1. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory
costs. Below is the inventory record for Product C124:
What is the average cost per unit after the receipt of the
May 17 inventory (rounded to the nearest cent)?
A. $6.63 C. $6.55
B. $6.00 D.
$7.40
2. Which of the following is an incorrect statement if ending inventory is
understated?
A. Net income is understated.
B. Gross profit is overstated.
C. Income tax is understated.
D. Cost of goods sold is overstated.
3. Which items may not limit the effectiveness of internal control systems in an
organization?
A. Collusion
B. Properly designed controls
C. Overriding controls
D. Costs not worth benefits
4. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory
costs. Below is the inventory record for Product C124:
What is the average cost per unit after the receipt of the June 21 inventory?
A. $6.61 C. $6.72
B. $6.67 D. $6.62
5. Which of the following is an incorrect statement if ending inventory is
overstated?
A. Cost of goods sold is overstated.
B. Gross profit is overstated.
C. Net income is overstated.
D. Income tax is overstated.
6. Casey Company's beginning inventory and purchases during the fiscal year ended
December 31, 2012, were as follows: (Note: The company uses a perpetual
system of inventory.) What is the ending inventory of Casey Company for 2012 using
FIFO?
A. $196
B. $182
C. $175
D. $168

7. A drawback to using _______ when inventory costs are rising is that the company reports lower
net income.
A. specific-identification costing
B. average costing
C. FIFO
D. LIFO
8. One of the biggest factors in implementing SOX was
A. disclosing deficiencies in internal controls. C. establishing internal control
procedures
B. reviewing the financial reports. D. the cost of implementing the system.
9. The major difference in the statement of retained earnings between a service business and
a merchandising business is
A. that the retained earnings statement of a merchandising business includes dividends.
B. nothing. There are no differences between the two.
C. that the retained earnings statement of a merchandising business shows the cost of goods
sold.
D. that the retained earnings statement of a service business includes dividends.
10. Committing a fraud because the employee feels that it will be easy to do is indicative of
which part of the fraud triangle?
A. Realization
B. Rationalization
C. Perceived opportunity
D. Perceived pressure
11. When a merchandiser sells on account, which of the following is not needed to
record the transaction?
A. Accounts receivable
B. Cash
C. Inventory
D. Cost of goods sold
12. Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation.
The journal entry to record this purchase for Meranda under a perpetual
inventory system is
A. debit Inventory; credit Cash.
B. debit Inventory; credit Accounts Payable—Ashley.
C. debit Accounts Payable-Ashley; credit Inventory.
D. debit Inventory; credit Accounts Payable—Meranda.
13. A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory,
and $2,000 in beginning inventory. The company's cost of goods sold is

A. $5,600. C.
$6,200.

B. $7,100. D. $5,700.

14. Meranda
Company reports the following inventory information:







What is the total value of the merchandise under LCM
(lower-of-cost or market)?

A. $154,832.90

B. $156,230.80

C. $157,147.60

D. $158,545.60

15. New
technology, like the latest cell phones and HDTV, would probably be costed
using the

A. LIFO method
of inventory costing.

B. FIFO method of inventory costing.

C. moving-average
method of inventory costing.

D. specific-identification
method of inventory costing.

16. Physical
inventory counts must be done

A. when using
bar-code scan technology.

B. when
using the periodic method of inventory.

C. regardless of method inventory.

D. when using
the perpetual method of inventory.



17. In a
balance sheet prepared in report form, liabilities must be listed after

A. assets with
long-term liabilities listed first.

B. assets with current liabilities listed first.

C. assets in
alphabetical order.

D. stockholders'
equity.

18. The balance
sheet format that lists assets above liabilities is the _______ form.

A. report

B. alphabetical

C. account

D. liquidity

19. Which of
the following may not limit the effectiveness of internal control
systems in an organization?

A. Duties not
segregated

B. Understanding of policies and procedures

C. Costs not
worth benefits

D. Poorly
designed controls

20. When a
company repays the seller for shipping costs on an FOB shipping transaction,
which of the following is true?

A. A purchase discount can still be taken net of the
prepaid shipping charges.

B. A purchase
discount cannot be taken when shipping charges are prepaid.



C. The
shipping costs don't affect the invoice cost.

D. A purchase
discount can still be taken on the gross amount of the invoice

End of exam



Exam: 061692RR – CORPORATIONS



1. If you own
500 shares (2% of a corporation's stock) and the corporation issues 15,000 new
shares, how many of the new shares can you purchase under preemptive right?

