ACCTG Final Exam

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?

$1,323.00

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years. Determine the second year's depreciation expense using the straight-line method.

$10,200

A machine was purchased for $68,000. It has a useful life of 5 years and a residual value of $8,000. Determine the annual depreciation expense using the straight-line method?

$12,000

Paleota Company purchased a patent from Finise for $234,000. At the time of purchase, the patent had a remaining useful life of 10 years. Determine the patent amortization expense for the first year.

$23,400

A corporation has 50,000 shares of $100 par value stock outstanding that has a current market value of $180. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately:

$45.

If $500,000 of 8% bonds are issued at 102, the amount of cash received from the sale is:

$510,000

An equipment was purchased for $15,000. It has a useful life of 5 years and a residual value of $4,000. Determine the depreciation expense for the first year using the double-declining-balance method?

$6,000

For the year that just ended, a company reports net income of $1,500,000. There are 500,000 shares authorized, 300,000 shares issued, and 250,000 shares of common stock outstanding. What is the earnings per share?

$6.00

An equipment was purchased for $30,000. It has a useful life of 5 years, and a residual value of $4,000. Compute the depreciation expense for the second year using the double-declining-balance method.

$7,200

A fixed asset with a cost of $15,000 and accumulated depreciation of $12,500 is sold for $1,750. What is the amount of gain or loss on disposal of the fixed asset?

$750 loss

A company purchased an oil well for $10 million. It is estimated that 5 million barrels can be extracted from the well. Determine depletion expense assuming 4 million barrels are extracted and sold during the year.

$8,000,000

On March 15, Silver Co. issued a $80,000, 5%, 90-day note payable to Gold Co. How much will Silver Co. have to pay at maturity? (Assume 360 days in a year)

$81,000

A company acquired some land for $75,000 to construct a new office complex. Legal fees paid were $2,750, delinquent taxes assumed were $3,250, and $6,350 was paid to remove an old building. Materials salvaged from the demolition of the building were sold for $2,300. Determine the cost of the land to be reported on the balance sheet.

$85,050

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the net pay for the employee?

$873.77

If $1,000,000 of 10% bonds are issued at 98, the amount of cash received from the sale is:

$980,000.

Question Content Area Based on the following data, what is the quick ratio, rounded to one decimal place? Accounts payable $ 32,000 Accounts receivable 64,000 Accrued liabilities 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 35,000 Notes payable (short-term) 25,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000

1.9

From the given data for the current year, determine the inventory turnover. Net sales on account during the year $316,780 Cost of merchandise sold during the year 688,500 Accounts receivable, the beginning of year 47,000 Accounts receivable, end of year 62,000 Inventory, the beginning of year 157,000 Inventory, end of year 149,000

4.5

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

55,000

Jack Co. issued 675,000 shares at $0.25 per share of common stock. If 75,000 shares were subsequently reacquired, _____ shares are considered outstanding.

600,000

Question Content Area Using the following data for the current year, determine the accounts receivable turnover. Net sales on account during the year $ 457,065 Cost of merchandise sold during the year 461,280 Accounts receivable, beginning of year 75,290 Accounts receivable, end of year 26,280 Inventory, beginning of year 185,000 Inventory, end of year 169,570

9

Orange Inc. had 300,000 shares of $150 par value common stock outstanding at the beginning of the year. During the year, the company issued a 3-for-1 stock split. What is the number of shares outstanding after the split?

900,000 shares

Which of the following is an effect of payment of cash dividends on a company's financial statements?

A decrease in cash and stockholders' equity

_____ is an example of a fixed asset.

A machine

Sarbanes-Oxley Act of 2002 requires which of the following report to be prepared by the management of the company?

A report showing management's assessment of internal control.

Which of the following is included in the computation of the quick ratio?

Accounts receivable

Which of the following is a characteristic of accumulated depreciation account?

Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset.

Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet?

Bonds Payable

Which of the following is the formula to calculate current ratio?

Current assets / Current liabilities

A company sold 200 shares of common stock with a par value of $5 at a price of $12 per share. Which section of the statement of cash flows will contain this transaction?

Financing activities

Which of the following is a characteristic of fixed assets?

Fixed assets are long-term or relatively permanent assets.

The independent auditor's report does which of the following?

Gives the auditor's opinion regarding the fairness of the financial statements.

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

Increase cash $2,600; increase common stock $1,000 and increase paid-in capital $1,600

Which of the following should be included in the acquisition cost of a piece of equipment?

Installation costs

Which of the following is true of liquidity?

Liquidity is the ability to convert assets to cash.

Which of the following isnotan intangible asset?

Long-term receivable

Which one of the following is not a characteristic generally evaluated in ratio analysis?

Marketability

_____ is a solvency metric and is computed as total assets minus total liabilities.

Net asset

What is the effect of declaring a stock dividend on the liabilities and stockholders' equity section of the balance sheet?

