Reference no: EM131915678

Question: 1. Assets include _____.

prepaid insurance and prepaid rent

dividends paid to shareholders

loans obtained by the company

stockholders' investment in the business

2. Which of the following accounts is recorded as part of stockholders' equity on the balance sheet?

Long-term debt

Retained earnings

Revenue

Expenses

3. Which of the following is not a current liability?

Unearned revenue

Accounts payable

Accrued liabilities

Prepaid expenses

4. For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What was the 2014 earnings per share?

$17.50

$7.50

$75.00

$131.25

5. For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What was the 2014 earnings per share?

$17.50

$7.50

$75.00

$131.25

6. In periods of rising prices, which of the following inventory methods results in the lowest income taxes?

Average cost method

FIFO

LIFO

Cannot be determined based on the information given

7. Selling a long-term asset is an example of a(n) _____.

operating activity

investing activity

financing activity

noncash investing and financing activity

8. Dividends declared are reported on which of the following statements?

Income statement

Statement of retained earnings

Balance sheet

Statement of financial position

9. What is the correct order to create the financial statements?

Balance sheet, income statement, statement of retained earnings, and statement of cash flows

Statement of cash flows, balance sheet, statement of retained earnings, and income statement

Income statement, statement of retained earnings, balance sheet, and statement of cash flows

Income statement, balance sheet, statement of retained earnings, and statement of cash flows

10. Which of the following is an objective of internal control?

Risk assessment

Information technology

Adequate records

Comply with legal requirements

11. Which of the following is an objective of internal control?

Risk assessment

Information technology

Adequate records

Comply with legal requirements

12. The accounting term used to indicate recording an expense before paying cash for the item is _____.

deferral

accrual

depreciation

prepayment

13. Your friend, Lisa, has hired you to evaluate the following internal control procedures.
Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.

For the weaknesses, you also need to state a recommendation for improvement.

(1) Paychecks are left on the desk for pick-up.

(2) Supervisors count cash receipts daily.

(3) Invoices are pre-numbered.

(4) Bonding of the cashiers is required.

(5) The accountant purchases and pays for supplies.

14. Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

(1) Investors invest $300,000 in exchange for 30,000 shares of common stock.

(2) Company made payment on account for $500.

(3) Employees work Monday through Friday and are paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a Tuesday.

(4) Company purchased Supplies for $2,000.

(5) The company needs to record Supplies used for $500.

15. The following items are taken from the financial statements of Lacey Company for 2017.

Note some information may not be relevant for the required calculations below.

Advertising Expense	$14,000
Accounts Receivable	12,000
Cost of Goods Sold	65,000
Accumulated Depreciation-Equipment	20,000
Accounts Payable	21,000
Cash	44,000
Depreciation Expense	17,000
Common Stock	100,000
Dividends	25,000
Insurance Expense	5,000
Note Payable (due 2020)	70,000
Rent Expense	4,000
Prepaid Insurance	17,000
Retained Earnings (beginning)	22,000
Salaries Expense	50,000
Salaries Payable	3,500
Net sales	175,000
Supplies	4,000
Supplies Expense	3,000
Equipment	210,000

Instructions: (Must show your work for each part to receive partial credit):

(a) Calculate the net income. (18 points)

(b) Calculate the ending balance of Retained Earnings that would appear on a balance sheet at December 31, 2017. (7 points)

(c) Calculate the gross profit percentage. (5 points)

16. The following items are taken from the general ledger of SRW Company at the end of December 2017. Note some information may not apply to the financial statement.

Cash	$375,000
Accounts Receivable	125,000
Prepaid Insurance	100,000
Accounts Payable	88,000
Unearned Service Revenue	15,000
Equipment, net of accumulated depreciation	177,000
Common Stock	125,000
Retained Earnings (beginning)	106,000
Long-term debt	336,500
Service revenue	225,000
Cost of Goods Sold	62,500
Rent expense	30,000
Supplies expense	8,000
Insurance expense	18,000

Instructions: (a) Please create a classified Balance Sheetin good form for the year ended 2017.

(b) Please calculate the current ratio.