ACCT 504 Final Last Exam / ACCT504 Final Last Exam: DeVry University, Keller Graduate School of Management

ACCT 504 Final Last Exam Question 1.1. (TCO A) An advantage of the corporate form of business is . (Points : 5) it is simple to establish the corporate tax rate is less than the personal tax rate corporations must pay dividends the shareholders are not responsible for the corporation’s debts 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. (TCOs B and E) Which of the following statements is correct with regard to cash-basis accounting? (Points : 5) Cash-basis accounting is required by GAAP. Cash-basis accounting does not record any expenses until they are paid. Cash-basis is never allowed by the IRS. Cash-basis accounting records revenue when the product is shipped. Question 5.5. (TCO D) Which inventory method will result in the lowest income taxes when prices are decreasing? (Points : 5) The average cost method LIFO FIFO Income tax expense will be the same. Question 6.6. (TCOs A and E) Equipment was purchased for $200,000. Freight charges amounted to $10,000 and there was a cost of $15,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $20,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be . (Points : 5) $41,000 $38,000 $45,000 $40,000 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) Accounts receivable arising from sales to customers amounted to $50,000 and $45,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $150,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be . (Points : 5) $195,000 $145,000 $115,000 $155,000 Question 9.9. (TCO F) Horizontal analysis is also known as . (Points : 5) ratio analysis vertical analysis common-size analysis trend analysis Question 10.10. (TCO F) When performing a common-size income statement, the 100% figure is . (Points : 5) net sales total liabilities plus stockholders’ equity net income total assets Question 11.11. (TCO F) In vertical analysis, the base amount for cost of goods sold expense is generally . (Points : 5) net income operating profit gross profit net sales Question 12.12. (TCO F) A common ratio to measure profitability is the . (Points : 5) quick ratio inventory turnover days’ sales in receivables asset turnover Question 13.13. (TCO F) The rate of return on common stockholder's equity ratio is NOT affected by . (Points : 5) dividends paid to preferred stockholders net income dividends paid to common stockholders average common stockholders’ equity Question 14.14. (TCO G) Which factors below impact the present value of a bond? (Points : 5) The dollar amounts to be received The market interest rate The time to maturity of the bond All of the above