A. 500

B. 0

C. 300

D. 800



2. The Isaiah
Corporation Stockholders' Equity section includes the following information:

Total par value of the preferred and common stock is

Preferred Stock $22,000

Paid-in Capital in Excess of Par—Preferred 2,980

Common Stock 48,000

Paid-in Capital in Excess of Par—Common 3,400

Retained Earnings 7,350

A. $83,730.



B. $77,350.

C. $70,000.

D. $76,380.

3. What are
the rate of return on stockholders' equity and the rate of return on common
stockholders' equity (rounded to the nearest one-tenth of a percent) given the
following information:

Net Income $350,000

Preferred Dividends 20,000

Common Stock 48,000

Common Stockholders’ Equity 1/1/2011 4,400,000

Total Stockholders’ Equity 1/1/2011 5,300,000

Total Stockholders’ Equity 12/31/2011 5,500,000

A. Return on
Stockholders' Equity: 8.1 %; Return on Common Stockholders' Equity: 9.2%

B. Return on
Stockholders' Equity: 5.6 %; Return on Common Stockholders' Equity: 6.7%

C. Return on Stockholders' Equity: 6.5 %; Return on
Common Stockholders' Equity: 7.6%

D. Return on
Stockholders' Equity: 7.8 %; Return on Common Stockholders' Equity: 8.9%







4. Casey
Company has an accounts receivable turnover of 36 days, an inventory turnover
of 77 days, and an accounts payable turnover of 40 days. Casey's cash
conversion cycle is _______ day(s).

A. 1 C. 153

B. 73 D.
81

5. Net sales
at Kelly's Bakery increased from $40,000 to $60,000, and its cost of goods sold
increased from $20,000 to $40,000. Vertical analysis based on net sales would
show which percentages for cost of goods sold (rounded to the nearest %)?

A. 10% and 30%

B. 40% and 20%

C. 67% and 40%

D. 50% and 67%

6. To
determine why net income and cash on the balance sheet don't equal, an
accountant can prepare a/an

A. statement
of retained earnings.

B. statement
of cash flows.

C. income
statement.

D. balance
sheet.

7. Which
activities are computed differently using the two methods of formatting a
statement of cash flows?

A. Both
operating activities and investing activities

B. Operating activities

C. Financing
activities

D. Investing
activities

8. Isaiah
Corporation's Accounts Receivable increased by $35,000, and its Accounts
Payable decreased by $18,000. What is the net effect on cash from operations
under the indirect method?

A. −$53,000

B. +$35,000

C. −$18,000

D. +$17,000

9. Rick
Company has declared a $40,000 cash dividend to shareholders. The company has
5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par
common stock. The preferred stock is cumulative. How much will be distributed
to the preferred and common stockholders on the date of payment if the
preferred stock is $12,000 in arrears?

A. $20,000
preferred; $20,000 common

B. $40,000
preferred; $0 common

C. $6,000
preferred; $34,000 common

D. $18,000 preferred; $22,000 common

10. Accounts
receivable amounted to $215,000 at the beginning of the year and $245,000 at
the end of the year. Income reported on the income statement for the year was
$300,000. The cash flow from operating activities on the cash flow statement
using the indirect method is

A. $270,000.

B. $330,000.

C. $300,000.

D. $315,000.





11. The
accuracy of the statement of cash flows can be verified by computing the change
in the balance of the

A. revenue
accounts.

B. cash and cash equivalent accounts.

C. asset and
liability accounts.

D. equity
account.

12. Rick
Company's net sales decreased from $90,000 in year 1 to $45,000 in year 2, and
its cost of goods sold decreased from $30,000 in year 1 to $20,000 in year 2.
Vertical analysis based on sales would show which decreases in cost of goods
sold for the two periods (rounded to the nearest tenth of a percent)?

