Question: 1. Assets include _____.
prepaid insurance and prepaid rent
dividends paid to shareholders
loans obtained by the company
stockholders' investment in the business
2. Which of the following accounts is recorded as part of stockholders' equity on the balance sheet?
Long-term debt
Retained earnings
Revenue
Expenses
3. Which of the following is not a current liability?
Unearned revenue
Accounts payable
Accrued liabilities
Prepaid expenses
4. 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
5. 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
6. In periods of rising prices, which of the following inventory methods results in the lowest income taxes?
Average cost method
FIFO
LIFO
Cannot be determined based on the information given
7. Selling a long-term asset is an example of a(n) _____.
operating activity
investing activity
financing activity
noncash investing and financing activity
8. Dividends declared are reported on which of the following statements?
Income statement
Statement of retained earnings
Balance sheet
Statement of financial position
9. What is the correct order to create the financial statements?
Balance sheet, income statement, statement of retained earnings, and statement of cash flows
Statement of cash flows, balance sheet, statement of retained earnings, and income statement
Income statement, statement of retained earnings, balance sheet, and statement of cash flows
Income statement, balance sheet, statement of retained earnings, and statement of cash flows
10. Which of the following is an objective of internal control?
Risk assessment
Information technology
Adequate records
Comply with legal requirements
11. Which of the following is an objective of internal control?
Risk assessment
Information technology
Adequate records
Comply with legal requirements
12. The accounting term used to indicate recording an expense before paying cash for the item is _____.
deferral
accrual
depreciation
prepayment
13. Your friend, Lisa, 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) Paychecks are left on the desk for pick-up.
(2) Supervisors count cash receipts daily.
(3) Invoices are pre-numbered.
(4) Bonding of the cashiers is required.
(5) The accountant purchases and pays for supplies.
14. 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 $300,000 in exchange for 30,000 shares of common stock.
(2) Company made payment on account for $500.
(3) Employees work Monday through Friday and are paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a Tuesday.
(4) Company purchased Supplies for $2,000.
(5) The company needs to record Supplies used for $500.
15. The following items are taken from the financial statements of Lacey Company for 2017.
Note some information may not be relevant for the required calculations below.
|
Advertising Expense
|
$14,000
|
|
Accounts Receivable
|
12,000
|
|
Cost of Goods Sold
|
65,000
|
|
Accumulated Depreciation-Equipment
|
20,000
|
|
Accounts Payable
|
21,000
|
|
Cash
|
44,000
|
|
Depreciation Expense
|
17,000
|
|
Common Stock
|
100,000
|
|
Dividends
|
25,000
|
|
Insurance Expense
|
5,000
|
|
Note Payable (due 2020)
|
70,000
|
|
Rent Expense
|
4,000
|
|
Prepaid Insurance
|
17,000
|
|
Retained Earnings (beginning)
|
22,000
|
|
Salaries Expense
|
50,000
|
|
Salaries Payable
|
3,500
|
|
Net sales
|
175,000
|
|
Supplies
|
4,000
|
|
Supplies Expense
|
3,000
|
|
Equipment
|
210,000
|
Instructions: (Must show your work for each part to receive partial credit):
(a) Calculate the net income. (18 points)
(b) Calculate the ending balance of Retained Earnings that would appear on a balance sheet at December 31, 2017. (7 points)
(c) Calculate the gross profit percentage. (5 points)
16. The following items are taken from the general ledger of SRW Company at the end of December 2017. Note some information may not apply to the financial statement.
|
Cash
|
$375,000
|
|
Accounts Receivable
|
125,000
|
|
Prepaid Insurance
|
100,000
|
|
Accounts Payable
|
88,000
|
|
Unearned Service Revenue
|
15,000
|
|
Equipment, net of accumulated depreciation
|
177,000
|
|
Common Stock
|
125,000
|
|
Retained Earnings (beginning)
|
106,000
|
|
Long-term debt
|
336,500
|
|
Service revenue
|
225,000
|
|
Cost of Goods Sold
|
62,500
|
|
Rent expense
|
30,000
|
|
Supplies expense
|
8,000
|
|
Insurance expense
|
18,000
|
Instructions: (a) Please create a classified Balance Sheetin good form for the year ended 2017.
(b) Please calculate the current ratio.