Accounts receivable amounted to $215,000 at the beginning of the year

1.Accounts receivable amounted to $215,000 at the beginning of the year and $245,000 at the end of theyear. Income reported on the income statement for the year was $300,000. The cash flow from operating activities on the cash flow statement using the indirect method is

A.$315,000.

B.$270,000.

C.$300,000.

D.$330,000.

2.In a common-size income statement, selling expenses are 55%. This means that they’re 55% of

A.net profit.

B.net income.

C.net sales.

D.gross profit.

3.Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of$20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The preferred stock iscumulative. How much will be distributed to the preferred and common stockholders on the date ofpayment if the preferred stock is $12,000 in arrears?

A.$20,000 preferred; $20,000 common

B.$6,000 preferred; $34,000 common

C.$40,000 preferred; $0 common

D.$18,000 preferred; $22,000 common

4.The Isaiah Corporation Stockholders’ Equity section includes the following information:Total par value of the preferred and common stock isPreferred Stock $22,000Paid-in Capital in Excess of Par—Preferred 2,980Common Stock 48,000Paid-in Capital in Excess of Par—Common 3,400Retained Earnings 7,350

A.$83,730.

B.$76,380.

C.$77,350.

D.$70,000.

5.Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a currentmarket value of $3,000. Which of the following is not part of the journal entry for this transaction?

A.Debiting equipment for $3,000

B.Crediting paid-in capital in excess of par common for $600

C.Crediting common stock for $3,000

D.Crediting common stock for $2,400

6.Which section of the income statement does not report net of income taxes or net of income tax savings?

A.Continuing operations section

B.Extraordinary items section

C.Discontinued operations section

D.Cumulative effect of changes in accounting principles section

7.Earnings that a stockholder receives from a corporation are an example of which stockholder right?

A.Dividends

B.Liquidation

C.Preemption

D.Vote

8.Casey Company has a $2,400 credit balance in Paid-In Capital— Treasury Stock. It sells 500 shares oftreasury stock that the company reacquired at $21/share, for $18/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par— Treasury account?

A.$1,500 debit

B.$900 debit

C.$900 credit

D.$3,900 credit

9.The records of Ashley Boutique showed a net loss of $30,000; depreciation expense of $25,000; and anincrease in supplies on hand of $5,000. The amount of net cash flow from operating activities using theindirect method is

A.($15,000).

B.($10,000).

C.$20,000.

D.$15,000.

10.The Amanda Corporation Stockholders’ Equity section includes the following information:Preferred Stock $12,000Paid-in Capital in Excess of Par— Preferred 2,700Common Stock 15,000Paid-in Capital in Excess of Par— Common 4,100What was the total selling price of the preferred stock?Retained Earnings 8,200

A.$16,100

B.$14,700

C.$20,200

D.$12,000

11.Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5%stock dividend. The current market price of the common stock is $7.50/share. The amount that will bedebited to retained earnings on the date of declaration is

A.$183,750.

B.$52,500.

C.$78,750.

D.$131,250.

12.Operating expenses—other than depreciation—for the year were $335,000. Prepaid expensesdecreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statementusing the direct method would be

A.$335,000.

B.$328,000.

C.$342,000.

D.$7,000.

13.Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and$90,000 at the end of the year. There were no changes in the amount in accounts payable for the year.Cash payment for merchandise to be reported under the direct method is

A.$880,000.

B.$850,000.

C.$910,000.

D.$940,000.

14.If current assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of increase ordecrease in percentage terms from 2009 to 2010? (Round to the nearest percent.)

A.Increase of 12%

B.Decrease of 14%

C.Decrease of 12%

D.Increase of 14%

15.What is the rate of return on common stockholders’ equity if sales are $100,000, net income is$22,700, and average common stockholders’ equity is $86,000?

A.26.4%

B.86.0%

C.22.7%

End of exam

D.The rate of return can’t be determined from the information given.

16.Net sales at Kelly’s Bakery increased from $40,000 to $60,000, and its cost of goods sold increasedfrom $20,000 to $40,000. Vertical analysis based on net sales would show which percentages for cost ofgoods sold (rounded to the nearest %)?

A.50% and 67%

B.67% and 40%

C.40% and 20%

D.10% and 30%

17.Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77 days, andan accounts payable turnover of 40 days. Casey’s cash conversion cycle is _______ day(s).

A.81

B.73

C.1

D.153

18.For vertical analysis purposes, the base item on the income statement is

A.gross profit.

B.net sales.

C.total expenses.

D.net income.

19.Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 sharesof $20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The preferred stock isnoncumulative. How much will be distributed to the preferred and common stockholders on the date ofpayment?

A.$6,000 preferred; $34,000 common

B.$0 preferred; $40,000 common

C.$34,000 preferred; $6,000 common

D.$40,000 preferred; $0 common

20.Brandon Company had extraordinary losses of $150,000. If its corporate tax rate is 30%, at whichamount will the losses be shown on the income statement?

A.Not enough information is given to answer the question.

B.$105,000

C.$45,000

D.$150,000