You are given a choice of taking the simple interest on 100,000 invested for 2 years

1. What is Jane's rate of return on total assets if
average total assets are $100,000; net income is $2,000; interest
expense if $1,600; and income tax is $2,000?

A. 5.6

B. 4.6%

C. 5.2%

D. 3.6%

2. Operating cash flows affect

A. long-term asset accounts.

B. current assets and current
liabilities.

C. equity accounts.

D. long-term liability accounts.

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

A. Cumulative effect of changes in accounting principles
section

B. Discontinued operations section

C. Extraordinary items section

D. Continuing operations section
4. 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: 7.8 %; Return on
Common Stockholders' Equity: 8.9%

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

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

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

5. 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. $70,000.

B. $83,730.

C. $77,350.

D. $76,380.

6. What is the rate of return on equity if net income is
$22,700; preferred dividends are $3,000; sales are

$100,000; and average common stockholders' equity is $86,000?

A. 22.9%
B. 86.0%

C. 26.4%

D. 22.7%

7. Birch issued 200 shares of $12 par common stock in
exchange for a piece of equipment with a current market
value of $3,000. Which of the following is not part of the journal entry
for this transaction?

A. Crediting Common Stock for $2,400

B. Crediting Paid-in Capital in Excess of Par—Common for
$600

C. Debiting Equipment for $3,000

D. Crediting Common Stock for
$3,000

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

A. gross profit.

B. net income.

C. total expenses.

D. net sales.

9. 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. $300,000.

B. $330,000.

C. $270,000.

D. $315,000.

10. 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. 50% and 67%

C. 40% and 20%

D. 67% and 40%

11. 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. 800

B. 300

C. 500

D. 0

12. What is the rate of return on common stockholders'
equity if sales are $100,000, net income is $22,700,
and average common stockholders' equity is $86,000?

A. 22.7%

B. 86.0%

C. The rate of return can't be determined from the
information given.

D. 26.4%

13. 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 14%

B. Increase of 12%

C. Increase of 14%

D. Decrease of 12%

14. Casey Company has 5,000 shares of treasury cost that
it purchased for $13 per share. It later resold 2,000
of those shares for $17 per share. The amount to be credited to Paid-in
Capital—Treasury Stock is

A. $34,000.

B. $30,000.

C. $8,000.

D. $26,000

15. The Amanda Corporation Stockholders' Equity sectionincludes the following information:

What was the total selling price of the preferred stock?

Preferred Stock $12,000

Paid-in Capital in Excess of Par— Preferred 2,700

Common Stock 15,000

Paid-in Capital in Excess of Par— Common 4,100

Retained Earnings 8,200

A. $12,000

B. $14,700

C. $20,200

D. $16,100

16. Patty's Baker has cost of goods sold for the years2011, 2010, and 2009, respectively, of $28,600, $26,900,
and $25,600. If 2009 is the base year, the trend percentage for 2011 iS

A. 5.08%.

B. 105.08%.

C. 11.72%.

D. 111.72%.

17. 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. $328,000.

C. $335,000.

D. $342,000.

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

the

A. cash and cash equivalent
accounts.

B. revenue accounts.

C. equity account.

D. asset and liability accounts.

19. The records of Ashley Boutique showed a net loss of
$30,000; depreciation expense of $25,000; and

an
increase in supplies on hand of $5,000. The amount of net cash flow from
operating activities using the

indirect
method is

A. $20,000.

B. $15,000.

C. ($10,000).

D. ($15,000).

20. 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. $900 credit

B. $900 debit

C. $3,900 credit

D. $1,500 debit

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