Reference no: EM132322450

1) The declaration and issuance of a stock dividend:

A) Does not change total assets, liabilities, or total stockholders' equity.

B) Decreases assets and decreases total stockholders' equity.

C) Does not change retained earnings or paid-in capital.

D) Decreases total stockholders' equity and increases common stock.

2) ABC paid $2,000 interest on short-term notes payable, $10,000 interest on long-term bonds, and $6,000 in dividends on its common stock. ABC would report cash outflows from activities, as follows:

A) Operating, $12,000; Financing $6,000.

B) Operating, $0; Financing $18,000.

C) Operating, $18,000; Financing $0.

D) Operating, $2,000; Financing $16,000.

3) It is possible to calculate shrinkage

A) in Perpetual Inventory Accounting but not in Periodic Inventory Accounting

B) in neither Periodic Inventory Accounting nor Perpetual Inventory Accounting

C) in Periodic Inventory Accounting but not in Perpetual Inventory Accounting

D) in both Periodic Inventory Accounting and in Perpetual Inventory Accounting

4) A company provides services on account. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues.

A) (1) Increase, (2) Increase (3) Increase

C) (1) No effect, (2) No effect (3) No effect

B) (1) Increase, (2) No effect (3) Increase

D) (1) No effect, (2) Increase (3) Increase

5) The balance sheet of ABC reports total assets of $1,500,000 and $1, 700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's asset turnover?

A) 8.33 times.

B) 1.33 times.

C) 0.80 times.

D) 1.25 times.

6) How many of the following transactions are operating activities?

Borrowed $50,000 from the bank

Purchased $12,000 in supplies

Provide services to customers for $27,000

Paid the utility bill of $750

Purchased a delivery truck for $12,000

Received $25,000 from issuing common stock

A) Three.

B) Four.

C) Two.

D) One.

7) A machine has a cost of $15,000, an estimated residual value of $3,000, and an estimated useful life of four years. The machine is being depreciated on a straight-line basis. At the end of the second year, what amount will be reported for accumulated depreciation?

A) $6,000.

C) $9,000.

D) $7,500.