Final Review Combined F

127 Questions | By Amphib2007 | Last updated: Mar 20, 2022 | Total Attempts: 88

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1.

If a bond is sold at par value for $1,000, has a life of 5 years, and a contract rate of 8%, how much will have to be paid to redeem the bond on its maturity date?
- A.
  
  $ 80
- B.
  
  $1,000
- C.
  
  $920
- D.
  
  $400
2.

The ratio that is computed by taking total liabilities and dividing them by total equity is called the:
- A.
  
  Quick ratio
- B.
  
  Debt to equity ratio
- C.
  
  Reinvested assets ratio
- D.
  
  Debt ratio
3.

While the balance sheet is a "snapshot" of the business, the income statement has been compared to a "home video" because it
- A.
  
  Shows the company's performance for a particular date in time
- B.
  
  Shows the company's performance for a period of time
- C.
  
  Depicts the operations of the company on a precise date
- D.
  
  None of these answers is correct
4.

The relationship among the accounting elements found on the income statement can be represented by the following equation:
- A.
  
  Revenues - expenses = net loss
- B.
  
  Revenues - expenses = net income
- C.
  
  Answers A and B are both correct
- D.
  
  Assets - liabilities = net income
5.

The excess of the rewards over the sacrifices for a given time period is the monetary reward of doing business, which is also known as:
- A.
  
  Net earnings
- B.
  
  Earnings
- C.
  
  Net profit
- D.
  
  All of these answers are correct.
6.

Gross margin is an important item shown on the income statement because:
- A.
  
  Gross margin is not shown on a multiple-step income statement
- B.
  
  Sales minus gross margin equals net income
- C.
  
  Gross margin is the revenue generated from the sale of tangible products
- D.
  
  It highlights the relationship between sales revenue and cost of goods sold
7.

The distributions to owners of proprietorships and partnerships are also called:
- A.
  
  Dividends
- B.
  
  Drawings
- C.
  
  Sketches
- D.
  
  Net income
8.

The main accounting elements that make up the income statement are and .
- A.
  
  Expenses; net income
- B.
  
  Assets; owners' equity
- C.
  
  Revenues; expenses
- D.
  
  Assets; liabilities
9.

The following information is available for a company: Net sales, $750,950; Cost of goods sold, $330,418; total expenses, $214,775; average total assets for the year, $459,785. What is the company's gross profit margin ratio(round your answer to two decimal places)?
- A.
  
  45%
- B.
  
  27%
- C.
  
  56%
- D.
  
  The ratio cannot be computed from the information given.
10.

During the month of May, $400 of services were performed by Belk & Rich, Inc. If Belk & Rich received $100 during May and $300 during June and uses the cash basis of accounting, when and how much revenue should be recognized?
- A.
  
  $100 in May; $300 in June
- B.
  
  $300 in May; $100 in June
- C.
  
  $0 in May; $400 in June
- D.
  
  $400 in May; $0 in June
11.

If the JJ Company performs services for a client in the amount of $770 during June and collects the money from the client during July under a cash basis accounting system, when and how much revenue should JJ Company recognize in June and July?
- A.
  
  $385 during June; $385 during July
- B.
  
  $0 during June; $770 during July
- C.
  
  $770 during June; $770 during July
- D.
  
  $770 during June; $0 during July
12.

The Corner Dress shop buys $200 of dresses during May. Corner Dress pays $150 of that amount during May and the remainder in June. During June, Corner Dress buys $300 of dresses paying for $100 during June and the remainder in July. If the Corner Dress Shop uses a cash basis accounting system, how much should the shop recognize as an expense during May?
- A.
  
  $ 50
- B.
  
  $150
- C.
  
  $200
- D.
  
  $250
13.

Baaker Auto Body Repair uses electricity costing $200 during February and pays for them in March. How much will Baaker recognize under an accrual basis system of accounting?
- A.
  
  $200 revenue in March
- B.
  
  $200 revenue in February
- C.
  
  $200 expense in February
- D.
  
  $200 expense in March
14.

Under accrual accounting we recognize revenue when it is:
- A.
  
  Earned, as long as payment for it occurs in the same time period
- B.
  
  Earned, no matter when payment for it is received
- C.
  
  Received, no matter when it is earned
- D.
  
  Received, as long as payment for it occurs in the same time period
15.

If Sanford and Son's Auto Repair acquires supplies costing $200 during February and pays for the supplies in March, how much will Sanford and Son recognize under a cash basis system of accounting?
- A.
  
  $200 revenue in March only
- B.
  
  $200 expense in February only
- C.
  
  $200 expense in March only
- D.
  
  $200 revenue in February only
16.

The Corner Dress shop uses $200 in advertising during May. Corner Dress pays $150 of that amount during May and the remainder in June. During June, Corner Dress uses $300 in advertising paying for $100 during June and the remainder in July. If Corner Dress uses an accrual basis accounting system, how much should the shop recognize as an advertising expense during May?
- A.
  
  $ 50
- B.
  
  $200
- C.
  
  $150
- D.
  
  $250
17.

What is the relationship between a company receiving cash and recognizing revenue?
- A.
  
  All of these answers are correct.
- B.
  
  Cash is received after the revenue has been earned.
- C.
  
  Cash is received before the revenue has been earned.
- D.
  
  Cash is received at the time revenue is earned.
18.

Accrual accounting attempts to establish a relationship between revenues and expenses. This relationship is called:
- A.
  
  Recognition
- B.
  
  Realization
- C.
  
  Matching
- D.
  
  Articulation
19.

The Ladybug Dress shop uses $200 in advertising during May. Ladybug pays $150 of that amount during May and the remainder in June. During June, Ladybug uses $300 in advertising paying for $200 during June and the remainder in July. If Ladybug uses an accrual basis accounting system, how much should the shop recognize as an advertising expense during June?
- A.
  
  $150
- B.
  
  $300
- C.
  
  $250
- D.
  
  $ 50
20.

A company can adopt a policy in which it resolves to pay a set amount as a dividend each year as long as it has:
- A.
  
  Both sufficient retained earnings and sufficient cash each year to pay the amount
- B.
  
  Sufficient net income for the current year to cover the amount of the dividend payment
- C.
  
  The approval of the stockholders
- D.
  
  None of these answers is correct
21.

Adam's Chili Bowl and Space Burgers purchases a grill for $5,000. The company expects to use it for four years. If the company thinks that it can sell the grill at the end of the fourth year for $500, how much is the residual value of the grill?
- A.
  
  $4,500
- B.
  
  $ 500
- C.
  
  $1,250
- D.
  
  $1,125
22.

The first step in the accrual matching process is:
- A.
  
  To determine in which income statement period a company should recognize a particular revenue
- B.
  
  To determine which expenses helped to generate specific revenue
- C.
  
  To match those expenses paid in the same period with the revenues received in cash during the same period
- D.
  
  To recognize only those expenses actually paid in the same period as the revenue they helped to generate
23.

In accounting, an asset's depreciable base is calculated as:
- A.
  
  Asset cost - residual value
- B.
  
  Asset cost + residual value
- C.
  
  Asset cost × residual value
- D.
  
  Asset cost ÷ residual value
24.

An inflow of resources that comes to the business when it delivers services to a customer is a(n):
- A.
  
  Liability
- B.
  
  Asset
- C.
  
  Expense
- D.
  
  Revenue
25.

The basic formula used by a company to compute its income tax is:
- A.
  
  Taxable income × tax rate
- B.
  
  Sales × tax rate
- C.
  
  Cost of goods sold × tax rate
- D.
  
  Total assets × tax rate