A. 225% and
300%

B. 33.3% and 44.4%

C. 300% and
225%

D. 44.4% and
33.3%

13. If total
assets are $6,000, what is the common-size figure of cash, assuming that cash
has a balance of $2,400?

A. 100.0%

B. 40.0%

C. 120.0%

D. 60.0%







14. Operating
expenses—other than depreciation—for the year were $335,000. Prepaid expenses decreased
by $7,000. Cash payments for operating expenses to be reported on the cash flow
statement using the direct method would be

A. $7,000.

B. $342,000.

C. $335,000.

D. $328,000.



15. Rick
Company has declared a $40,000 cash dividend to shareholders. The company has
5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par
common stock. The preferred stock is noncumulative. How much will be
distributed to the preferred and common stockholders on the date of payment?

A. $0
preferred; $40,000 common

B. $6,000 preferred; $34,000 common

C. $40,000
preferred; $0 common

D. $34,000
preferred; $6,000 common



16. For
vertical analysis purposes, the base item on the income statement is

A. net sales.

B. total
expenses.

C. net income.

D. gross
profit.







17. Casey
Company has a $2,400 credit balance in Paid-In Capital— Treasury Stock. It
sells 500 shares of treasury stock that the company reacquired at $21/share,
for $18/share. After the transaction, what will the balance be in the Paid-In
Capital in Excess of Par— Treasury account?

A. $1,500
debit

B. $900 debit

C. $900 credit

D. $3,900
credit




18. Which
section of the income statement does not report net of income taxes or
net of income tax savings?

A. Extraordinary
items section

B. Continuing operations section

C. Cumulative
effect of changes in accounting principles section

D. Discontinued
operations section



19. If current
assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of
increase or decrease in percentage terms from 2009 to 2010? (Round to the
nearest percent.)

A. Decrease of
12%

B. Decrease of
14%

C. Increase of 14%

D. Increase of
12%

20. Brandon
Company had extraordinary losses of $150,000. If its corporate tax rate is 30%,
at which amount will the losses be shown on the income statement?

A. $150,000

B. Not enough
information is given to answer the question.

C. $105,000

D. $45,000
 1. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory
costs. Below is the inventory record for Product C124:
What is the average cost per unit after the receipt of the
May 17 inventory (rounded to the nearest cent)?
A. $6.63 C. $6.55
B. $6.00 D.
$7.40
2. Which of the following is an incorrect statement if ending inventory is
understated?
A. Net income is understated.
B. Gross profit is overstated.
C. Income tax is understated.
D. Cost of goods sold is overstated.
3. Which items may not limit the effectiveness of internal control systems in an
organization?
A. Collusion
B. Properly designed controls
C. Overriding controls
D. Costs not worth benefits
4. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory
costs. Below is the inventory record for Product C124:
What is the average cost per unit after the receipt of the June 21 inventory?
A. $6.61 C. $6.72
B. $6.67 D. $6.62
5. Which of the following is an incorrect statement if ending inventory is
overstated?
A. Cost of goods sold is overstated.
B. Gross profit is overstated.
C. Net income is overstated.
D. Income tax is overstated.
6. Casey Company's beginning inventory and purchases during the fiscal year ended
December 31, 2012, were as follows: (Note: The company uses a perpetual
system of inventory.) What is the ending inventory of Casey Company for 2012 using
FIFO?
A. $196
B. $182
C. $175
D. $168

7. A drawback to using _______ when inventory costs are rising is that the company reports lower
net income.
A. specific-identification costing
B. average costing
C. FIFO
D. LIFO
8. One of the biggest factors in implementing SOX was
A. disclosing deficiencies in internal controls. C. establishing internal control
procedures
B. reviewing the financial reports. D. the cost of implementing the system.
9. The major difference in the statement of retained earnings between a service business and
a merchandising business is
A. that the retained earnings statement of a merchandising business includes dividends.
B. nothing. There are no differences between the two.
C. that the retained earnings statement of a merchandising business shows the cost of goods
sold.
D. that the retained earnings statement of a service business includes dividends.
10. Committing a fraud because the employee feels that it will be easy to do is indicative of
which part of the fraud triangle?
A. Realization
B. Rationalization
C. Perceived opportunity
D. Perceived pressure
11. When a merchandiser sells on account, which of the following is not needed to
record the transaction?
A. Accounts receivable
B. Cash
C. Inventory
D. Cost of goods sold
12. Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation.
The journal entry to record this purchase for Meranda under a perpetual
inventory system is
A. debit Inventory; credit Cash.
B. debit Inventory; credit Accounts Payable—Ashley.
C. debit Accounts Payable-Ashley; credit Inventory.
D. debit Inventory; credit Accounts Payable—Meranda.
13. A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory,
and $2,000 in beginning inventory. The company's cost of goods sold is

