accounting mcq quiz and problems with A+ answers

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You invested $5,000 in the Cog corporation and $5,000 in the Gear corporation. Both of these corporations have $100 million in total assets. The Cog corporation had a net profit of $5 million and the Gear corporation had a net profit of $10 million. You read their annual reports and both companies had established a goal of having net profit equal to 10% of total assets. Which of the following statements is true regarding these 2 firms?

Cog is effective and more efficient than Gear.

Cog is effective but less efficient than Gear.

Gear is effective and more efficient then Cog.

Gear is effective but less efficient than Cog.

Cannot tell without more information.
2 points

Question 3

Sam quit his job as an accountant with We Keep Books Accurately to open his own accounting firm. He earned $40,000 with the accounting firm We Keep Books Accurately. During the current year Sam had revenues of $190,000 and total expenses of $110,000. Sam earned an

accounting profit of $40,000.

accounting profit of $80,000 and an entrepreneurial profit of $40,000.

entrepreneurial profit of $80,000, but an accounting of $40,000.

entrepreneurial profit of $80,000.

Cannot tell from the information provided.
2 points

Question 4

Sam quit his job as an accountant with We Keep Books Accurately to open his own accounting firm. He earned $40,000 with the accounting firm We Keep Books Accurately. During the current year Sam had revenues of $150,000 and total expenses of $110,000. For Sam the opportunity cost of going into business was

$40,000.

$110,000.

$150,000.

zero because he has a profitable business.
2 points

Question 5

All of the costs that a firm must pay, even if there are no sales, are

contribution costs.

fixed costs.

variable costs.

sales cost.
2 points

Question 6

Table 5-1. Steel Shelf Company

Category Cost

Payment Period

Cost

Rent

Monthly

$ 3,000

Utilities

Monthly

1,100

Insurance

Quarterly

1,200

Property Taxes

Annually

6,000

Steel

Per Shelf

9.00

Forming

Per Shelf

0.25

Labor

Per Shelf

0.75

Price

Per Shelf

20.00

Refer to Table 5-1. The Steel Shelf company has variable costs per unit of ________ .

$10.00

$18.33

$20.00

$25.00

$30,00
2 points

Question 7

Table 5-1. Steel Shelf Company

Category Cost

Payment Period

Cost

Rent

Monthly

$ 3,000

Utilities

Monthly

1,100

Insurance

Quarterly

1,200

Property Taxes

Annually

6,000

Steel

Per Shelf

9.00

Forming

Per Shelf

0.25

Labor

Per Shelf

0.75

Price

Per Shelf

20.00

Refer to Table 5-1. The Steel Shelf company has monthly fixed costs of _____ and a contribution margin of _____.

$5,000; $10

$5,000; $20

$5,800; $10

$11,300; $10

$11,300; $20
2 points

Question 8

Table 5-1. Steel Shelf Company

Category Cost

Payment Period

Cost

Rent

Monthly

$ 3,000

Utilities

Monthly

1,100

Insurance

Quarterly

1,200

Property Taxes

Annually

6,000

Steel

Per Shelf

9.00

Forming

Per Shelf

0.25

Labor

Per Shelf

0.75

Price

Per Shelf

20.00

Refer to Table 5-1. The Steel Shelf company has a monthly break-even quantity of _____ shelves.

250

500

580

1,130

Cannot calculate with information provided.
2 points

Question 9

Table 5-1. Steel Shelf Company

Category Cost

Payment Period

Cost

Rent

Monthly

$ 3,000

Utilities

Monthly

1,100

Insurance

Quarterly

1,200

Property Taxes

Annually

6,000

Steel

Per Shelf

9.00

Forming

Per Shelf

0.25

Labor

Per Shelf

0.75

Price

Per Shelf

20.00

Refer to Table 5-1. If the Steel Shelf Company wants to earn a profit of $3,000 per month they will have to produce _____ shelves.

