Penn Foster Exam 061696

1.

Casey Company has 5,000 shares of treasury cost that it purchased for $13 per share. It later resold 2,000 of those shares for $17 per share. The amount to be credited to Paid-in Capital—Treasury Stock is

A. $26,000.

B. $30,000.

C. $34,000.

D. $8,000.

2.   If total assets are $6,000, what is the common-size figure of cash, assuming that cash has a balance of $2,400?

A. 100.0%

B. 60.0%

C. 40.0%

D. 120.0%

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

A. $15,000.

B. $20,000.

C. ($15,000).

D. ($10,000).

4.   The Isaiah Corporation Stockholders’ Equity section includes the following information:

Preferred Stock

$22,000

Paid-in Capital in Excess of Par—Preferred

2,980

Common Stock

48,000

Paid-in Capital in Excess of Par—Common

3,400

Retained Earnings

7,350

Total par value of the preferred and common stock is

A. $70,000.

B. $83,730.

C. $76,380.

D. $77,350.

5.   If you own 500 shares (2% of a corporation’s stock) and the corporation issues 15,000 new shares, how many of the new shares can you purchase under preemptive right?

A. 300

B. 800

C. 500

D. 0

6.   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 is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is $12,000 in arrears?

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

B. $40,000 preferred; $0 common

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

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

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

A. total expenses.

B. net income.

C. net sales.

D. gross profit.

8.   The accuracy of the statement of cash flows can be verified by computing the change in the balance of the

A. equity account.

B. revenue accounts.

C. asset and liability accounts.

D. cash and cash equivalent accounts

9.   What are the rate of return on stockholders’ equity and the rate of return on common stockholders’ equity (rounded to the nearest one-tenth of a percent) given the following information:

Net Income

$350,000

Preferred Dividends

20,000

Common Stock

48,000

Common Stockholders’ Equity 1/1/2011

4,400,000

Total Stockholders’ Equity 1/1/2011

5,300,000

Total Stockholders’ Equity 12/31/2011

5,500,000

A. Return on Stockholders’ Equity: 5.6 %; Return on Common Stockholders’ Equity: 6.7%

B. Return on Stockholders’ Equity: 8.1 %; Return on Common Stockholders’ Equity: 9.2%

C. Return on Stockholders’ Equity: 6.5 %; Return on Common Stockholders’ Equity: 7.6%

D. Return on Stockholders’ Equity: 7.8 %; Return on Common Stockholders’ Equity: 8.9%

10.   Isaiah Corporation’s Accounts Receivable increased by $35,000, and its Accounts Payable decreased by $18,000. What is the net effect on cash from operations under the indirect method?

A. −$53,000

B. +$17,000

C. +$35,000

D. −$18,000

11.   Which activities are computed differently using the two methods of formatting a statement of cash flows?

A. Both operating activities and investing activities

B. Operating activities

C. Investing activities

D. Financing activities

12.   To determine why net income and cash on the balance sheet don’t equal, an accountant can prepare a/an

A. balance sheet.

B. statement of retained earnings.

C. statement of cash flows.

D. income statement.

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

A. Discontinued operations section

B. Continuing operations section

C. Cumulative effect of changes in accounting principles section

D. Extraordinary items section

14.   Accounts receivable amounted to $215,000 at the beginning of the year and $245,000 at the end of the year. 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. $270,000.

B. $315,000.

C. $330,000.

D. $300,000.

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

A. 10% and 30%

B. 67% and 40%

C. 50% and 67%

D. 40% and 20%

16.   Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current market 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 Common Stock for $3,000

C. Crediting Common Stock for $2,400

D. Crediting Paid-in Capital in Excess of Par—Common for $600

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

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

B. Debiting equipment for $3,000

C. Crediting common stock for $2,400

D. Crediting common stock for $3,000

18.   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 be credited to common stock on the date of declaration is

A. $131,250.

B. $78,750.

C. $183,750.

D. $52,500

19.   Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Ryan’s cash conversion cycle is _______ days.

A. 121

B. 43

C. 9

D. 103

20.   Casey Company has a $2,400 credit balance in Paid-In Capital—Treasury Stock. It sells 500 shares of treasury 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. $3,900 credit

C. $900 debit

D. $900 credit