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Strayer Week 5 Midterm Exam Part 1 Latest 2016 Jan.
• Question
1
2 out of 2 points
Consistent
use of the same accounting principles and methods is necessary for meaningful
analysis of trends within a company.
• Question
2
2 out of 2 points
An
advantage of using the periodic inventory system is that it requires less
record keeping than the perpetual inventory system.
• Question
3
2 out of 2 points
Use the
following data to calculate the current ratio.
Carne Auto Supplies
Balance Sheet
December 31, 2014
Cash $ 35,000 Accounts payable $ 65,000
Accounts receivable 50,000 Salaries and wages payable 10,000
Inventory
70,000 Mortgage
payable
90,000
Prepaid insurance 40,000 Total liabilities $165,000
Stock investments 80,000
Land
95,000
Buildings
$100,000
Common stock
$120,000
Less: Accumulated
Retained earnings
250,000
depreciation (30,000) 85,000 Total stockholders’ equity $370,000
Trademarks 70,000 Total liabilities and
Total assets $535,000 stockholders’ equity $535
• Question
4
2 out of 2 points
The
partnership form of business organization
• Question
5
2 out of 2 points
Solvency
ratios measure the short-term ability of the company to pay its maturing
obligations.
• Question
6
2 out of 2 points
The
multiple-step income statement is considered more useful than the single-step
income statement because it highlights the components of net income.
• Question
7
2 out of 2 points
Financing
activities include the purchase or sale of long-lived assets or the purchase or
sale of investment securities.
• Question
8
2 out of 2 points
A
concentration of credit risk is a threat of nonpayment from a single customer
or class of customers that could adversely affect the financial health of the
company.
• Question
9
2 out of 2 points
Which
of the following would not be classified as a long-term liability?
• Question
10
2 out of 2 points
Lankston
Company began the year by issuing $90,000 of common stock for cash. The company
recorded revenues of $825,000, expenses of $720,000, and paid dividends of
$45,000. What was Lankston’s net income for the year?
• Question
11
2 out of 2 points
Which
of the following is not a common way that managers use the balance sheet?
• Question
12
2 out of 2 points
The
revenue recognition principle dictates that revenue be recognized in the
accounting period in which the performance obligation is satisfied.
• Question
13
2 out of 2 points
Marvin Services
Corporation had the following accounts and balances:
Accounts payable $18,000 Equipment $21,000
Accounts receivable 3,000 Land 21,000
Buildings ? Unearned service revenue 6,000
Cash 9,000 Total stockholders’ equity ?
If the balance of the Buildings account was $45,000 and the
equipment was sold for $21,000, what would be the total of stockholders’
equity?
• Question
14
2 out of 2 points
Expense
recognition is tied to revenue recognition.
• Question
15
2 out of 2 points
To
obtain maximum benefit from a bank reconciliation, the reconciliation should be
prepared by the employee authorized to sign checks.
• Question
16
2 out of 2 points
Which
of the following is the least likely consideration that management uses when
deciding whether to pay a dividend?
• Question
17
2 out of 2 points
An
aging of accounts receivable schedule is based on the premise that the longer
the period an account remains unpaid, the greater the probability that it will
eventually be collected.
• Question
18
2 out of 2 points
Source
documents can provide evidence that a transaction has occurred.
• Question
19
2 out of 2 points
The
economic resources that are owned by a business are called stockholders’
equity.
• Question
20
2 out of 2 points
Management
may choose any inventory costing method it desires as long as the cost flow
assumption chosen is consistent with the physical movement of goods in the
company.
• Question
21
2 out of 2 points
Requiring
employees to take vacations is a weakness in the system of internal controls
because it does not promote operational efficiency.
• Question
22
2 out of 2 points
Goods
that have been purchased FOB destination but are in transit, should be excluded
from a physical count of goods by the buyer.
• Question
23
2 out of 2 points
Owners
of business firms are the only people who need accounting information.
