Acct 210 FINAL EXAM QUESTIONS
A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If
current liabilities are $14,350, then the quick ratio would be - correct answer-1.2 to 1.
A company would repurchase its own stock for all of the following reasons except - correct
answer-it wishes to make an investment in its own stock.
A decreasing long-term liability account is presented on the statement of cash flows as -
correct answer-a decrease in cash in the Financing Activities category.
Almost all current liabilities affect the Operating category of the statement of cash flows, but
one that does not affect cash provided by operating activities is - correct answer-notes
payable.
An invoice received from a supplier for $8,000 on January 1 with terms 1/15, n/30 means
that the company should pay - correct answer-either $7,920 before January 16 or $8,000
before the end of the month.
Anole Company was incorporated as a new business on January 1, 2017. The company is
authorized to issue 20,000 shares of $5 par value common stock and 10,000 shares of 6%,
$10 par value, cumulative, participating preferred stock. On January 1, 2017, the company
issued 8,000 shares of common stock for $15 per share and 2,000 shares of preferred stock
for $30 per share. Net income for the year ended December 31, 2017, was $375,000. -
correct answer-$555,000.
Arco Corporation declared a cash dividend on June 2 of $6 per common share. The
company has 2,000 shares of common stock authorized, 1,000 shares issued, and 200 in
the treasury. The entry to record the declaration of the cash dividend increases a(n) - correct
answer-liability.
Barnhill, Inc. uses straight-line depreciation for its equipment with an estimated useful life of
ten years and zero residual value. The CEO points out that the equipment will last much
longer than ten years, perhaps up to 20 years. What is the impact on earnings per share and
net income of depreciating equipment over 20 years rather than ten years? - correct
answer-Both earnings per share and net income will increase.
Birken Co. purchased a building for $500,000 in 2012. At the end of 2017, when it had a
book value of $450,000, it was appraised for $1,000,000. A potential buyer offered
$900,000. Birken rejected the offer. What amount is in Birken's records at the end of 2017 in
the Building account? - correct answer-$500,000
Bonds in the amount of $100,000 with a life of ten years were issued by Focus Company. If
the face rate is 6% and interest is paid semiannually, what would be the total amount of
interest paid over the life of the bonds? - correct answer-$60,000
, Churchill Company planned to raise $100,000 by issuing bonds. The bond certificates were
printed bearing an interest rate of 8%, which was equal to the market rate of interest at the
time. However, before the bonds could be issued, economic conditions forced the market
rate up to 9%. If the life of the bonds is six years and interest is paid annually on December
31, how much will Churchill receive from the sale of the bonds? - correct answer-Churchill
will receive less than $100,000 because the market rate of interest at 9% was more than the
face rate.
Dark Corp. began operations on March 1, 2017. The corporate charter authorized issuance
of 3,000 shares of $2 par value common stock. Dark sold all of the stock on March 1. On
May 1, Dark repurchased 2,000 of the outstanding shares. On May 14, Dark sold 1,200 of
the treasury shares. On June 1, Dark declared a 2-for-1 stock split. As a result of the split,
what occurred? - correct answer-Total stockholders' equity stayed the same.
During 2017, Soho Inc. sold equipment with a cost of $30,000 and accumulated depreciation
of $25,000 for cash. A gain of $3,000 was recognized on the sale of the equipment. This was
the only equipment sale during the year. - correct answer-$8,000
During 2017, the accounts payable balance of Andreas Corp. decreased. Which of the
following statements is true? - correct answer-This decrease is deducted from net income in
the Operating Activities section of a statement of cash flows prepared under the indirect
method.
Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of
interest was 9%. This means that the bonds were issued - correct answer-at a discount.
For a given single sum invested at 8% for four years, how will the future value be affected if
the compounding period is changed from quarterly to annually? - correct answer-The future
value will decrease.
How will the payee of the promissory note record the note on its books? - correct
answer-The promissory note will be recorded as an asset.
If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's
books will - correct answer-decrease as the bonds approach their maturity date.
If interest is compounded annually, the total amount of interest on an $18,000 note payable
for four years at 10% is - correct answer-$8,352.
If Lynx Corp. uses the aging of accounts receivable approach to estimate its bad debts, what
amount will be reported as bad debts expense for 2017? - correct answer-$12,700
Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600. If
the current ratio is 2.5 to 1, then current assets are - correct answer-$1,250.
Most long-term liabilities are related to a firm's investing activities. - correct answer-False
A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If
current liabilities are $14,350, then the quick ratio would be - correct answer-1.2 to 1.
