ACCT 504 Final Exam / ACCT504 Final Exam: DeVry University, Keller Graduate School of Management | ACCT 504 Final Exam 100% Answers

ACCT 504 Final Exam (TCO A) A corporation has which of the following advantages? (Points : 5) Reduced taxes Simple to set up Limited liability for stockholders Owner maintains control Question 2.2. (TCO A) Dividends flow through which one of the following statements? (Points : 5) The Balance Sheet The Statement of Retained Earnings The Income Statement None of the above Question 3.3. (TCOs A and B) Below is a partial list of account balances for LBJ Company. Cash $12,000 Prepaid rent 1,300 Accounts receivable 7,000 Accounts payable 5,000 Notes payable 9,000 Common stock 22,000 Dividends 2,000 Revenues 45,000 Expenses 35,000 What did LBJ Company show as total debits? (Points : 5) $57,300 $81,000 $55,300 $56,000 Question 4.4. (TCO B and E) Under cash­basis accounting, which of the following transactions would not be recorded? (Points : 5) Cash sales to customers Payments to vendors Sales on account Payroll payments to employees Question 5.5. (TCO D) If ending inventory of the current year is understated (Points : 5) Cost of goods sold for the current year will be understated Gross profit for the current year will be unaffected Gross profit for the current year will be understated Net income for the current year will be overstated Question 6.6. (TCO A and E) Equipment was purchased for $27,000. Freight charges amounted to $1,000 and there was a cost of $5,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $5,000 salvage value at the end of its 7­year useful life. Depreciation expense each year using the straight­line method will be . (Points : 5) $4,714 $4,000 $3,857 $3,285 Question 7.7. (TCOs D and G) When the market rate of interest exceeds the stated rate of interest on the bond, the bond will require . (Points : 5) a debit to Discount on Bonds Payable a credit to Premium on Bonds Payable a debit to Loss on Bonds Payable a credit to Gain on Bonds Payable Question 8.8. (TCO C) Which inventory accounting system does not require a physical count of the inventory at the year end? (Points : 5) Periodic inventory system Perpetual inventory system Specific Identification None of the above Question 9.9. (TCO F) Horizontal analysis is also known as . (Points : 5) ratio analysis vertical analysis common­size analysis trend analysis Question 10.10. (TCO F) When performing a common­size balance sheet, the 100% figure is . (Points : 5) net sales total liabilities total assets total equity Question 11.11. (TCO F) Ratios are most useful in expressing . (Points : 5) cause­and­effect relationships the relationships between numbers the delta between numbers the root cause of the problem Question 12.12. (TCO F) Creditors are usually most concerned with analyzing . (Points : 5) the company stock price turnover liquidity profitability Question 13.13. (TCO F) Shareholders are usually most interested in evaluating . (Points : 5) profitability leverage turnover the ability to pay debts as they come due Question 14.14. (TCO G) To calculate the market value of a bond, we need to . (Points : 5) multiply the stated rate times the bond’s face value calculate the present value of the principal only calculate the present value of both the principal and the interest calculate the present value of the interest only