Accounting quiz 14 Questions
1 Resources owned by a business are referred to as
profits. dividends. assets. equity.
2 For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What was the 2014 earnings per share?
$17.50 $7.50 $75.00 $131.25
3 Selling a long-term asset is an example of a(n)
noncash investing and financing activity.
4 Dividends declared are reported on which of the following statements?
Statement of Retained Earnings
Statement of Financial Position
5 Which of the following describes the normal balance and classification of the Accumulated Depreciation account?
Debit, asset Credit, liability Credit, asset Debit, expense
6 The accrual accounting term used to indicate recording an expense before paying cash for the item is
deferral. accrual. depreciation. prepayment.
7 LBJ Company recorded the following events involving a recent purchase of merchandise.
Received goods for $200,000, terms 2/10, n/30.
Returned $5,000 of the shipment for a credit due to damaged goods.
Paid $2,500 for freight in.
Paid the invoice within the discount period.
As a result of these events, the company’s merchandise inventory
increased by $193,600. increased by $195,950. increased by $197,500. increased by $193,500.
8 In periods of rising prices, which of the following inventory methods results in the highest gross profit figure?
FIFO LIFO Average cost method Cannot be determined based on the information given
9 On a classified balance sheet, prepaid expenses are classified as
current liabilities. long-term liabilities. current assets. Prepaid expenses do not belong on the Balance Sheet.
10 Which of the following is an internal control procedure?
Comparisons and compliance monitoring
Promote operational efficiency
Encourage employees to follow company policies
11 Your friend, Ellen, has hired you to evaluate the following internal control procedures.
Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.
For the weaknesses, you also need to state a recommendation for improvement.
(1) The cashier counts the total receipts and reconciles the receipts with the cash register total.
(2) Electronic documents are password-protected.
(3) The accountant is completely independent of the sales department.
(4) Invoices are not numbered.
(5) Large purchase orders must be approved by a manager.
12 Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.
(1) Investors invest $70,000 in exchange for 1,000 shares of common stock.
(2) Company paid a utility bill for $2,000.
(3) The unadjusted balance of the Supplies account is $5,200 and the total cost of supplies on hand is $4,000.
(4) Company received $5,000 for services performed.
(5) The company needs to record $15,000 for depreciation.
13 The following items are taken from the financial statements of Ashe Company for 2012:
Equipment $100,000 Accounts Receivable 12,000 Accounts Payable 9,000 Cost of Goods Sold 72,000 Utilities Expense 11,000 Depreciation Expense 17,000 Insurance Expense 9,000 Common Stock 200,000 Dividends 12,000 Rent Expense 3,000
Note Payable (due 2014) 40,000 dvertising Expense 14,000 Prepaid Insurance 17,000 Retained Earnings (beginning) 44,000 Accumulated Depreciation 50,000 Salaries Expense 60,000 Salaries Payable 3,500 Net sales 205,000 Supplies 4,000 Supplies Expense 5,000
Calculate the net income.
(b) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2012.
(c) Calculate the gross profit percentage.
14 The following items are taken from the financial statements of BGS Company for 2012:
Cash $500,000 Accounts Receivable 200,000 Supplies 70,000 Accounts Payable 147,300 Unearned Service Revenue 18,000 Equipment, net of accumulated depreciation 212,000 Common Stock 500,000 Retained Earnings 12/31/2011 78,300 Long-term debt 142,400 Service revenue 240,000 Cost of Goods Sold 72,000 Rent expense 36,000 Supplies expense12,000 Insurance expense 24,000
(a) Please create a classified balance sheet in good form for the year ended 2012. (25 points)
(b) Please calculate the current ratio.