ACCT 504 Final Last Exam
Question 1.1. (TCO A) An advantage of the corporate form of business is . (Points : 5)
it is simple to establish
the corporate tax rate is less than the personal tax rate
corporations must pay dividends
the shareholders are not responsible for the corporation’s debts
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. (TCOs B and E) Which of the following statements is correct with regard to cash-basis
accounting? (Points : 5)
Cash-basis accounting is required by GAAP.
Cash-basis accounting does not record any expenses until they are paid.
Cash-basis is never allowed by the IRS.
Cash-basis accounting records revenue when the product is shipped.
Question 5.5. (TCO D) Which inventory method will result in the lowest income taxes when prices are
decreasing? (Points : 5)
The average cost method
LIFO
FIFO
Income tax expense will be the same.
Question 6.6. (TCOs A and E) Equipment was purchased for $200,000. Freight charges amounted to
$10,000 and there was a cost of $15,000 for building a foundation and installing the equipment. It
is estimated that the equipment will have a $20,000 salvage value at the end of its 5-year useful
life. Depreciation expense each year using the straight-line method will be . (Points : 5)
$41,000
$38,000
$45,000
$40,000
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
Question 1.1. (TCO A) An advantage of the corporate form of business is . (Points : 5)
it is simple to establish
the corporate tax rate is less than the personal tax rate
corporations must pay dividends
the shareholders are not responsible for the corporation’s debts
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. (TCOs B and E) Which of the following statements is correct with regard to cash-basis
accounting? (Points : 5)
Cash-basis accounting is required by GAAP.
Cash-basis accounting does not record any expenses until they are paid.
Cash-basis is never allowed by the IRS.
Cash-basis accounting records revenue when the product is shipped.
Question 5.5. (TCO D) Which inventory method will result in the lowest income taxes when prices are
decreasing? (Points : 5)
The average cost method
LIFO
FIFO
Income tax expense will be the same.
Question 6.6. (TCOs A and E) Equipment was purchased for $200,000. Freight charges amounted to
$10,000 and there was a cost of $15,000 for building a foundation and installing the equipment. It
is estimated that the equipment will have a $20,000 salvage value at the end of its 5-year useful
life. Depreciation expense each year using the straight-line method will be . (Points : 5)
$41,000
$38,000
$45,000
$40,000
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
