ACCT 504 Final Exam
(TCO A) A corporation has which of the following advantages? (Points : 5)
Reduced taxes
Simple to set up
Limited liability for stockholders
Owner maintains control
Question 2.2. (TCO A) Dividends flow through which one of the following statements? (Points : 5)
The Balance Sheet
The Statement of Retained Earnings
The Income Statement
None of the above
Question 3.3. (TCOs A and B) Below is a partial list of account balances for LBJ Company.
Cash
$12,000
Prepaid rent
1,300
Accounts receivable
7,000
Accounts payable
5,000
Notes payable
9,000
Common stock
22,000
Dividends
2,000
Revenues
45,000
Expenses
35,000
What did LBJ Company show as total debits? (Points : 5)
$57,300
$81,000
$55,300
$56,000
, Question 4.4. (TCO B and E) Under cashbasis accounting, which of the following transactions would not be
recorded? (Points : 5)
Cash sales to customers
Payments to vendors
Sales on account
Payroll payments to employees
Question 5.5. (TCO D) If ending inventory of the current year is understated (Points : 5)
Cost of goods sold for the current year will be understated
Gross profit for the current year will be unaffected
Gross profit for the current year will be understated
Net income for the current year will be overstated
Question 6.6. (TCO A and E) Equipment was purchased for $27,000. Freight charges amounted to $1,000 and
there was a cost of $5,000 for building a foundation and installing the equipment. It is estimated that the
equipment will have a $5,000 salvage value at the end of its 7year useful life. Depreciation expense each year
using the straightline method will be . (Points : 5)
$4,714
$4,000
$3,857
$3,285
Question 7.7. (TCOs D and G) When the market rate of interest exceeds the stated rate of interest on the bond,
the bond will require . (Points : 5)
a debit to Discount on Bonds Payable
a credit to Premium on Bonds Payable
a debit to Loss on Bonds Payable
a credit to Gain on Bonds Payable
Question 8.8. (TCO C) Which inventory accounting system does not require a physical count of the inventory at
the year end? (Points : 5)
Periodic inventory system
Perpetual inventory system
Specific Identification
None of the above
Question 9.9. (TCO F) Horizontal analysis is also known as . (Points : 5)
ratio analysis
vertical analysis
commonsize analysis
trend analysis
Question 10.10. (TCO F) When performing a commonsize balance sheet, the 100% figure is . (Points : 5)
(TCO A) A corporation has which of the following advantages? (Points : 5)
Reduced taxes
Simple to set up
Limited liability for stockholders
Owner maintains control
Question 2.2. (TCO A) Dividends flow through which one of the following statements? (Points : 5)
The Balance Sheet
The Statement of Retained Earnings
The Income Statement
None of the above
Question 3.3. (TCOs A and B) Below is a partial list of account balances for LBJ Company.
Cash
$12,000
Prepaid rent
1,300
Accounts receivable
7,000
Accounts payable
5,000
Notes payable
9,000
Common stock
22,000
Dividends
2,000
Revenues
45,000
Expenses
35,000
What did LBJ Company show as total debits? (Points : 5)
$57,300
$81,000
$55,300
$56,000
, Question 4.4. (TCO B and E) Under cashbasis accounting, which of the following transactions would not be
recorded? (Points : 5)
Cash sales to customers
Payments to vendors
Sales on account
Payroll payments to employees
Question 5.5. (TCO D) If ending inventory of the current year is understated (Points : 5)
Cost of goods sold for the current year will be understated
Gross profit for the current year will be unaffected
Gross profit for the current year will be understated
Net income for the current year will be overstated
Question 6.6. (TCO A and E) Equipment was purchased for $27,000. Freight charges amounted to $1,000 and
there was a cost of $5,000 for building a foundation and installing the equipment. It is estimated that the
equipment will have a $5,000 salvage value at the end of its 7year useful life. Depreciation expense each year
using the straightline method will be . (Points : 5)
$4,714
$4,000
$3,857
$3,285
Question 7.7. (TCOs D and G) When the market rate of interest exceeds the stated rate of interest on the bond,
the bond will require . (Points : 5)
a debit to Discount on Bonds Payable
a credit to Premium on Bonds Payable
a debit to Loss on Bonds Payable
a credit to Gain on Bonds Payable
Question 8.8. (TCO C) Which inventory accounting system does not require a physical count of the inventory at
the year end? (Points : 5)
Periodic inventory system
Perpetual inventory system
Specific Identification
None of the above
Question 9.9. (TCO F) Horizontal analysis is also known as . (Points : 5)
ratio analysis
vertical analysis
commonsize analysis
trend analysis
Question 10.10. (TCO F) When performing a commonsize balance sheet, the 100% figure is . (Points : 5)
