acc-Corporations mcq

1. The accuracy of the statement of cash flows can be
verified by computing the change in the balance of

the

A. asset and liability accounts.

B. revenue accounts.

C. cash and cash equivalent accounts.

D. equity account.

2. For vertical analysis purposes, the base item on the
income statement is

A. net income.

B. net sales.

C. gross profit.

D. total expenses.

3. Cost of goods sold for the year was $850,000. Inventory
was $60,000 at the beginning of the year and $90,000 at the end of the year.
There were no changes in the amount in accounts payable for the year.

Cash payment for merchandise to be reported under the direct
method is

A. $880,000.

B. $940,000.

C. $850,000.

D. $910,000.

4. Patty’s Baker has cost of goods sold for the years 2011,
2010, and 2009, respectively, of $28,600, $26,900, and $25,600. If 2009 is the
base year, the trend percentage for 2011 is

A. 111.72%.

B. 5.08%.

C. 11.72%.

D. 105.08%.

5. The Amanda Corporation Stockholders’ Equity section
includes the following information:

Preferred Stock $12,000

Paid-in Capital in Excess of Par— Preferred 2,700

Common Stock 15,000

Paid-in Capital in Excess of Par— Common 4,100

Retained Earnings 8,200

A. $20,200

B. $14,700

C. $12,000

D. $16,100

6. Rick Company’s net sales decreased from $90,000 in year 1
to $45,000 in year 2, and its cost of goods sold decreased from $30,000 in year
1 to $20,000 in year 2. Vertical analysis based on sales would show which
decreases in cost of goods sold for the two periods (rounded to the nearest
tenth of a percent)?

A. 33.3% and 44.4%

B. 225% and 300%

C. 300% and 225%

D. 44.4% and 33.3%

7. Birch issued 200 shares of $12 par common stock in
exchange for a piece of equipment with a current

market value of $3,000. Which of the following is not part
of the journal entry for this transaction?

A. Crediting Paid-in Capital in Excess of Par—Common for
$600

B. Debiting Equipment for $3,000

C. Crediting Common Stock for $3,000

D. Crediting Common Stock for $2,400

8. The records of Ashley Boutique showed a net loss of
$30,000; depreciation expense of $25,000; and an increase in supplies on hand
of $5,000. The amount of net cash flow from operating activities using
theindirect method is

A. $15,000.

B. $20,000.

C. ($15,000).

D. ($10,000).

9. Rick Company has declared a $40,000 cash dividend to
shareholders. The company has 5,000 shares of $20 par, 6% preferred stock, and
10,000 shares of $15 par common stock. The preferred stock is noncumulative.
How much will be distributed to the preferred and common stockholders on the
date of payment?

A. $0 preferred; $40,000 common

B. $34,000 preferred; $6,000 common

C. $6,000 preferred; $34,000 common

D. $40,000 preferred; $0 common

10. Operating expenses—other than depreciation—for the year
were $335,000. Prepaid expenses decreased by $7,000. Cash payments for
operating expenses to be reported on the cash flow statementusing the direct
method would be

A. $342,000.

B. $328,000.

C. $7,000.

D. $335,000.

11. Tammy Corporation has 350,000 shares of $3 par common
stock outstanding. It has declared a 5% stock dividend. The current market
price of the common stock is $7.50/share. The amount that will be credited to
common stock on the date of declaration is

A. $131,250.

B. $183,750.

C. $52,500.

D. $78,750.

12. If you own 500 shares (2% of a corporation’s stock) and
the corporation issues 15,000 new shares, how many of the new shares can you
purchase under preemptive right?

A. 300

B. 0

C. 800

D. 500

13. Casey Company has an accounts receivable turnover of 36
days, an inventory turnover of 77 days, and an accounts payable turnover of 40
days. Casey’s cash conversion cycle is _______ day(s).

A. 1

B. 73

C. 81

D. 153

14. The Isaiah Corporation Stockholders’ Equity section
includes the following information:

Total par value of the preferred and common stock is

Preferred Stock $22,000

Paid-in Capital in Excess of Par—Preferred 2,980

Common Stock 48,000

Paid-in Capital in Excess of Par—Common 3,400

Retained Earnings 7,350

Total par value of the preferred and common stock is (Verify this)

A. $77,350.

B. $70,000.

C. $76,380.

D. $83,730.

15. Casey Company reported net income of $35,000;
depreciation expenses of $20,000; an increase in accounts payable of $2,000;
and an increase in current notes receivable of $3,000. Net cash flows from
operating activities under the indirect method is operating activities under
the indirect method is

A. $54,000.

B. $56,000.

C. $50,000.

D. $55,000.

16. Brandon Company had extraordinary losses of $150,000. If
its corporate tax rate is 30%, at which amount will the losses be shown on the
income statement?

A. $45,000

B. $105,000

C. Not enough information is given to answer the question.

D. $150,000

17. What is Jane’s rate of return on total assets if average
total assets are $100,000; net income is $2,000; interest expense if $1,600;
and income tax is $2,000?

A. 5.6%

B. 3.6%

C. 5.2%

D. 4.6%

18. If Rick’s net sales increased from $40,000 to $80,000
and its operating expenses increased from

$30,000 to $50,000, then vertical analysis based on net
sales would show which of the following for

operating expenses for the two periods (to the nearest tenth
of a percent)?

A. 62.5% and 75.0%

B. 75.0% and 62.5%

C. 133.3% and 160.0%

D. 160.0% and 133.3%

19. If current assets were $100,000 in 2009 and $88,000 in
2010, what was the amount of increase or decrease in percentage terms from 2009
to 2010? (Round to the nearest percent.)

A. Decrease of 14%

B. Decrease of 12%

C. Increase of 12%

D. Increase of 14%

20. To determine why net income and cash on the balance
sheet don’t equal, an accountant can prepare

a/an

A. income statement.

B. statement of cash flows.

C. statement of retained earnings.

D. balance sheet.