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ACCT 504 Week 8, Final Exam 2Week 8 : Wk8 - Final Exam
1. (TCO A) An advantage of the corporate form of business is that (Points : 5)
it has limited life.
its owner’s personal resources are at stake.
its ownership is easily transferable via the sale of shares of stock.
it is simple to establish.
2. (TCO A) Which activities involve acquiring the resources to run the business? (Points : 5)
Delivering
Financing
Investing
Operating
3. (TCO A) For 2007 Landford Corporation reported net income of $30,000; net sales $400,000; and
average share outstanding 6,000. There were no preferred stock dividends. What was the 2007 earnings
per share? (Points : 5)
$4.66
$0.20
$66.67
$5.00
4. (TCO C) Free cash flow provides an indication of a company’s ability to (Points : 5)
generate cash to invest in new capital expenditures.
generate net income.
generate cash to pay dividends.
both a and c.
5. (TCO C) When a corporation distributes a dividend the (Points : 5)
most common form of distribution is a cash dividend.
Dividends account will be increased with a credit.
Retained Earnings account will be directly increased with a debit.
Dividends account will be decreased with a debit.
6. (TCO A, B) Cerner Company showed the following balances at the end of its first year:
Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500
What did Cerner Company show as total credits on its trial balance?
(Points : 5)
$21,500
$21,000
, $20,500
$22,000
7. (TCO B, E) Under the accrual basis of accounting (Points : 5)
cash must be received before revenue is recognized.
net income is calculated by matching cash outflows against cash inflows.
events that change a company's financial statements are recognized in the period they occur rather
than in the period in which cash is paid or received.
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial
statements are prepared under generally accepted accounting principles.
8. (TCO A, B) The Village Laundry Company purchased $6,500 worth of laundry supplies on June 2 and
recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only
$3,000 on hand. The adjusting entry that should be made by the company on June 30 is (Points : 5)
Debit Laundry Supplies Expense, $3,000; Credit Laundry Supplies, $3,000.
Debit Laundry Supplies Expense, $3,500; Credit Laundry Supplies, $3,000.
Debit Laundry Supplies, $3,500; Credit Laundry Supplies Expense, $3,500.
Debit Laundry Supplies Expense, $3,500; Credit Laundry Supplies, $3,500.
9. (TCO E) A credit sale of $800 is made on April 25, terms 2/10, net/30, on which a return of $50 is
granted on April 28. What amount is received as payment in full on May 4? (Points : 5)
$735
$784
$800
$750
10. (TCO B) During the year, Darla’s Pet Shop’s merchandise inventory decreased by $20,000. If the
company’s cost of goods sold for the year was $300,000, purchases must have been (Points : 5)
$320,000.
$280,000.
$260,000.
Unable to determine.
11. (TCO D) 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
(Points : 5)
LIFO will have the highest ending inventory.
FIFO will have the highest cost of goods sold.
FIFO will have the highest ending inventory.
LIFO will have the lowest cost of goods sold.
12. (TCO D) The inventory turnover ratio is calculated by dividing cost of goods sold by (Points : 5)
beginning inventory.
ending inventory.
average inventory.
365 days.
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