# charter oak acc101 final exam

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Use the following to answer questions 1-2:

Snappy, Inc. uses a perpetual inventory system. The
company’s beginning inventory of a particular product and its purchases during
the month of January were as follows:

Quantity Unit Cost Total
Cost

Beginning inventory (Jan. 1) 15 \$
10 \$ 150

Purchase (Jan. 11) 10
12 120

Purchase (Jan. 20) 18
15 270

Total 43 \$ 540

On January 14, Snappy, Inc. sold 22 units of this
product. The other 21 units remained in
inventory at January 31.

1. Refer to the above data. Assuming that Snappy uses the FIFO flow
assumption, the cost of goods sold to be recorded at January 14 is:

A) \$306.

B) \$234.

C) \$318.

D) Some other amount.

â€¢ Question
2

0 out of 6.286 points

questions 1-2:

Snappy, Inc. uses a perpetual inventory system. The
company’s beginning inventory of a particular product and its purchases during
the month of January were as follows:

Quantity Unit Cost Total
Cost

Beginning inventory (Jan. 1) 15 \$
10 \$ 150

Purchase (Jan. 11) 10
12 120

Purchase (Jan. 20) 18
15 270

Total 43 \$ 540

On January 14, Snappy, Inc. sold 22 units of this
product. The other 21 units remained in
inventory at January 31.

2. Refer to the above data. Assuming that Snappy uses the LIFO flow
assumption, the cost of goods sold to be recorded at January 14 is:

A) \$222.

B) \$234.

C) \$318.

D) Some other amount.

â€¢ Question
3

6.286 out of 6.286 points

3.
On Saturday, June 30, P

K Pool Supplies sold merchandise to John Krock on
account. The sales price was \$5,300, and the cost of goods sold was \$4,200. The
sales revenue was recorded immediately, but the entry recording the cost of
goods sold was dated Monday, July 2. As a result, net income for June was:

A) Overstated by \$5,300.

B) Overstated by \$4,200.

C) Overstated by \$1,100.

D) Not affected, but the net income for July is
understated.

â€¢ Question
4

6.286 out of 6.286 points

4.
In a period of rising prices, a company is most likely to use the FIFO
method of pricing inventory if:

A) Each item in the inventory is unique.

B) Management wants the same unit cost assigned
to items sold and items remaining in inventory.

C) Management’s primary objective is to
minimize income taxes.

D) Management wants the company’s income
statement to indicate the highest possible amounts of gross profit and net
income.

â€¢ Question
5

6.286 out of 6.286 points

5.
Land and a warehouse were acquired for \$980,000. What amounts should be
recorded in the accounting records for land and for the warehouse if an
appraisal showed the estimated values to be \$450,000 for the land and \$750,000
for the warehouse?

A) \$450,000 for land; \$530,000 for warehouse.

B) \$367,500 for land; \$612,500 for warehouse.

C) \$450,000 for land; \$750,000 for warehouse.

D) \$230,000 for land; \$750,000 for warehouse.

â€¢ Question
6

6.286 out of 6.286 points

6.
Carlson Imports sold a depreciable plant asset for cash of \$35,000. The
accumulated depreciation amounted to \$70,000, and a loss of \$5,000 was
recognized on the sale. Under these circumstances, the original cost of the
asset must have been:

A) \$65,000.

B) \$75,000.

C) \$100,000.

D) \$110,000.

â€¢ Question
7

6.286 out of 6.286 points

7.
An asset which costs \$7,200 and has accumulated depreciation of \$1,800
is sold for \$4,500. What amount will be
recognized when the asset is sold?

A) A gain of \$900

B) A loss of \$900

C) A loss of \$2,700

D) A gain of \$2,700

â€¢ Question
8

6.286 out of 6.286 points

8.
Which of the following would not be amortized?

A) Oil well.

C) Franchise fee.

D) Patent.

â€¢ Question
9

6.286 out of 6.286 points

9.
A capital lease is recorded in the accounting records of the lessee by
an entry:

A) Debiting Rent Expense and crediting Cash each
time a lease payment is made.

B)
Debiting Cash and crediting Rental Revenue each time a lease payment is

C) Debiting an asset account and crediting a
liability account for the present value of the future lease payments.

D) Debiting an asset account and crediting Sales
for the present value of the future lease payments.

