1) which of the following is not an advantage of the corporate form of business
organization?
a.no personal liability
b.easy to transfer ownership
c.favorable tax treatment
d.easy to raise funds
2) outstanding stock of the hall corporation included 30,000 shares of $5 par common
stock and 15,000 shares of 6%, $10 par non-cumulative preferred stock. in 2011, hall
declared and paid dividends of $6,000. in 2012, hall declared and paid dividends of
$18,000. how much of the 2012 dividend was distributed to preferred shareholders?
a.$12,000
b.$21,000
c.$9,000
d.none of the above
3) budke corporation paid dividends of $5,000. as a result of this event, the
a.dividends account was increased by $5,000.
b.dividends account was decreased by $5,000.
c.cash account was increased by $5,000.
d.cash was increased and the dividends account was decreased by $5,000.
4) the lifo reserve is
a.the difference between the value of the inventory under lifo and the value under fifo
b.an amount used to adjust inventory to the lower of cost or market
c.the difference between the value of the inventory under lifo and the value under
average cost
d.the amount used to adjust inventory to history cost
5) a company has the following assets:
the total amount reported under property, plant, and equipment would be
a.$23,500,000
b.$18,000,000
c.$20,500,000
d.$19,000,000
6) palmer company has budgeted sales revenues as follows:
past experience indicates that 60% of the credit sales will be collected in the month of
sale and the remaining 40% will be collected in the following month.
purchases of inventory are all on credit and 50% is paid in the month of purchase and
50% in the month following purchase. budgeted inventory purchases are:
other budgeted cash disbursements: (a) selling and administrative expenses of $7,000
each month, (b) dividends of $19,000 will be paid in july, and (c) purchase of a
computer in august for $6,000 cash.
the company wishes to maintain a minimum cash balance of $10,000 at the end of each
month. the company borrows money from the bank at 9% interest, if necessary, to
maintain the minimum cash balance. borrowed money is repaid in months when there is
an excess cash balance. the beginning cash balance on july 1 was $10,000. assume that
borrowed money in this case is for one month.
instructions
prepare a cash budget for the months of july and august. prepare separate schedules for
expected collections from customers and expected payments for purchases of inventory.
7) the discontinued operations section of the income statement refers to
a.discontinuance of a product line
b.the income or loss on products that have been completed and sold
c.obsolete equipment and discontinued inventory items
d.the disposal of a significant segment of a business
8) templeton company had the following transactions pertaining to debt securities held
as an investment.
instructions
(a)journalize the transactions.
(b)prepare the adjusting entry for the accrual of interest on december 31.
9) compound interest is the return on principal
a.only
b.for one or more periods
c.for two or more periods
d.for one period
10) the financial statements of the nelson manufacturing company reports net sales of
$400,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year
and end of year, respectively. what is the receivables turnover ratio for nelson?
a.5.6 times
b.8 times
c.13.3 times
d.10.0 times
11) banks that issue credit cards generally charge retailers a fee of 2 to 4% of the
amount of sale. list reasons why companies are willing to pay these fees.
12) the following ratios have been computed for piper company for 2012.
the 2012 financial statements for piper company with missing information follows:
instructions
use the above ratios and information from the piper company financial statements to fill
in the missing information on the financial statements. follow the sequence indicated.
show computations that support your answers.
13) a student is considering dropping his accounting class because he cannot understand
the rules of debits and credits.
can the student be successful in the course without an understanding of the rules of
debits and credits? explain the rules of debits and credits in a way that will help him
understand them.
14) this information is available for pepsico, inc. for 2008 and 2009.
calculate the inventory turnover ratio, days in inventory, and gross profit rate for
pepsico., inc. for 2008 and 2009. comment on any trends.
15) presented here are five economic events. for each item, indicate whether the event
increased (+), decreased (-), or had no effect (ne) on assets, liabilities, and stockholders
equity.
16) the ________________ reports the assets, liabilities, and stockholders equity of a
business at a specific date.
17) match the items below by entering the appropriate code letter in the space provided.
1) the entire group of accounts maintained by a company.
2) transferring journal entries to ledger accounts.
3) the side which increases an account.
4) a list of all the accounts used by a company.
5) an accounting record of increases and decreases in specific assets, liabilities, and
stockholders equity items.
6) left side of an account.
7) evidence that a transaction has taken place.
8) shows the debit and credit effects of specific transactions.
9) a list of accounts and their balances at a given time.
10) has a credit normal balance
18) hansen company uses the periodic inventory method and had the following
inventory information available:
a physical count of inventory on december 31 revealed that there were 350 units on
hand.
answer the following independent questions and show computations supporting your
answers.
1>assume that the company uses the fifo method. the value of the ending inventory at
december 31 is $__________.
2>assume that the company uses the average cost method. the value of the ending
inventory on december 31 is $__________.
3>assume that the company uses the lifo method. the value of the ending inventory on
december 31 is $__________.
4>determine the difference in the amount of income that the company would have
reported if it had used the fifo method instead of the lifo method. would income have
been greater or less?
19) al bodkin, a new employee of crafter’s paradise, recorded $1,000 in consigned
goods received as part of the firm’s inventory. the goods were received one day after the
end of the fiscal period, but al reasoned that the goods should be included in inventory
sooner because crafter’s paid the freight. the mistake was brought to his attention by the
purchasing department who said the goods should not have been recorded as crafters
inventory at all. al told sid goza, the purchasing supervisor, that nobody needed to
worry, because the mistake would cancel itself out the following month. in al’s opinion,
there was no reason to get everyone excited over nothing, especially since it was
monthly, and not annual, financial statements that were affected. sid goza has reported
the problem to the accounting department.
20) hobson corporation had net sales for the year of $300,000 and average total assets
of $200,000. the asset turnover ratio is ____________ times.