No effect on total liabilities and total stockholders' equity

Where is interest expense listed on the income statement?

Other expense section

The major subdivisions of the Stockholders' Equity section of the balance sheet are:

Paid-in Capital and Retained Earnings.

Which of the following intangible assets are amortized over their useful life?

Patents

Which of the following will be classified as a current liability?

Unearned rent

When the contract rate of interest on bonds is less than the market rate of interest, the bonds sell at:

a discount.

Capital expenditure is reported on the:

balance sheet under fixed assets.

The cost incurred to extend an asset's useful life is recorded as:

capital expenditures.

Basic analytical method in which all items are expressed only in relative terms (percentages of a common base) and are often useful for comparing one company with another or for comparing a company with industry averages are:

common-sized statements.

The Modified Accelerated Cost Recovery System is used to:

compute depreciation for tax purposes.

The periodic interest to be paid on bonds is identified in the bond indenture and is expressed as a percentage of the face amount of the bond. This percentage or rate of interest is called the:

contract rate.

The book value of an asset is computed as the asset's:

cost less accumulated depreciation.

Depreciable cost is computed as:

cost less residual value.

Working capital is calculated as:

current assets minus current liabilities.

A company's ability to pay its current liabilities is called:

current position analysis.

ABC Co. has a gross payroll of $18,000. The FICA tax rate is 7.65% of the gross payroll, and the federal and state withholding are $1,600 and $963 respectively. On recording the payroll tax liability, net assets of the company:

decrease by $14,060.

A company issues 5,000 shares of $15 par common stock. As a result, the earnings per share of the company _____.

decreases

When natural resources are used, the _____ expense account is increased for a portion of the cost of resources removed.

depletion

When the contract rate of interest on bonds is higher than the market rate of interest, the bonds sell at:

discount

Current liabilities are:

due and payable within one year.

Profitability refers to the ability of the business to:

earn a reasonable amount of income.

Most employers are levied a tax on payrolls for:

federal unemployment compensation tax.

Rico Inc. issues a 90-day, 4%, $3,000 note on account. This transaction:

has no effect on net assets and earnings per share of the company.

The following is an example of _____. Increase (Decrease) Current YearPrior YearAmountPercentCurrent assets$ 420,000 $ 500,000 $(80,000) (16%) Fixed assets 1,530,000 1,500,000 30,000 2%

horizontal analysis

The percentage change in long-term liabilities between two balance sheet dates is an example of:

horizontal analysis.

A fully depreciated asset must be:

kept on the books until sold or discarded.

The cost of removal of an old building to make the land ready for its intended use is charged to:

land.

A(n) _____ is a contract for the use of an asset for a period of time without having to buy the asset.

lease

Liabilities due beyond one year are classified as _____.

long-term liabilities

The return on stockholders' equity is computed as:

net income divided by average total stockholders' equity.

Contingent liabilities that are probable but cannot be reasonably estimated are disclosed in the:

notes to the financial statements.

Land improvements include:

outdoor lighting.

The cost of a product warranty should be included as an expense in the:

period of the sale of the product.

Question Content Area The ability of a business to earn a reasonable amount of income is referred to as the factor of:

profitability.

If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000, the company must:

recognize a loss on the income statement under other expenses.

The purpose of an audit is to:

render an opinion on the fairness of the statements.

The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as:

solvency and profitability.

Treasury stock is reported in the _____ section of the balance sheet.

stockholders' equity

The accounting term depreciation measures:

the amount of asset cost allocated to expense over periods benefited.

A gain is recorded on the sale of fixed assets when:

the asset is sold for a price more than its book value.

For most profitable companies, the return on total assets will be less than:

the return on stockholders' equity.

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

their face value.

The exclusive right to use a certain name or symbol is called a:

trademark.

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

vertical analysis.

The percentage analysis of accounts payable to total liabilities is an example of:

vertical analysis.

Goodwill is:

written down only if an impairment in value occurs.

Which of the following is an example of a capital expenditure?

Replacing an engine in a company car

Which of the following expenditures would be included in the cost of a fixed asset?

Sales taxes

The FICA tax withheld from employees contributes to:

Social Security and Medicare.

Which method of depreciation considers residual value in computing the normal periodic depreciation?

Straight-line

Which of the following is necessary for a corporation to pay cash dividends?

Sufficient retained earnings

On which of the following dates, a company incurs liability for a dividend?

The date of declaration

The following information is available for Morgan Corporation: 2016 Market price per share of common stock $25.00Earnings per share on common stock 1.25 Which of the following statements is correct?

The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2016.

Question Content Area Which of the following focuses on the ability of a company to earn profits?

The return on total assets

Which of the following statement is true about intangible assets?

They are not held for resale

Which of the following is a reason for a corporation to buy back its own stock?

To increase the shares outstanding

Losses on discarding fixed assets are _____.

accumulated depreciation

Fixed assets are ordinarily presented on the balance sheet:

at its cost less accumulated depreciation.