â€¢ Question
10

6.286 out of 6.286 points

10.
Which of the following is an example of a contingent liability?

A) A lawsuit pending against a restaurant chain
for improper storage of perishable food items.

B) The liability for future warranty repairs on
computers sold during the current period.

C) A corporation’s long-term employment
contract with its chief executive officer.

D) A liability for notes payable with interest
included in the face amount.

â€¢ Question
11

6.286 out of 6.286 points

questions 11-14:

On November 1, Year 1, Dale Co. borrowed \$50,000 from Town
Bank and signed a 12%, six-month note payable, all due at maturity. The
interest on this loan is stated separately.

11. Refer to the above data. How much must Dale
pay Town Bank on May 1, Year 2, when the note matures?

A) \$50,000.

B) \$56,000.

C) \$53,000.

D) \$52,000.

â€¢ Question
12

6.286 out of 6.286 points

questions 11-14:

On November 1, Year 1, Dale Co. borrowed \$50,000 from Town
Bank and signed a 12%, six-month note payable, all due at maturity. The
interest on this loan is stated separately.

12. Refer to the above data. How much interest expense will Dale recognize
on this note in Year 2?

A) \$6,000.

B) \$3,000.

C) \$1,500.

D) \$2,000.

â€¢ Question
13

6.286 out of 6.286 points

13.
Refer to the above data. At December 31, Year 1, Dale Co.’s overall
liability for this loan amounts to:

A) \$50,000.

B) \$51,000.

C) \$52,000.

D) \$53,000.

â€¢ Question
14

6.286 out of 6.286 points

14.
Tivoli Corporation issued 300,000 shares of \$4 par value common stock at
the time of its incorporation. The stock was issued for cash at a price of \$15
per share. During the first year of operations, the company sustained a net
loss of \$100,000. The year-end balance sheet would show the balance of the
Common Stock account to be:

A) \$1,200,000.

B) \$1,100,000.

C) \$4,500,000.

D) \$4,400,000.

â€¢ Question
15

6.286 out of 6.286 points

15.
If the preferred stock of a corporation is cumulative:

A) Dividends on preferred stock are guaranteed.

B) Dividends cannot be declared in an amount
less than that stated on the stock certificate.

C) Preferred stockholders participate in
dividends paid in excess of a stated amount on the common shares.

D) Dividends in arrears must be paid on
preferred stock before any dividend can be paid on common stock.

â€¢ Question
16

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16.
Treasury stock should most often be recorded:

A) At cost.

B) Par value.

C) Fair market value at year end.

D) Face value.

â€¢ Question
17

6.29 out of 6.29 points

17.
From the viewpoint of stockholders or potential investors, which of the
following cash flow measurements would be of least importance?

A) The dollar amount of net cash flow from
operating activities for the current year.

B)
The trend in net cash flow from operating activities from year to year.

C) The corporations’s free cash flow for the
current year.

D) The dollar amount of overall increase or
decrease in cash for the current year.

â€¢ Question
18

6.29 out of 6.29 points

18.
When net cash flow from operating activities is presented by the direct
method, the statement of cash flows is accompaned by a supplementary schedule
reconciling:

A) Net cash flow from operating activities with
net sales.

B) Net income with the net increase or decrease
in cash and cash equivalents.

C) Net Income with net cash flow from operating
activities.

D) Net cash flow from operating activities shown
in the statement with that which would result from use of the indirect method.

â€¢ Question
19

6.286 out of 6.286 points

19.
During the year 2007, Moonglow Corporation suffered a \$600,000 loss when
its factory was destroyed in a flood.
Assuming the corporate income tax rate is 34%, what amount will Moonglow
report as an extraordinary loss on its income statement for 2007? Assume floods are not common in this area.

A) \$600,000

B) \$396,000

C) \$204,000.

D) Nothing, since this does not qualify as an
extraordinary item.

â€¢ Question
20

6.286 out of 6.286 points

20.
Which of the following would be classified as an extraordinary item?

A) A
large gift given to the company.

B) A loss from obsolete inventory.

C) A loss from a natural disaster that affects
the company at infrequent intervals.

D) A loss from an enacted law that made
inventory unsalable.