• Question
24
2 out of 2 points
The
best definition of assets is the
• Question
25
2 out of 2 points
Bathlinks
Corporation has a debt to assets ratio of 73%. This tells the user of
Bathlinks’s financial statements that
Part 2
• Question
1
2 out of 2 points
Which
statement is incorrect?
• Question
2
2 out of 2 points
A trial
balance proves
• Question
3
2 out of 2 points
All of
the following are characteristics of every accounting information system except
it is a system
• Question
4
2 out of 2 points
What is
an advantage of using the multiple-step income statement?
• Question
5
2 out of 2 points
Which
of these would cause the inventory turnover ratio to increase the most?
• Question
6
2 out of 2 points
Independent
internal verification of the physical inventory process occurs when
• Question
7
2 out of 2 points
Olympus
Climbers Company has the following inventory data:
July
1 Beginning inventory 20 units at $19 $
380
7 Purchases 70 units at $20 1,400
22 Purchases 10 units at $22 220
$2,000
A physical count of merchandise inventory on July 30 reveals
that there are 32 units on hand. Using the FIFO inventory method, the amount
allocated to cost of goods sold for July is
• Question
8
2 out of 2 points
If a
company is given credit terms of 2/10, n/30, it should
• Question
9
2 out of 2 points
Two
companies report the same cost of goods available for sale but each employs a
different inventory costing method. If the price of goods has increased during
the period, then the company using
• Question
10
2 out of 2 points
At
Emerson Company, one bookkeeper prepares the cash deposits while the other
bookkeeper enters the collections in the journal and ledger. Which of the
following is the best explanation of this type of internal control principle
over cash receipts?
• Question
11
2 out of 2 points
Bad
Debt Expense is considered
• Question
12
2 out of 2 points
A
company usually determines the amount of supplies used during a period by:
• Question
13
2 out of 2 points
A
revenue generally
• Question
14
2 out of 2 points
A
merchandiser will earn an operating income of exactly $0 when
• Question
15
2 out of 2 points
Management
usually wants ________ financial statements and the IRS requires all businesses
to file _________ tax returns.
• Question
16
2 out of 2 points
Regions
Inc. pays its rent of $48,000 annually on January 1 and makes monthly adjusting
entries. If the February 28 monthly adjusting entry for prepaid rent is
omitted, which of the following are true?
• Question
17
2 out of 2 points
Receivables
are
Selected
Answer:
claims that are expected to be collected in cash.
• Question
18
2 out of 2 points
Fehr
Company sells merchandise on account for $5,000 to Kelly Company with credit
terms of 2/10, n/30. Kelly Company returns $1,000 of merchandise that was
damaged, along with a check to settle the account within the discount period.
What is the amount of the check?
• Question
19
2 out of 2 points
Dobler
Company gathered the following reconciling information in preparing its June
bank reconciliation:
Cash balance per books, 6/30 $8,400
Deposits in transit
600
Notes receivable and interest collected by bank 1,480
Bank charge for check printing 50
Outstanding checks
3,000
NSF check
280
The adjusted cash balance per books on June 30 is
• Question
20
2 out of 2 points
Smithson
Corporation’s unadjusted trial balance includes the following balances (assume
normal balances):
• Accounts
Receivable
$3,357,000
• Allowances
for Doubtful Accounts
$ 63,900
Bad debts are estimated to be 6% of outstanding receivables.
What amount of bad debt expense will the company record?
• Question
21
2 out of 2 points
Which
of the following is least likely to help a company minimize losses as credit
standards are relaxed?
• Question
22
2 out of 2 points
Which
one of the following is not an objective of a system of internal controls?
• Question
23
2 out of 2 points
If
Morris Corporation has a negative $131 million free cash flow, which of the
following statements is most likely true?
• Question
24
2 out of 2 points
All of
the following are true regarding the management and monitoring of cash except
• Question
25
2 out of 2 points
The
primary difference between accrued revenues and unearned revenues is that
accrued revenues have:
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