HUI 18.doc

CLICK HERE TO DOWNLOAD THIS ANSWER INSTANTLY

1.Landseeker’s Restaurants reported cost of goods sold of $322 million and accounts payable of $83 million for 2011. In 2010, cost of goods sold was $258 million and accounts payable was $72 million. What was Landseeker’s accounts payable turnover ratio in 2011?
A) 4.23
B) 4.15
C) 4.04
D) 3.91
2.
Which of the following transactions will decrease the accounts payable turnover ratio?
A) Using cash to pay an accounts payable balance.
B) Selling inventory on account.
C) Selling inventory for cash.
D) A customer returning inventory purchased on account.
3.
Which of the following statements incorrectly describes the accounts payable turnover ratio?
A) A high ratio indicates that suppliers are being paid in a timely manner.
B) It increases when inventory is sold on account regardless of the sales price.
C) It can be manipulated by aggressively paying off accounts payable at year-end.
D) It is not affected by the choice of inventory accounting methods.
4.
On September 1, 2010, Donna Equipment signed a one-year, 8% interest-bearing note payable for $50,000. Assuming that Donna Equipment maintains its books on a calendar year basis, how much interest expense that should be reported in the 2011 income statement?
A) $2,667
B) $4,000
C) $1,333
D) $3,000
5.
Phipps Company borrowed $25,000 cash on October 1, 2010, and signed a six-month, 8% interest-bearing note payable with interest payable at maturity. Assuming that no adjusting entries have been made during the year, the amount of accrued interest payable to be reported on the December 31, 2010 balance sheet is which of the following?
A) $250
B) $300
C) $500
D) $750
6.
When a company prepares a bond indenture, certain provisions of the bonds are included. Which of the following is/are not specified in the indenture?
A) Dates of each interest payment.
B) The stated interest rate.
C) The maturity date.
D) The market rate of interest.
7.
Which of the following bonds does not have specific assets pledged to guarantee repayment?
A) Debenture bond
B) Callable bond
C) Discount bond
D) Convertible bond
8.
Which of the following is not a reason that a corporation would want to issue bonds instead of stock?
A) Interest payments can be deducted for income tax purposes.
B) Stockholders maintain control.
C) The impact on earnings may be positive.
D) There is less risk associated with a bond issue.
9.
The annual interest rate specified within a bond indenture is called which of the following?
A) The stated rate of interest.
B) The market rate of interest.
C) The effective rate of interest.
D) The actual rate of interest.
10.
Which of the following statements best describes callable bonds?
A) They can be turned in for early retirement at the option of the bondholder.
B) They can be converted to common stock at the option of the bondholder.
C) They can be called for early retirement at the option of the issuer.
D) They can be called for early retirement at the option of the lien holder.
11.
Which of the following statements incorrectly describes earnings per share?
A) Earnings per share are per common share.
B) An increase in the market price per common share does not result in a decrease in earnings per share.
C) An increase in dividends per share results in an increase in earnings per share.
D) The reissue of treasury stock decreases earnings per share.
12.
Which of the following is not a primary advantage of a general partnership relative to a corporation?
A) The ease of formation.
B) The limited liability for the owners.
C) There isn’t income taxation on the business itself.
D) The complete control of the business given to the partners.
13.
A company purchased 1,000 shares of treasury stock for $38,000 cash; the treasury stock was initially issued for $24,000 and had a $9,000 par value. Which of the following statements incorrectly describes the effect of treasury stock purchase?
A) Net income is unchanged.
B) Earnings per share increases.
C) Total assets remain the same.
D) Stockholders’ equity decreases.
14.
Which of the following statements is correct?
A) A 2-for-1 common stock split decreases both earnings per share and total stockholders’ equity.
B) A 10% common stock dividend decreases both earnings per share and total stockholders’ equity.
C) A 2-for-1 common stock split increases both the number of common shares outstanding and total stockholders’ equity.
D) A 30% common stock dividend increases the number of common shares outstanding and does not affect total stockholders’ equity.
15.
Which of the following statements is not correct?
A) Issuance of common stock creates a financing activities cash inflow.
B) Payment of a common stock cash dividend creates an operating activities cash outflow.
C) Purchase of treasury stock creates a financing activities cash outflow.
D) Issuance of preferred stock creates a financing activities cash inflow.
16.
use of the consolidated financial statement method of accounting for a long-term investment in common stock of another company is required when the ownership of its voting stock is
A) 20% or more.
B) less than 20%.
C) between 20% and 50%.
D) more than 50%.
17.
On January 1, 2010, Entertainment Company acquired 15% of the outstanding voting stock of Rocker Company as a long-term investment in available-for-sale securities. During 2010, Rocker Company reported net income of $1,500,000 and dividends declared and paid of $250,000. How much income will be reported during 2010 from the Rocker investment?
A) $225,000
B) $37,500
C) $187,500
D) $250,000
18.
On January 1, 2010, Palmer, Inc. bought 40% of the outstanding shares of Arnold Corporation at a cost of $137,000. The equity method of accounting for this investment is used. During 2010, Arnold Corporation reported $30,000 of net income and paid $10,000 in cash dividends. At the end of 2010, the shares had a market value of $150,000. How much income will Palmer report from the Arnold investment during 2010?
A) $12,000
B) $30,000
C) $10,000
D) $4,000
19.
Which of the following accounts is only created as the result of acquiring a controlling interest in another company?
A) Patents
B) Goodwill
C) Acquisition expense
D) Acquisition revenue
20.
McGinn Company purchased 10% of RJ Company’s common stock during 2010 for $100,000. The 10% investment in RJ had a $90,000 fair value at the end of 2010 and a $105,000 fair value at the end of 2011. Which of the following statements is correct if McGinn classifies the investment as a trading security?
A) The 2010 unrealized loss is $10,000, but is not included in McGinn’s 2010 net income.
B) The 2011 unrealized gain is $15,000, but is not included in McGinn’s 2011 net income.
C) The 2011 unrealized gain is $15,000 and is included in McGinn’s 2011 net income.
D) The 2010 unrealized loss is $10,000 and is reported on McGinn’s balance sheet as a component of stockholders’ equity and is not reported on the income statement.