500

800

1,000

1,500
2 points

Question 10

Table 5-1. Steel Shelf Company

Category Cost

Payment Period

Cost

Rent

Monthly

$ 3,000

Utilities

Monthly

1,100

Insurance

Quarterly

1,200

Property Taxes

Annually

6,000

Steel

Per Shelf

9.00

Forming

Per Shelf

0.25

Labor

Per Shelf

0.75

Price

Per Shelf

20.00

Refer to Table 5-1. The Steel Shelf company has annual fixed costs of ________ .

$5,300

$56,400

$60,000

$69,600

$135,600
2 points

Question 11

Table 5-1. Steel Shelf Company

Category Cost

Payment Period

Cost

Rent

Monthly

$ 3,000

Utilities

Monthly

1,100

Insurance

Quarterly

1,200

Property Taxes

Annually

6,000

Steel

Per Shelf

9.00

Forming

Per Shelf

0.25

Labor

Per Shelf

0.75

Price

Per Shelf

20.00

Refer to Table 5-1. The Steel Shelf company has to have annual revenue of _____ in order to break even.

$10,000

$120,000

$69,600

$135,600

Cannot calculate with information provided.
2 points

Question 12

The earning power of a company can be defined as the product of 2 factors:

fixed asset turnover and cash flow per share.

net profit margin and fixed asset turnover.

net profit margin and total asset turnover.

total asset turnover and earnings per share.

If a firm has $400,000 in credit sales and $100,000 in accounts receivable, accounts receivable turnover is.

25%.
4.
5.
14.

Marketable securities

consist of government securities only.
normally pay a higher rate of interest than checking accounts.
never require an investment strategy.
never offer any risk.

Which of the following is a method used to speed up cash receipts?

lock box.
electronic funds transfer.
writing a check.
a and b above.
b and c above.

.All of the following are part of working capital except

accounts receivable.
inventory.
mortgage.
cash.
none of the above.

  1. Use the following information to answer this question: Bill’s Furniture has just completed the first year of operation for his business and has the following information: sales, $200,000; cost of goods sold, $140,000; rent, $18,000; utilities, $8,400; insurance, $2,000; depreciation on equipment, $3,500; and interest, $10,000. Your forecast indicates that your sales will increase by 20%. Your rental agreement provides for a 3 increase percent per year. Bill has just read an article indicating that utility costs in his area will increase by 10% next year. Also, Bill just received a notice from his insurance company stating that his quarterly premium will increase to $600 beginning the first quarter of next year. The depreciation expense on the equipment will not change; however, Bill’s loan amortization schedule indicates that interest expense next year will be $9,000. Pro forma sales for Bill’s second year of operation is __________.

    $40,000.
    $200,000
    $240,000
    $220,000

2 points

Question 26

  1. Use the following information to answer this question: Bill’s Furniture has just completed the first year of operation for his business and has the following information: sales, $200,000; cost of goods sold, $140,000; rent, $18,000; utilities, $8,400; insurance, $2,000; depreciation on equipment, $3,500; and interest, $10,000. Your forecast indicates that your sales will increase by 20%. Your rental agreement provides for a 3 increase percent per year. Bill has just read an article indicating that utility costs in his area will increase by 10% next year. Also, Bill just received a notice from his insurance company stating that his quarterly premium will increase to $600 beginning the first quarter of next year. The depreciation expense on the equipment will not change; however, Bill’s loan amortization schedule indicates that interest expense next year will be $9,000. The projected rent expense for Bill’s second year of operation is __________.

    $18,000.
    $18,540.
    $23,400.
    $19,800.

2 points

Question 27

  1. Use the following information to answer this question: Bill’s Furniture has just completed the first year of operation for his business and has the following information: sales, $200,000; cost of goods sold, $140,000; rent, $18,000; utilities, $8,400; insurance, $2,000; depreciation on equipment, $3,500; and interest, $10,000. Your forecast indicates that your sales will increase by 20%. Your rental agreement provides for a 3 increase percent per year. Bill has just read an article indicating that utility costs in his area will increase by 10% next year. Also, Bill just received a notice from his insurance company stating that his quarterly premium will increase to $600 beginning the first quarter of next year. The depreciation expense on the equipment will not change; however, Bill’s loan amortization schedule indicates that interest expense next year will be $9,000. Pro forma net income for Bill’s Furniture in the second year is __________.