A. $5,600. C.
$6,200.

B. $7,100. D. $5,700.

14. Meranda
Company reports the following inventory information:







What is the total value of the merchandise under LCM
(lower-of-cost or market)?

A. $154,832.90

B. $156,230.80

C. $157,147.60

D. $158,545.60

15. New
technology, like the latest cell phones and HDTV, would probably be costed
using the

A. LIFO method
of inventory costing.

B. FIFO method of inventory costing.

C. moving-average
method of inventory costing.

D. specific-identification
method of inventory costing.

16. Physical
inventory counts must be done

A. when using
bar-code scan technology.

B. when
using the periodic method of inventory.

C. regardless of method inventory.

D. when using
the perpetual method of inventory.



17. In a
balance sheet prepared in report form, liabilities must be listed after

A. assets with
long-term liabilities listed first.

B. assets with current liabilities listed first.

C. assets in
alphabetical order.

D. stockholders'
equity.

18. The balance
sheet format that lists assets above liabilities is the _______ form.

A. report

B. alphabetical

C. account

D. liquidity

19. Which of
the following may not limit the effectiveness of internal control
systems in an organization?

A. Duties not
segregated

B. Understanding of policies and procedures

C. Costs not
worth benefits

D. Poorly
designed controls

20. When a
company repays the seller for shipping costs on an FOB shipping transaction,
which of the following is true?

A. A purchase discount can still be taken net of the
prepaid shipping charges.

B. A purchase
discount cannot be taken when shipping charges are prepaid.



C. The
shipping costs don't affect the invoice cost.

D. A purchase
discount can still be taken on the gross amount of the invoice

End of exam



Exam: 061692RR – CORPORATIONS



1. If you own
500 shares (2% of a corporation's stock) and the corporation issues 15,000 new
shares, how many of the new shares can you purchase under preemptive right?

A. 500

B. 0

C. 300

D. 800



2. The Isaiah
Corporation Stockholders' Equity section includes the following information:

Total par value of the preferred and common stock is

Preferred Stock $22,000

Paid-in Capital in Excess of Par—Preferred 2,980

Common Stock 48,000

Paid-in Capital in Excess of Par—Common 3,400

Retained Earnings 7,350

A. $83,730.



B. $77,350.

C. $70,000.

D. $76,380.

3. What are
the rate of return on stockholders' equity and the rate of return on common
stockholders' equity (rounded to the nearest one-tenth of a percent) given the
following information:

Net Income $350,000

Preferred Dividends 20,000

Common Stock 48,000

Common Stockholders’ Equity 1/1/2011 4,400,000

Total Stockholders’ Equity 1/1/2011 5,300,000

Total Stockholders’ Equity 12/31/2011 5,500,000

A. Return on
Stockholders' Equity: 8.1 %; Return on Common Stockholders' Equity: 9.2%

B. Return on
Stockholders' Equity: 5.6 %; Return on Common Stockholders' Equity: 6.7%

C. Return on Stockholders' Equity: 6.5 %; Return on
Common Stockholders' Equity: 7.6%

D. Return on
Stockholders' Equity: 7.8 %; Return on Common Stockholders' Equity: 8.9%







4. Casey
Company has an accounts receivable turnover of 36 days, an inventory turnover
of 77 days, and an accounts payable turnover of 40 days. Casey's cash
conversion cycle is _______ day(s).

A. 1 C. 153

B. 73 D.
81

5. Net sales
at Kelly's Bakery increased from $40,000 to $60,000, and its cost of goods sold
increased from $20,000 to $40,000. Vertical analysis based on net sales would
show which percentages for cost of goods sold (rounded to the nearest %)?

