Penn Foster 061696RR

1. Brandon Company had extraordinary losses of $150,000. If its corporate tax rate is 30%, at which amount will the losses be shown on the income statement?
A) $105,000
B) not enough information is given to answer the question
C) $45,000
D) $150,000

2. Operating cash flows affect
A. equity accounts.
B. long-term liability accounts.
C. current assets and current liabilities.
D. long-term asset accounts.

3. A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments;
and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The
company’s quick ratio is
A. 1.133.
B. 0.933.
C. 1.550.
D. 3.217.

4. Casey Company reported net income of $35,000; depreciation expenses of $20,000; an increase in
accounts payable of $2,000; and an increase in current notes receivable of $3,000. Net cash flows from operating activities under the indirect method is
A. $50,000.
B. $54,000.
C. $55,000.
D. $56,000.

5. The accuracy of the statement of cash flows can be verified by computing the change in the balance of the
A. cash and cash equivalent accounts.
B. asset and liability accounts.
C. equity account.
D. revenue accounts.

6. The Isaiah Corporation Stockholders’ Equity section includes the following information:
Preferred Stock $22,000
Paid-in Capital in Excess of Par�Preferred 2,980
Common Stock 48,000
Paid-in Capital in Excess of Par�Common 3,400
Retained Earnings 7,350

Total par value of the preferred and common stock is
A. $77,350.
B. $70,000.
C. $83,730.
D. $76,380.

7. Operating expenses other than depreciation�for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be
A. $7,000.
B. $328,000.
C. $342,000.
D. $335,000.

8. Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77 days, and an accounts payable turnover of 40 days. Casey’s cash conversion cycle is _______ day(s).
A. 153
B. 73
C. 1
D. 81

9. Casey Company has 5,000 shares of treasury cost that it purchased for $13 per share. It later resold 2,000 of those shares for $17 per share. The amount to be credited to Paid-in Capital�Treasury Stock is
A. $8,000.
B. $30,000.
C. $26,000.
D. $34,000.

10. If Rick’s net sales increased from $40,000 to $80,000 and its operating expenses increased from $30,000 to $50,000, then vertical analysis based on net sales would show which of the following for operating expenses for the two periods (to the nearest tenth of a percent)?
A. 160.0% and 133.3%
B. 62.5% and 75.0%
C. 133.3% and 160.0%
D. 75.0% and 62.5%

11. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5% stock dividend. The current market price of the common stock is $7.50/share. The amount that will be debited to retained earnings on the date of declaration is
A. $52,500.
B. $131,250.
C. $78,750.
D. $183,750.

12. Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The preferred stock is noncumulative. How much will be distributed to the preferred and common stockholders on the date of payment?
A. $34,000 preferred; $6,000 common
B. $0 preferred; $40,000 common
C. $6,000 preferred; $34,000 common
D. $40,000 preferred; $0 common

13. If total assets are $6,000, what is the common-size figure of cash, assuming that cash has a balance of
$2,400?
A. 60.0%
B. 120.0%
C. 100.0%
D. 40.0%

14. Which activities are computed differently using the two methods of formatting a statement of cash flows?
A. Financing activities
B. Both operating activities and investing activities
C. Investing activities
D. Operating activities

15. If you own 500 shares (2% of a corporation’s stock) and the corporation issues 15,000 new shares, how many of the new shares can you purchase under preemptive right?
A. 800
B. 500
C. 300
D. 0

16. What are the rate of return on stockholders’ equity and the rate of return on common stockholders’ equity (rounded to the nearest one-tenth of a percent) given the following information:
Net Income $350,000
Preferred Dividends 20,000
Common Stock 48,000
Common Stockholders� Equity 1/1/2011 4,400,000
Total Stockholders� Equity 1/1/2011 5,300,000
Total Stockholders� Equity 12/31/2011 5,500,000
20,000
Common Stock 48,000
Common Stockholders� Equity 1/1/2011 4,400,000
Total Stockholders� Equity 1/1/2011 5,300,000
Total Stockholders Equity 12/31/2011 5,500,000
A. Return on Stockholders’ Equity: 6.5 %; Return on Common Stockholders’ Equity: 7.6%
B. Return on Stockholders’ Equity: 8.1 %; Return on Common Stockholders’ Equity: 9.2%
C. Return on Stockholders’ Equity: 7.8 %; Return on Common Stockholders’ Equity: 8.9%
D. Return on Stockholders’ Equity: 5.6 %; Return on Common Stockholders’ Equity: 6.7%

17. Accounts receivable amounted to $215,000 at the beginning of the year and $245,000 at the end of the year. Income reported on the income statement for the year was $300,000. The cash flow from operating activities on the cash flow statement using the indirect method is
A. $270,000.
B. $300,000.
C. $330,000.
D. $315,000.

18. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5% stock dividend. The current market price of the common stock is $7.50/share. The amount that will be credited to common stock on the date of declaration is A. $183,750.
B. $52,500.
C. $131,250.
D. $78,750.

19. To determine why net income and cash on the balance sheet don’t equal, an ccountant can prepare a/an
A. income statement.
B. statement of retained earnings.
C. statement of cash flows.
D. balance sheet.

20. Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Ryan’s cash conversion cycle is _______ days.
A. 9
B. 121
C. 103
D. 43