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Devry ACCT504 week 8 final exam set 4 23 mcq

1. (TCO A) For 2007 Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2007 earnings per share? (Points : 5)

$4.66

$0.20

$66.67

$5.00

2. (TCO C) Free cash flow provides an indication of a company’s ability to (Points : 5)

generate cash to invest in new capital expenditures.

generate net income.

generate cash to pay dividends.

both a and c.

3. (TCO C) When a corporation distributes a dividend the (Points : 5)

most common form of distribution is a cash dividend.

Dividends account will be increased with a credit.

Retained Earnings account will be directly increased with a debit.

Dividends account will be decreased with a debit.

4. (TCO A, B) Cerner Company showed the following balances at the end of its first year:

Cash $5,000

Prepaid insurance 500

Accounts receivable 2,500

Accounts payable 2,000

Notes payable 3,000

Common stock 1,000

Dividends 500

Revenues 15,000

Expenses 12,500

What did Cerner Company show as total credits on its trial balance?

(Points : 5)

$21,500

$21,000

$20,500

$22,000

5. (TCO A, B) The Village Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $3,000 on hand. The adjusting entry that should be made by the company on June 30 is (Points : 5)

Debit Laundry Supplies Expense, $3,000; Credit Laundry Supplies, $3,000.

Debit Laundry Supplies Expense, $3,500; Credit Laundry Supplies, $3,000.

Debit Laundry Supplies, $3,500; Credit Laundry Supplies Expense, $3,500.

Debit Laundry Supplies Expense, $3,500; Credit Laundry Supplies, $3,500.

6. (TCO E) A credit sale of $800 is made on April 25, terms 2/10, net/30, on which a return of $50 is granted on April 28. What amount is received as payment in full on May 4? (Points : 5)

$735

$784

$800

$750

7. (TCO B) During the year, Darla’s Pet Shop’s merchandise inventory decreased by $20,000. If the company’s cost of goods sold for the year was $300,000, purchases must have been (Points : 5)

$320,000.

$280,000.

$260,000.

Unable to determine.

8. (TCO D) A consequence of separation of duties is that (Points : 5)

theft by employees becomes impossible.

operations become extremely inefficient because of constant training of employees.

more employees will need to be bonded.

theft is still possible when several employees are involved.

9. (TCO D) Which of the following is not a suggested procedure to establish internal control over cash disbursements? (Points : 5)

Anyone can sign the checks.

Different individuals approve and make the payments.

Blank checks are stored with limited access.

The bank statement is reconciled monthly.

10. (TCO A, B, D) An aging of a company’s accounts receivable indicates that $3,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a (Points : 5)

debit to Bad Debts Expense for $3,000.

debit to Allowance for Doubtful Accounts for $1,800.

debit to Bad Debts Expense for $1,800.

credit to Allowance for Doubtful Accounts for $3,000.

11. (TCO A, B, D) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $25,000 at the end of the year. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment; what is the amount of bad debt expense for that period? (Points : 5)

$25,000

$8,000

$33,000

$17,000

12. (TCO D) A cash register tape shows cash sales of $3,000 and sales taxes of $150. The journal entry to record this information is (Points : 5)

Debit Cash 3,000

Credit Sales 3,000

Debit Cash 3,150

Credit Sales Tax Revenue 150

Credit Sales 3,000

Debit Cash 3,000

Debit Sales Tax Expense 150

Credit Sales 3,150

Debit Cash 3,150

Credit Sales 3,000

Credit Sales Taxes Payable 150

13. (TCO D) Joyce Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to record the issuance will show a (Points : 5)

debit to Cash of $1,020,000.

debit to Discount on Bonds Payable for $20,000.

credit to Bonds Payable for $1,020,000.

credit to Cash for $1,000,000.

14. (TCO A) New Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to: (Points : 5)

Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000.

Common Stock $14,000.

Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000.

Common Stock $10,000 and Retained Earnings $4,000.

15. (TCO A, C) Outstanding stock of the Bell Corporation included 20,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par non-cumulative preferred stock. In 2006, Bell declared and paid dividends of $4,000. In 2007, Bell declared and paid dividends of $12,000. How much of the 2007 dividend was distributed to preferred shareholders? (Points : 5)

$8,000

$14,000

$6,000

None of the above

16. (TCO C) 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 (Points : 5)

$240,000.

$250,000.

$310,000.

$230,000.

17. (TCO F) One variation of the horizontal analysis is known as (Points : 5)

nonlinear analysis.

vertical analysis.

trend analysis.

common size analysis.

18. (TCO F) Ratios are most useful in identifying (Points : 5)

trends.

differences.

causes.

relationships among different numbers.

19. (TCO F) Short-term creditors are usually most interested in assessing (Points : 5)

solvency.

liquidity.

marketability.

profitability.

20. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5)

it has limited life

its owner’s personal resources are at stake

its ownership is easily transferable via the sale of shares of stock

it is simple to establish

21. (TCO A) The Dividends account _____. (Points : 5)

is increased with a debit

is decreased with a credit

is not an expense account

All of the above

22. (TCOs A, B) Denton Company showed the following balances at the end of its first year:

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

23. What did Denton Company show as total credits on its trial balance? (Points : 5)

$30,100

$29,400

$28,700

$30,800

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