D

D

â€¢ Question
21

6.286 out of 6.286 points

21.
On January 1, 2006, Lane Corporation had 50,000 shares of \$5 par value
common stock outstanding. On March 31,
2006, Lane issued an additional 8,000 shares in exchange for a building. What number of shares will be used in the
computation of basic EPS for the year 2006?

A) 50,000.

B) 58,000.

C) 56,000.

D)
52,000.

â€¢ Question
22

6.286 out of 6.286 points

22.
Foster Company reports net income of \$290,000 for 2006 and declared a
cash dividend of \$1 per share on each of its 100,000 shares of common stock
outstanding. Earnings per share for 2006 is:

A) \$2.90 per share.

B) \$1.00 per share.

C) \$0.90 per share.

D) \$1.90 per share.

â€¢ Question
23

6.286 out of 6.286 points

23.
Windsor Corporation’s 2006 net income is smaller than net cash flow from
operating activities. Which of the
following would not be an explanation of why net income is smaller than net
cash flow from operating activities?

A) Windsor paid dividends to shareholders during
2006.

B) Windsor’s accounts payable increased during
2006.

C) Windsor recognized depreciation expense in
2006.

D) Windsor sold equipment at a loss in 2006.

â€¢ Question
24

6.286 out of 6.286 points

24.
Early in 2006, Platt Corporation purchased marketable securities at a
cost of \$70,000. In September, dividends
of \$4,700 were received; Platt sold the securities in December at a gain of
\$3,500. How would these transactions be
reported on Platt’s statement of cash flows for 2006?

A) \$3,500 net cash provided by investing
activities; \$4,700 included in cash provided by operating activities.

B) \$8,200 net cash provided by investing
activities.

C) \$78,200 cash provided by investing
activities; \$70,000 cash used in financing activities.

D) \$65,300 net cash used in investing
activities; \$73,500 cash provided by investing activities.

â€¢ Question
25

6.286 out of 6.286 points

25.
The accountant for Earth Institute, Inc., determined the cash flow for
several transactions to be as follows:

Payment to pay off notes
payable…………………………………… \$175,000

Proceeds from issuance of bonds
payable………………………… 615,000

Payment to purchase
equipment…………………………………….. 255,000

Payment of
wages………………………………………………………. 95,000

Payment of
dividends…………………………………………………… 135,000

On the
basis of the above transactions alone, determine the net cash flow from
financing activities.

A) \$255,000 net cash used for financing
activities.

B) \$440,000 net cash provided by financing
activities.

C) Zero: cash inflows equal cash outflows from
financing activities.

D) \$305,000 net cash provided by financing
activities.

â€¢ Question
26

6.286 out of 6.286 points

26.
All of the following are considered cash equivalents except

A) Marketable securities

B) Money market funds

C) Commercial paper

D) Treasury bills

â€¢ Question
27

6.286 out of 6.286 points

27.
A stock dividend is reported on the

A) Financing section of the statement of cash
flows

B) Balance sheet

C) Income statement

D) Operating section of the statement of cash
flows

â€¢ Question
28

6.286 out of 6.286 points

28.
A statement of cash flows is not intended to assist investors in
evaluating:

A) Reasons for differences between the amount of
net income and net cash flow from operations.

B) The company’s ability to meet its
obligations and to pay dividends.

C) Noncash aspects of investing and financing
activities.

D) The profitability of business operations.

â€¢ Question
29

6.286 out of 6.286 points

questions 29-31:

Shown below are selected data from the balance sheet of
HiTech, a small electronics store (dollar amounts are in thousands):

Cash………………………………………………………………………… \$25

Accounts
receivable……………………………………………………. 45

Inventory………………………………………………………………….. 80

Total
assets……………………………………………………………….. 400

Current
liabilities…………………………………………………………. 100

Non current
liabilities…………………………………………………… 240

29. Refer to the above data. The quick ratio is:

A) 1.5 to 1.

B) .7 to 1.

C) .45 to 1.

D) Some other amount.

â€¢ Question
30

6.286 out of 6.286 points

questions 29-31:

Shown below are selected data from the balance sheet of
HiTech, a small electronics store (dollar amounts are in thousands):

Cash………………………………………………………………………… \$25

Accounts
receivable……………………………………………………. 45

Inventory………………………………………………………………….. 80

Total
assets……………………………………………………………….. 400

Current
liabilities…………………………………………………………. 100

Non current
liabilities…………………………………………………… 240

30. Refer to the above data. The current ratio is:

A) 5.0 to 1.