A company would repurchase its own stock for all of the following reasons except - correct
answer-it wishes to make an investment in its own stock.
A decreasing long-term liability account is presented on the statement of cash flows as -
correct answer-a decrease in cash in the Financing Activities category.
Almost all current liabilities affect the Operating category of the statement of cash flows, but
one that does not affect cash provided by operating activities is - correct answer-notes
payable.
An invoice received from a supplier for $8,000 on January 1 with terms 1/15, n/30 means
that the company should pay - correct answer-either $7,920 before January 16 or $8,000
before the end of the month.
Anole Company was incorporated as a new business on January 1, 2017. The company is
authorized to issue 20,000 shares of $5 par value common stock and 10,000 shares of 6%,
$10 par value, cumulative, participating preferred stock. On January 1, 2017, the company
issued 8,000 shares of common stock for $15 per share and 2,000 shares of preferred stock
for $30 per share. Net income for the year ended December 31, 2017, was $375,000. -
correct answer-$555,000.
Arco Corporation declared a cash dividend on June 2 of $6 per common share. The
company has 2,000 shares of common stock authorized, 1,000 shares issued, and 200 in
the treasury. The entry to record the declaration of the cash dividend increases a(n) - correct
answer-liability.
Barnhill, Inc. uses straight-line depreciation for its equipment with an estimated useful life of
ten years and zero residual value. The CEO points out that the equipment will last much
longer than ten years, perhaps up to 20 years. What is the impact on earnings per share and
net income of depreciating equipment over 20 years rather than ten years? - correct
answer-Both earnings per share and net income will increase.
Birken Co. purchased a building for $500,000 in 2012. At the end of 2017, when it had a
book value of $450,000, it was appraised for $1,000,000. A potential buyer offered
$900,000. Birken rejected the offer. What amount is in Birken's records at the end of 2017 in
the Building account? - correct answer-$500,000
Bonds in the amount of $100,000 with a life of ten years were issued by Focus Company. If
the face rate is 6% and interest is paid semiannually, what would be the total amount of
interest paid over the life of the bonds? - correct answer-$60,000
, Churchill Company planned to raise $100,000 by issuing bonds. The bond certificates were
printed bearing an interest rate of 8%, which was equal to the market rate of interest at the
time. However, before the bonds could be issued, economic conditions forced the market
rate up to 9%. If the life of the bonds is six years and interest is paid annually on December
31, how much will Churchill receive from the sale of the bonds? - correct answer-Churchill
will receive less than $100,000 because the market rate of interest at 9% was more than the
face rate.
Dark Corp. began operations on March 1, 2017. The corporate charter authorized issuance
of 3,000 shares of $2 par value common stock. Dark sold all of the stock on March 1. On
May 1, Dark repurchased 2,000 of the outstanding shares. On May 14, Dark sold 1,200 of
the treasury shares. On June 1, Dark declared a 2-for-1 stock split. As a result of the split,
what occurred? - correct answer-Total stockholders' equity stayed the same.
During 2017, Soho Inc. sold equipment with a cost of $30,000 and accumulated depreciation
of $25,000 for cash. A gain of $3,000 was recognized on the sale of the equipment. This was
the only equipment sale during the year. - correct answer-$8,000
During 2017, the accounts payable balance of Andreas Corp. decreased. Which of the
following statements is true? - correct answer-This decrease is deducted from net income in
the Operating Activities section of a statement of cash flows prepared under the indirect
method.
Endeavor Company issued 20-year bonds with a coupon rate of 6% when the market rate of
interest was 9%. This means that the bonds were issued - correct answer-at a discount.
For a given single sum invested at 8% for four years, how will the future value be affected if
the compounding period is changed from quarterly to annually? - correct answer-The future
value will decrease.
How will the payee of the promissory note record the note on its books? - correct
answer-The promissory note will be recorded as an asset.
If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's
books will - correct answer-decrease as the bonds approach their maturity date.
If interest is compounded annually, the total amount of interest on an $18,000 note payable
for four years at 10% is - correct answer-$8,352.
If Lynx Corp. uses the aging of accounts receivable approach to estimate its bad debts, what
amount will be reported as bad debts expense for 2017? - correct answer-$12,700
Long-term assets are $800, current liabilities are $500, and long-term liabilities are $600. If
the current ratio is 2.5 to 1, then current assets are - correct answer-$1,250.
Most long-term liabilities are related to a firm's investing activities. - correct answer-False
