Accounting Quiz

1 Resources owned by a business are referred to as

profits.
dividends.
assets.
equity.

2 For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What was the 2014 earnings per share?

$17.50
$7.50
$75.00
$131.25

3 Selling a long-term asset is an example of a(n)

operating activity.

investing activity.

financing activity.

noncash investing and financing activity.

4 Dividends declared are reported on which of the following statements?

Income Statement

Statement of Retained Earnings

Balance Sheet

Statement of Financial Position

5 Which of the following describes the normal balance and classification of the Accumulated Depreciation account?

Debit, asset
Credit, liability
Credit, asset
Debit, expense

6 The accrual accounting term used to indicate recording an expense before paying cash for the item is

Deferral
accrual.
depreciation. 
prepayment.

7 LBJ Company recorded the following events involving a recent purchase of merchandise.

Received goods for $200,000, terms 2/10, n/30.

Returned $5,000 of the shipment for a credit due to damaged goods.

Paid $2,500 for freight in.

Paid the invoice within the discount period.

As a result of these events, the company's merchandise inventory

increased by $193,600.
increased by $195,950.
increased by $197,500.
increased by $193,500.

8 In periods of rising prices, which of the following inventory methods results in the highest gross profit figure?

FIFO
LIFO
Average cost method
Cannot be determined based on the information given

9 On a classified balance sheet, prepaid expenses are classified as

current liabilities.
long-term liabilities
current assets.
Prepaid expenses do not belong on the Balance Sheet.

10 Which of the following is an internal control procedure?

Control environment

Comparisons and compliance monitoring

Promote operational efficiency

Encourage employees to follow company policies

11 Your friend, Ellen, has hired you to evaluate the following internal control procedures.

Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.

For the weaknesses, you also need to state a recommendation for improvement.

(1) The cashier counts the total receipts and reconciles the receipts with the cash register total.

(2) Electronic documents are password-protected.

(3) The accountant is completely independent of the sales department.

(4) Invoices are not numbered.

(5) Large purchase orders must be approved by a manager.

Spellchecker

12 Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

(1) Investors invest $70,000 in exchange for 1,000 shares of common stock.

(2) Company paid a utility bill for $2,000.

(3) The unadjusted balance of the Supplies account is $5,200 and the total cost of supplies on hand is $4,000.

(4) Company received $5,000 for services performed.

(5) The company needs to record $15,000 for depreciation.

13 The following items are taken from the financial statements of Ashe Company for 2012:

Equipment $100,000
Accounts Receivable 12,000
Accounts Payable 9,000
Cost of Goods Sold 72,000
Utilities Expense 11,000
Depreciation Expense 17,000
Insurance Expense 9,000
Common Stock 200,000
Dividends 12,000
Rent Expense 3,000
Note Payable (due 2014) 40,000
dvertising Expense 14,000
Prepaid Insurance 17,000
Retained Earnings (beginning) 44,000
Accumulated Depreciation 50,000
Salaries Expense 60,000
Salaries Payable 3,500
Net sales 205,000
Supplies 4,000
Supplies Expense 5,000

Instructions

Calculate the net income.

(b) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2012.

(c) Calculate the gross profit percentage.

14 The following items are taken from the financial statements of BGS Company for 2012:

Cash $500,000
Accounts Receivable 200,000
Supplies 70,000
Accounts Payable 147,300
Unearned Service Revenue 18,000
Equipment, net of accumulated depreciation 212,000
Common Stock 500,000
Retained Earnings 12/31/2011 78,300
Long-term debt 142,400
Service revenue 240,000
Cost of Goods Sold 72,000
Rent expense 36,000
Supplies expense12,000
Insurance expense 24,000

Instructions  

(a) Please create a classified balance sheet in good form for the year ended 2012. (25 points)

(b) Please calculate the current ratio.