1. A corporation has which of the following sets of characteristics?
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
2. (The Dividends account _____.
is increased with a debit
is decreased with a credit
is not an expense account
All of the above
3. Below is a partial list of account balances for Denton Company:
Cash $7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Common stock 1,400
Dividends 700
Revenues 21,000
Expenses 17,500
What did Denton Company show as total credits?
$30,100
$29,400
$28,700
$30,800
4. Using accrual accounting, expenses are recorded and reported only _____.
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
5. Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____.
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO
6. 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?
$48,000
$52,500
$49,500
$43,500
7. 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 _____.
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
8. Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____.
$240,000
$250,000
$310,000
$230,000
9. If you are comparing the 2010 income statement numbers with the income statement numbers from 2009 and 2008, you are conducting a _____.
common-size analysis
horizontal analysis
vertical analysis
ratio analysis