B) 1.5 to 1.

C) .7 to 1.

D) Some other amount.

â€¢ Question
31

6.286 out of 6.286 points

questions 29-31:

Shown below are selected data from the balance sheet of
HiTech, a small electronics store (dollar amounts are in thousands):

Cash………………………………………………………………………… \$25

Accounts receivable……………………………………………………. 45

Inventory………………………………………………………………….. 80

Total
assets……………………………………………………………….. 400

Current liabilities…………………………………………………………. 100

Non current
liabilities…………………………………………………… 240

31. Refer to the above data. Hi-Tech’s debt ratio is:

A) 85%.

B) 25%.

C) 60%.

D) Some other amount.

â€¢ Question
32

6.286 out of 6.286 points

questions 32-35:

Shown below are selected data from the financial statements
of A-l Computers. (Dollar amounts are in
millions, except for the per-share data.)

Income statement data:

Net
sales……………………………………………………………. \$2,500

Cost of goods
sold……………………………………………….. 1,300

Operating
expenses……………………………………………… 400

Net
income………………………………………………………… 75

Balance sheet data:

Average total
equity………………………………………………. 300

Average total
assets……………………………………………… 4,000

Per share data (these amounts stated in actual dollars, not
millions):

A-1 reported earnings per share for the year of \$4 and paid
cash dividends of \$1.50 per share. At
year-end, the Wall Street Journal listed A-1’s capital stock as trading at \$48
per share.

32. Refer to the above data. A-1’s price/earnings ratio at year-end was:

A) .8.

B) 12.

C) 24.

D) Some other amount.

â€¢ Question
33

6.286 out of 6.286 points

questions 32-35:

Shown below are selected data from the financial statements
of A-l Computers. (Dollar amounts are in
millions, except for the per-share data.)

Income statement data:

Net
sales……………………………………………………………. \$2,500

Cost of goods
sold……………………………………………….. 1,300

Operating
expenses……………………………………………… 400

Net
income………………………………………………………… 75

Balance sheet data:

Average total
equity………………………………………………. 300

Average total
assets……………………………………………… 4,000

Per share data (these amounts stated in actual dollars, not
millions):

A-1 reported earnings per share for the year of \$4 and paid
cash dividends of \$1.50 per share. At
year-end, the Wall Street Journal listed A-1’s capital stock as trading at \$48
per share.

33. Refer to the above data. A-1’s gross profit rate was:

A) 20%.

B) 48%.

C) 52%.

D) Some other amount.

â€¢ Question
34

6.286 out of 6.286 points

questions 32-35:

Shown below are selected data from the financial statements
of A-l Computers. (Dollar amounts are in
millions, except for the per-share data.)

Income statement data:

Net
sales……………………………………………………………. \$2,500

Cost of goods
sold……………………………………………….. 1,300

Operating
expenses……………………………………………… 400

Net
income………………………………………………………… 75

Balance sheet data:

Average total
equity………………………………………………. 300

Average total
assets……………………………………………… 4,000

Per share data (these amounts stated in actual dollars, not
millions):

A-1 reported earnings per share for the year of \$4 and paid
cash dividends of \$1.50 per share. At
year-end, the Wall Street Journal listed A-1’s capital stock as trading at \$48
per share.

34. Refer to the above data. A-1’s operating income was:

A) \$1,200.

B) \$400.

C) \$800.

D) Some other amount.

â€¢ Question
35

6.286 out of 6.286 points

questions 32-35:

Shown below are selected data from the financial statements
of A-l Computers. (Dollar amounts are in
millions, except for the per-share data.)

Income statement data:

Net
sales……………………………………………………………. \$2,500

Cost of goods
sold……………………………………………….. 1,300

Operating
expenses……………………………………………… 400

Net
income………………………………………………………… 75

Balance sheet data:

Average total
equity………………………………………………. 300

Average total
assets……………………………………………… 4,000

Per share data (these amounts stated in actual dollars, not
millions):

A-1 reported earnings per share for the year of \$4 and paid
cash dividends of \$1.50 per share. At
year-end, the Wall Street Journal listed A-1’s capital stock as trading at \$48
per share.

35. Refer to the above data. A-1’s return on equity was:

A) 10%.

B) 20%.

C) 25%.

D) Some other amount.