Question 1.1.

(TCOs A, B, and C) Shareholders want answers to all of the following questions except for?

How does the company compare in profitability with competitors?

Did the company meet its operating expense budget?

Will the company be able to pay its liabilities as they come due?

Is the company earning a satisfactory return?

Question 2.2

(TCO C) Paying back long-term debt is an example of a(n)

non-cash investing activity.

investing activity.

financing activity.

operating activity.

Question 3.3.

(TCO C) Buying a new plant would be an example of which type of activity?

Operating

Financing

Investing

None of the above

Question 4.4.

(TCO A) In a classified balance sheet, assets are usually classified as

current assets, long-term assets, property, plant, and equipment, and tangible assets.

current assets, long-term investments, property, plant, and equipment, and intangible assets.

current assets, long-term investments, and tangible assets.

current assets, long-term investments, property, plant, and equipment, and common stocks.

Question 5.5.

(TCO B) For 2012, LBJ Corporation reported net income of $75,000; net sales $750,000; and weighted average shares outstanding of 7,500. There were no preferred stock dividends. What was the 2012 earnings per share?

$100.00

$50.00

$10.00

$110.00

Question 6.6.

(TCO D) Which of the following describes the normal balance and classification of the unearned revenue account?

Debit, Expense

Credit, Liability

Credit, Stockholders' equity

Debit, Liability

Question 7.7.

(TCO E) The accrual accounting term used to indicate an item paid in advance or the receipt of cash in advance is _____
prepayment.

depreciation.

deferral.

accrual.

Question 8.8.

(TCOs A and B) A periodic inventory system would most likely be used by a(n) _____

automobile dealership.

jewelry store.

furniture store.

local neighborhood restaurant.

Question 9.9.

(TCOs A and B) LBJ Company recorded the following events involving a recent merchandise purchase.

- Received goods for $40,000, terms 2/10, n/30

- Returned $1,200 of the shipment for credit due to damaged goods

- Paid $1,000 for freight in

- Paid the invoice within the discount period

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

increased by $39,800.

increased by $39,024.

increased by $38,988.

increased by $39,000.

Question 10.10.

(TCO A) In periods of rising prices, which of the following inventory methods results in the lowest income taxes?

FIFO method

Average cost method

LIFO method

None of the above

11.

(TCO D) A classmate is considering dropping his or her accounting class because he or she cannot understand the rules of debits and credits.

Explain the rules of debits and credits in a way that will help him or her understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities, and stockholders' equity) and the income statement (revenues and expenses).

12. RspGF="font-family:'Arial';font-size:10pt;"(TCOs B and E) The following information is available for Partin Company.
Sales $598,000
Sales returns and allowances 20,000
Cost of goods sold 398,000
Selling expense 69,000
Administrative expense 25,000
Interest expense 19,000
Interest revenue 20,000

Instruction:

Use the above information to prepare a multiple-step income statement for the year ended December 31, 2007.

Compute the profit margin ratio and gross profit rate. Partin Company's assets at the beginning of the year were $770,000, and they were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.

(TCOs D and E) 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.
Investors invest $50,000 in exchange for 1,000 shares of common stock.
Company purchased equipment for $10,000 on credit.
Company received $5,000 for services performed.
Company made payment on account for $2,000.
Company received $7,000 for services not yet performed.

14. (TCO D) Your friend Wendy plans to open a hair salon. Wendy states that she does not have time to develop and implement a system of internal controls.

Explain to Wendy the objectives of a system of internal control.

Explain to Wendy at least four key controls she must establish to protect herself against fraud. You should state specific internal control procedures and relate your answer to her hair salon business.