A. 10% and 30%

B. 40% and 20%

C. 67% and 40%

D. 50% and 67%

6. To
determine why net income and cash on the balance sheet don't equal, an
accountant can prepare a/an

A. statement
of retained earnings.

B. statement
of cash flows.

C. income
statement.

D. balance
sheet.

7. Which
activities are computed differently using the two methods of formatting a
statement of cash flows?

A. Both
operating activities and investing activities

B. Operating activities

C. Financing
activities

D. Investing
activities

8. Isaiah
Corporation's Accounts Receivable increased by $35,000, and its Accounts
Payable decreased by $18,000. What is the net effect on cash from operations
under the indirect method?

A. −$53,000

B. +$35,000

C. −$18,000

D. +$17,000

9. Rick
Company has declared a $40,000 cash dividend to shareholders. The company has
5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par
common stock. The preferred stock is cumulative. How much will be distributed
to the preferred and common stockholders on the date of payment if the
preferred stock is $12,000 in arrears?

A. $20,000
preferred; $20,000 common

B. $40,000
preferred; $0 common

C. $6,000
preferred; $34,000 common

D. $18,000 preferred; $22,000 common

10. Accounts
receivable amounted to $215,000 at the beginning of the year and $245,000 at
the end of the year. Income reported on the income statement for the year was
$300,000. The cash flow from operating activities on the cash flow statement
using the indirect method is

A. $270,000.

B. $330,000.

C. $300,000.

D. $315,000.





11. The
accuracy of the statement of cash flows can be verified by computing the change
in the balance of the

A. revenue
accounts.

B. cash and cash equivalent accounts.

C. asset and
liability accounts.

D. equity
account.

12. Rick
Company's net sales decreased from $90,000 in year 1 to $45,000 in year 2, and
its cost of goods sold decreased from $30,000 in year 1 to $20,000 in year 2.
Vertical analysis based on sales would show which decreases in cost of goods
sold for the two periods (rounded to the nearest tenth of a percent)?

A. 225% and
300%

B. 33.3% and 44.4%

C. 300% and
225%

D. 44.4% and
33.3%

13. If total
assets are $6,000, what is the common-size figure of cash, assuming that cash
has a balance of $2,400?

A. 100.0%

B. 40.0%

C. 120.0%

D. 60.0%







14. Operating
expenses—other than depreciation—for the year were $335,000. Prepaid expenses decreased
by $7,000. Cash payments for operating expenses to be reported on the cash flow
statement using the direct method would be

A. $7,000.

B. $342,000.

C. $335,000.

D. $328,000.



15. Rick
Company has declared a $40,000 cash dividend to shareholders. The company has
5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par
common stock. The preferred stock is noncumulative. How much will be
distributed to the preferred and common stockholders on the date of payment?

A. $0
preferred; $40,000 common

B. $6,000 preferred; $34,000 common

C. $40,000
preferred; $0 common

D. $34,000
preferred; $6,000 common



16. For
vertical analysis purposes, the base item on the income statement is

A. net sales.

B. total
expenses.

C. net income.

D. gross
profit.







17. Casey
Company has a $2,400 credit balance in Paid-In Capital— Treasury Stock. It
sells 500 shares of treasury stock that the company reacquired at $21/share,
for $18/share. After the transaction, what will the balance be in the Paid-In
Capital in Excess of Par— Treasury account?

A. $1,500
debit

B. $900 debit

C. $900 credit

D. $3,900
credit




18. Which
section of the income statement does not report net of income taxes or
net of income tax savings?

A. Extraordinary
items section

B. Continuing operations section

C. Cumulative
effect of changes in accounting principles section

D. Discontinued
operations section



19. If current
assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of
increase or decrease in percentage terms from 2009 to 2010? (Round to the
nearest percent.)

A. Decrease of
12%

B. Decrease of
14%

C. Increase of 14%

D. Increase of
12%

20. Brandon
Company had extraordinary losses of $150,000. If its corporate tax rate is 30%,
at which amount will the losses be shown on the income statement?

A. $150,000

B. Not enough
information is given to answer the question.

C. $105,000

D. $45,000


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