An advantage of the corporate form of business
1. (TCO A) An advantage of the corporate form of business is _____.
it is simple to establish
the corporate tax rate is less than the personal tax rate
corporations must pay dividends
the shareholders are not responsible for the corporation’s debts
Question 2. 2. (TCO A) Dividends flow through which one of the following statements?
The Balance Sheet
The Statement of Retained Earnings
The Income Statement
None of the above
Question 3. 3. (TCOs A, B) Below is a partial list of account balances for LBJ Company:
What did LBJ Company show as total debits?
Question 4. 4. (TCOs B, E) Which of the following statements is correct with regard to accrual accounting?
Accrual accounting is consistent with the matching principle.
Accrual accounting is less complex than the cash-basis method.
Accrual accounting does not record expenses until paid.
Accrual accounting does not record revenue until payment is received.
Question 5. 5. (TCO D) Two different companies utilize a different inventory costing method. If the price of goods has decreased during the period, then the company using _____.
LIFO will have the highest cost of goods sold
average cost will have the highest cost of goods sold
FIFO will have the highest ending inventory
LIFO will have the highest ending inventory
Question 6. 6. (TCO A, E) Equipment was purchased for $27,000. Freight charges amounted to $1,000 and there was a cost of $5,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $5,000 salvage value at the end of its 7-year useful life. Depreciation expense each year using the straight-line method will be _____.
Question 7. 7. (TCOs D, G) When the market rate of interest is less than the stated rate of interest on the bond, the bond will require _____.
a debit to Discount on Bonds Payable
a credit to Premium on Bonds Payable
a credit to Loss on Bonds Payable
a debit to Gain on Bonds Payable
Question 8. 8. (TCO C) Accounts receivable arising from sales to customers amounted to $75,000 and $90,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $100,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be _____.
Question 9. 9. (TCO F) If you are calculating the percentage change between 2 years worth of sales data, you are conducting a _____. (Points : 5)
Question 10. 10. (TCO F) Vertical analysis is also known as _____.
Question 11. 11. (TCO F) Which one of the following is typically analyzed via financial statement ratio analysis?
The design of a new product
The internal control failure rate
The leverage of the firm
The effectiveness of a marketing campaign
Question 12. 12. (TCO F) A common ratio to measure profitability is the _____.
days’ sales in receivables