A+ Solution ACCT/504 Final Exam

 1.Question :(TCO A) A corporation has which of the following sets of characteristics?

 

 Student Answer: Shared control, tax advantages, increased skills, and resources 

 

  Simple to set up and maintains control with the founder 

 

  Easier to transfer ownership and raise funds, no personal liability for stockholders 

  Harder to raise funds and gives owner control 

 

 Instructor Explanation:Chapter 1, pages 4 and 5

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 2.Question :(TCO A) When a corporation distributes a dividend, _____.

 

 Student Answer: the most common form of distribution is a cash dividend 

 

  the Dividends account will be increased with a credit 

 

  the Retained Earnings account will be directly increased with a debit 

 

  the Dividends account will be decreased with a debit 

 

 Instructor Explanation:Chapter 3, page 114

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 3.Question :(TCOs A, B) Below is a partial list of account balances for Kerner Company:

 

Cash                          $10,000

Prepaid insurance           1,000

Accounts receivable        5,000

Accounts payable           4,000

Notes payable                6,000

Common stock               2,000

Dividends                       1,000

Revenues                     30,000

Expenses                     25,000

 

What did Kerner Company show as total credits?

 

 Student Answer: $43,000 

 

  $41,000 

 

  $42,000 

 

  $44,000 

 

 Instructor Explanation:Chapter 3, page 129

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 4.Question :(TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____.

 

 Student Answer: when they are incurred, whether or not cash is paid 

 

  when they are incurred and paid at the same time 

 

  if they are paid before they are incurred 

 

  if they are paid after they are incurred 

 

 Instructor Explanation:Chapter 4, page 167

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 5.Question :(TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the lowest amount of income tax expense?

 

 Student Answer: FIFO 

 

  LIFO 

 

  The average cost method 

 

  Income tax expense for the period will be the same under all assumptions. 

 Instructor Explanation:Chapter 6, page 292

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 6.Question :(TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

 

 Student Answer: $48,000 

 

  $52,500 

 

  $49,500 

 

  $43,500 

 

 Instructor Explanation:Chapter 9, page 455

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 7.Question :(TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____.

 

 Student Answer: debit to Cash of $500,000 

 

  credit to Discount on Bonds Payable for $20,000 

 

  credit to Bonds Payable for $480,000 

 

  debit to Cash for $480,000 

 

 Instructor Explanation:Chapter 10, page 517

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 8.Question :(TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____.

 

 Student Answer: $120,000 

 

  $125,000 

 

  $155,000 

 

  $115,000 

 

 Instructor Explanation:Chapter 12, page 636

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 9.Question :(TCO F) One variation of the horizontal analysis is known as _____.

 

 Student Answer: nonlinear analysis 

 

  vertical analysis 

 

  trend analysis 

 

  common-size analysis 

 

 Instructor Explanation:Chapter 13, page 694

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 10.Question :(TCO F) Comparisons of data within a company are an example of the following comparative basis.

 

 Student Answer: Industry averages 

 

  Intercompany 

 

  Intracompany 

 

  Interregional 

 

 Instructor Explanation:Chapter 13, page 693

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 11.Question :(TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____.

 

 Student Answer: net sales 

 

  salary and wages expense in a previous year 

 

  gross profit 

 

  net income 

 

 Instructor Explanation:Chapter 13, page 698

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 12.Question :(TCO F) Short-term creditors are usually most interested in assessing _____.

 

 Student Answer: solvency 

 

  liquidity 

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  marketability 

 

  profitability 

 

 Instructor Explanation:Chapter 13, page 70

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 13.Question :(TCO F) Return on common stockholder’s equity ratio is affected by _____.

 

 Student Answer: net income 

 

  dividend paid to preferred stock, if any 

 

  leverage (debt-to-assets ratio) 

 

  All of the above 

 

 Instructor Explanation:Chapter 13, page 715

 

 

 Points Received:5 of 5 

 Comments:

 

    

 

    

 14.Question :(TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____.

 

 Student Answer: compounding 

 

  extrapolation 

 

  discounting 

 

  None of the above 

 

 Instructor Explanation:Chapter 10, page 514

 

 

 Points Received:5 of 5 

 Comments:

 

 

 

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