(TCO A) The Dividends account _____. (Points : 5)

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2.

(TCO A) The Dividends account _____. (Points : 5)

      appears on the income statement along with the expenses of the business

      must show transactions every accounting period

      is increased with debits and decreased with credits

      is considered a long-term asset of the firm

3.

(TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash                           $5,000

Prepaid insurance             500

Accounts receivable       2,500

Accounts payable          2,000

Notes payable               3,000

Common stock              1,000

Dividends                         500

Revenues                    15,000

Expenses                    12,500

What did Cerner Company show as total credits? (Points : 5)

      $21,500

      $21,000

      $20,500

      $22,000

4.

(TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)

      when they are incurred, whether or not cash is paid

      when they are incurred and paid at the same time

      if they are paid before they are incurred

      if they are paid after they are incurred

5.

(TCO D) Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)

      LIFO will have the highest ending inventory

      FIFO will have the highest cost of goods sold

      FIFO will have the highest ending inventory

      LIFO will have the lowest cost of goods sold

6.

(TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)

      $48,000

      $52,500

      $49,500

      $43,500

7.

(TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____. (Points : 5)

      debit to Cash of $500,000

      credit to Discount on Bonds Payable for $20,000

      credit to Bonds Payable for $480,000

      debit to Cash for $480,000

8.

(TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)

      $120,000

      $125,000

      $155,000

      $115,000

9.

(TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)

      nonlinear analysis

      vertical analysis

      trend analysis

      common-size analysis

10.

(TCO F) Vertical analysis is also known as _____. (Points : 5)

      perpendicular analysis

      common-size analysis

      trend analysis

      straight-line analysis

11.

(TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)

      Liquidity

      Profitability

      Marketability of the product

      Solvency

12.

(TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)

      solvency

      liquidity

      marketability

      profitability

13.

(TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)

      profit margin and debt-to-total-assets ratio

      profit margin and asset-turnover ratio

      times interest earned and debt-to-stockholders equity ratio

      profit margin and free cash flow

14.

(TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____. (Points : 5)

      compounding

      extrapolation

      discounting

      None of the above

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