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Casey Birch

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1. Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77 days, and an accounts payable turnover of 40 days. Casey's cash conversion cycle is _______ day(s).
A. 1
B. 81
C. 153
D. 73

2. Which activities are computed differently using the two methods of formatting a statement of cash
flows?
A. Financing activities
B. Operating activities
C. Both operating activities and investing activities
D. Investing activities

3. Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Ryan's cash conversion cycle is _______ days.
A. 103
B. 121
C. 43
D. 9

4. What is the rate of return on common stockholders' equity if sales are $100,000, net income is $22,700, and average common stockholders' equity is $86,000?
A. 26.4%
B. The rate of return can't be determined from the information given.
C. 22.7%
D. 86.0%

5. Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current market value of $3,000. Which of the following is not part of the journal entry for this transaction?
A. Crediting paid-in capital in excess of par common for $600
B. Debiting equipment for $3,000
C. Crediting common stock for $3,000
D. Crediting common stock for $2,400

6. Casey Company has 5,000 shares of treasury cost that it purchased for $13 per share. It later resold
2,000 of those shares for $17 per share. The amount to be credited to Paid-in Capital—Treasury Stock is
A. $26,000.
B. $34,000.
C. $30,000.
D. $8,000.

7. A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments;
and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The
company's quick ratio is
A. 1.550.
B. 0.933.
C. 1.133.
D. 3.217.

8. The records of Ashley Boutique showed a net loss of $30,000; depreciation expense of $25,000; and an increase in supplies on hand of $5,000. The amount of net cash flow from operating activities using the indirect method is
A. ($10,000).
B. ($15,000).
C. $15,000.
D. $20,000.

9. Operating expenses—other than depreciation—for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be
A. $7,000.
B. $342,000.
C. $335,000.
D. $328,000.

10. Earnings that a stockholder receives from a corporation are an example of which stockholder right?
A. Liquidation
B. Dividends
C. Preemption
D. Vote

11. If you own 500 shares (2% of a corporation's stock) and the corporation issues 15,000 new shares,
how many of the new shares can you purchase under preemptive right?
A. 800
B. 500
C. 0
D. 300

12. The accuracy of the statement of cash flows can be verified by computing the change in the balance of the
A. equity account.
B. asset and liability accounts.
C. revenue accounts.
D. cash and cash equivalent accounts.

13. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5%
stock dividend. The current market price of the common stock is $7.50/share. The amount that will be
debited to retained earnings on the date of declaration is
A. $183,750.
B. $131,250.
C. $78,750.
D. $52,500.

14. What are the rate of return on stockholders' equity and the rate of return on common stockholders'
equity (rounded to the nearest one-tenth of a percent) given the following information:
Net Income $350,000
Preferred Dividends 20,000
Common Stock 48,000
Common Stockholders’ Equity 1/1/2011 4,400,000
Total Stockholders’ Equity 1/1/2011 5,300,000
Total Stockholders’ Equity 12/31/2011 5,500,000
A. Return on Stockholders' Equity: 6.5 %; Return on Common Stockholders' Equity: 7.6%
B. Return on Stockholders' Equity: 7.8 %; Return on Common Stockholders' Equity: 8.9%
C. Return on Stockholders' Equity: 5.6 %; Return on Common Stockholders' Equity: 6.7%
D. Return on Stockholders' Equity: 8.1 %; Return on Common Stockholders' Equity: 9.2%

15. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5%
stock dividend. The current market price of the common stock is $7.50/share. The amount that will be
credited to common stock on the date of declaration is
A. $52,500.
B. $183,750.
C. $131,250.
D. $78,750.

16. Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The preferred stock is noncumulative. How much will be distributed to the preferred and common stockholders on the date of payment?
A. $34,000 preferred; $6,000 common
B. $40,000 preferred; $0 common
End of exam
C. $0 preferred; $40,000 common
D. $6,000 preferred; $34,000 common

17. Tammy Company has a beginning accounts receivable balance of $65,000 and an ending accounts
receivable balance of $60,000. Net credit sales are $250,000. Tammy's accounts receivable turnover rate is
A. 2.000.
B. 4.167.
C. 4.000.
D. 3.846.

18. Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and $90,000 at the end of the year. There were no changes in the amount in accounts payable for the year. Cash payment for merchandise to be reported under the direct method is
A. $910,000.
B. $850,000.
C. $880,000.
D. $940,000.

19. To determine why net income and cash on the balance sheet don't equal, an accountant can prepare
a/an
A. statement of retained earnings.
B. income statement.
C. statement of cash flows.
D. balance sheet.

20. Net sales at Kelly's Bakery increased from $40,000 to $60,000, and its cost of goods sold increased
from $20,000 to $40,000. Vertical analysis based on net sales would show which percentages for cost of goods sold (rounded to the nearest %)?
A. 40% and 20%
B. 10% and 30%
C. 67% and 40%
D. 50% and 67%

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