    $18,100.
    $30.160.
    $21,720.
    $29,320.
    1. Which of the following statements about forecasting is false?

      Product life cycle influences the length of the forecast.
      The forecasting horizon should be at least as long as your strategic plan.
      The longer the time horizon the more accurate the forecast will be.
      The longer the time horizon the more inaccurate the forecast will be.
      There is an inverse relationship between forecast accuracy and time.

    2 points

    Question 18

    1. Which of the following is the most appropriate firm to use the survey of sales force?

      Ace Hardware
      Best Buy
      Burger King
      IBM
      K-Mart
    1. Which of the following is the correct sequence of events?

      pro forma balance sheet, pro forma cash budget, pro forma income statement
      pro forma balance sheet, pro forma income statement, pro forma cash budget
      pro forma income statement, pro forma cash budget, pro forma balance sheet
      none of the above.
      1. Refer to Table 6.1 to answer this question.

        Table 6-1

        Balance Sheet

        Total Sales

        Percentage

        Forecast Sales

        Current Year

        of

        Next Year

        $225,000

        Sales

        $300,000

        Assets

        Current Assets

        Cash

        $5,694

        Accounts Receivable

        19,662

        Inventory

        3,381

        Total Current Assets

        28,737

        Fixed Assets

        Furniture & Fixtures

        5,595

        Equipment

        25,456

        Total Fixed Assets

        31,051

        Total Assets

        $59,788

        Liabilities and Owner’s Equity

        Current Liabilities

        Notes Payable

        $15,456

        Accrued Taxes Payable

        3,598

        Total Current Liabilities

        19,054

        Long-Term Debt

        18,654

        Total Liabilities

        37,708

        Owner’s Equity

        22,080

        Total Liabilities & Owner’s Equity

        $59,788

        The current ratio for the current year is __________.

        1.51.
        0.76.
        1.59.
        1.54.

      2 points

      Question 29

      1. Refer to Table 6-1 to answer this question.

        Table 6-1

        Balance Sheet

        Total Sales

        Percentage

        Forecast Sales

        Current Year

        of

        Next Year

        $225,000

        Sales

        $300,000

        Assets

        Current Assets

        Cash

        $5,694

        Accounts Receivable

        19,662

        Inventory

        3,381

        Total Current Assets

        28,737

        Fixed Assets

        Furniture & Fixtures

        5,595

        Equipment

        25,456

        Total Fixed Assets

        31,051

        Total Assets

        $59,788

        Liabilities and Owner’s Equity

        Current Liabilities

        Notes Payable

        $15,456

        Accrued Taxes Payable

        3,598

        Total Current Liabilities

        19,054

        Long-Term Debt

        18,654

        Total Liabilities

        37,708

        Owner’s Equity

        22,080

        Total Liabilities & Owner’s Equity

        $59,788

        When forecasted sales for next year are $300,000, projected long-term debt using the percentage of sales method for next year is __________.

        $25,410.
        $28,281.
        $29,430.
        $24,870.

      2 points

      Question 30

      1. Refer to Table 6-1 to answer this question.

        Table 6-1

        Balance Sheet

        Total Sales

        Percentage

        Forecast Sales

        Current Year

        of

        Next Year

        $225,000

        Sales

        $300,000

        Assets

        Current Assets

        Cash

        $5,694

        Accounts Receivable

        19,662

        Inventory

        3,381

        Total Current Assets

        28,737

        Fixed Assets

        Furniture & Fixtures

        5,595

        Equipment

        25,456

        Total Fixed Assets

        31,051

        Total Assets

        $59,788

        Liabilities and Owner’s Equity

        Current Liabilities

        Notes Payable

        $15,456

        Accrued Taxes Payable

        3,598

        Total Current Liabilities

        19,054

        Long-Term Debt

        18,654

        Total Liabilities

        37,708

        Owner’s Equity

        22,080

        Total Liabilities & Owner’s Equity

        $59,788

        When forecasted sales for next year are $300,000, total assets next year are estimated at __________ when the percentage of sales method is used.

        $104,629.
        $77,724.
        $79,710.
        $79,717.

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