ACC291 Final Exam (Multiple Choice)

ACC291 Final Exam (Multiple Choice)

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1. The term “receivables” refers to

1. Amounts due from individuals or companies.
2. Merchandise to be collected from individuals or companies.
3. Cash to be paid to creditors.
4. Cash to be paid to debtors.

2. Three accounting issues associated with accounts receivable are

1. Accrual, bad debts, and accelerating collections.
2. Recognizing, valuing, and accelerating collections.
3. Depreciating, returns, and valuing.
4. Depreciating, valuing, and collecting.

3. When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

1. An account becomes bad and is written off.
2. Management estimates the amount of uncollectibles.
3. A customer’s account becomes past due.
4. A sale is made.

4. Which one of the following is not a principle of sound accounts receivable management?

1. Monitor collections.
2. Determine to whom to extend credit.
3. Delay cash receipts from receivables if necessary.
4. Determine a payment period.

5. The accounts receivable turnover is computed by dividing

1. Total sales by average receivables.
2. Total sales by ending receivables.
3. Net credit sales by average receivables.
4. Net credit sales by ending receivables.

6. The accounts receivable turnover is used to analyze

1. Profitability.
2. Long-term solvency.
3. Risk.
4. Liquidity.

7. The following information is provided for Sheridan Company and Concord Corporation. (in $ millions)

Sheridan Company  Concord Corporation
Net income 2017                $170         $390
Net sales 2017                 1625         4550
Total assets 12/31/15          1005         2280
Total assets 12/31/16          1160         3080
Total assets 12/31/17          1160         4000

What is Concord’s return on assets (rounded) for 2017?

1. 6%
2. 0%
3. 8%
4. 7%

8. Which of the following is not properly classified as property, plant, and equipment?

1. A truck held for resale by an automobile dealership.
2. Land used in ordinary business operations.
3. Land improvement, such as parking lots and fences.
4. Building used as a factory.

9. A characteristic of a plant asset is that it is

1. Held for sale in the ordinary course of the business.
2. Used in the operations of a business.
3. Not currently used in the business but held for future use.

10. A current liability is a debt that can reasonably be expected to be paid

1. Within one year, or the operating cycle, whichever is longer.
2. Out of currently recognized revenues.
3. Between 6 months and 18 months.
4. Out of cash currently on hand.

11. Which of the following most likely would be classified as a current liability?

1. Bonds payable in 5 years
2. Dividends payable
3. Mortgage payable as a single payment in 10 years
4. Three-year notes payable

12. The 2017 financial statements of Blossom Company contain the following selected data (in millions).

Current assets                $76
Total assets                  175
Current liabilities           43
Total liabilities             82
Cash                          7
Interest expense              5
Income taxes                  10
Net income                    19

The debt to assets ratio (rounded) is

1. 13%.
2. 6%.
3. 0 times.
4. 9%.

13. In a recent year Martinez Corp. had net income of $146000, interest expense of $29500, and income tax expense of $39700. What was Martinez Corp.’s times interest earned (rounded) for the year?

1. 95
2. 29
3. 29
4. 95

14. If bonds are issued at a discount, it means that the

1. Market interest rate is lower than the contractual interest rate.
2. Bondholder will receive effectively less interest than the contractual rate of interest.
3. Financial strength of the issuer is suspect.
4. Market interest rate is higher than the contractual interest rate.

15. If bonds are issued at a premium, the stated interest rate is

1. Too low to attract investors.
2. Adjusted to a higher rate of interest.
3. Lower than the market rate of interest.
4. Higher than the market rate of interest.

16. The chief accounting officer in a company is known as the

1. Controller
2. Vice-president.
3. Treasurer
4. President

18. Which one of the following would not be considered an advantage of the corporate form of organization?

1. Continuous life.
2. Government regulation.
3. Limited liability of stockholders.
4. Separate legal existence.

19. Which of the following would not be true of a privately held corporation?

1. It does not offer its shares for sale to the general public.
2. It is usually smaller than a publicly held company.
3. It is sometimes called a closely held corporation.
4. Its shares are regularly traded on the New York Stock Exchange.

20. The following information pertains to Pharoah Company. Assume that all balance sheet amounts represent average balance figures.

Total assets                $420000
Stockholders’ equity-common 300000
Total stockholders’ equity 255000
Sales revenue               100000
Net income                              22400
Number of shares of common stock       7000
Common dividends                        6500
Preferred dividends                     6900

What is Pharoah’s payout ratio?

1. 42%.
2. 02%.
3. 22%.
4. 14%.

21. Sunland Company had net income of $100775 and paid dividends of $39500 to common stockholders and $22500 to preferred stockholders in 2017. Sunland Company common stockholders’ equity at the beginning and end of 2017s was $415000 and $595000, respectively. Sunland Company return on common stockholders’ equity is

1. 11%.
2. 20%.
3. 16%.
4. 15%.

22. Which one of the following items is not generally used in preparing a statement of cash flows?

1. Current income statement.
2. Additional information.
3. Adjusted trial balance.
4. Comparative balance sheets.

23. The category that is generally considered to be the best measure of a company’s ability to continue as a going concern is

1. Usually different from year to year.
2. Cash flows from operating activities.
3. Cash flows from investing activities.
4. Cash flows from financing activities.

24. Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, a stock dividend declared and issued would be classified on the statement of cash flows.

1. Does not represent a cash flow.
2. Investing activities section.
3. Financing activities section.
4. Operating activities section.

25. Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, an inventory increase with cash would be classified on the statement of cash flows.

1. Financing activities section.
2. Does not represent a cash flow.
3. Operating activities section.
4. Investing activities section.

26. Free cash flow provides an indication of a company’s ability to

1. Generate cash to invest in capital expenditures and to pay dividends.
2. Generate cash to pay dividends.
3. Generate cash to invest in capital expenditures.
4. Generate net income.

27. When using the indirect method to compute cash provided by operating activities

1. Amortization expense is added to net income.
2. Decreases in inventory are subtracted from net income.
3. Income taxes paid may be ignored.
4. Increases in accounts receivable are added to net income.

28. To determine the net cash provided (used) by operating activities, it is necessary to analyze

1. The current year’s income statement.
2. A comparative balance sheet.
3. Additional information.
4. All of these answer choices are correct.

29. Which of these is not a liquidity ratio?

1. Accounts receivable turnover
2. Current ratio
3. Asset turnover
4. Inventory turnover

30. The current ratio would be of most interest to

1. Customers.
2. Long-term creditors.
3. Short-term creditors.
4. Stockholders.

Course: ACC291 Principles Of Accounting II
School: University of Phoenix

• Due Date (Double Check): 20/02/2018
• Willing to Pay (USD): 55