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ACC 102 Midterm Review Questions

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ACC 102 Midterm Review Questions
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Quiz por smjackson7, atualizado more than 1 year ago
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Criado por smjackson7 mais de 10 anos atrás
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Resumo de Recurso

Questão 1

Questão
When compound interest is used, interest accumulates less quickly than when simple interest is used.
Responda
  • True
  • False

Questão 2

Questão
The annual interest earned on an amount deposited into a bank account will be the same each year when compound interest is used.
Responda
  • True
  • False

Questão 3

Questão
An ordinary annuity is a series of equal payments made at the end of equal intervals of time.
Responda
  • True
  • False

Questão 4

Questão
In a deferred payment arrangement, interest is charged only if it is stated.
Responda
  • True
  • False

Questão 5

Questão
If the net present value of a proposed investment is negative, it means that the investment should not be made.
Responda
  • True
  • False

Questão 6

Questão
* Assets purchased under a deferred payment plan should be recorded at the future value of the installment payments.
Responda
  • True
  • False

Questão 7

Questão
Decision makers rely on the future values, rather than on the present values, of future cash flows.
Responda
  • True
  • False

Questão 8

Questão
Use this information to answer the following question: Periods Future Value of $1 at 12% Future Value of Ordinary Annuity of $1 at (1) 1.120 1.000 (2) 1.254 2.120 (3) 1.405 3.374 A deposit of $2,000 made at the beginning of period 1 would grow to how much at the end of three years?
Responda
  • $2,240.00
  • $2,810.00
  • $2,508.00
  • $6,748.00

Questão 9

Questão
Which of the following phrases is NOT descriptive of an ordinary annuity?
Responda
  • Payments made at the beginning of equal periods of time
  • Both present and future value can be calculated
  • Compound interest assumed
  • Series of equal payments

Questão 10

Questão
The higher the interest rate assumed, the
Responda
  • higher the present value of an ordinary annuity.
  • more one must deposit today to accumulate to a desired sum.
  • lower the future value of a sum invested in the bank today.
  • lower the present value of a sum due in the future.

Questão 11

Questão
Heidi wishes to deposit an amount into her savings account that will enable her to withdraw $800 per year for the next four years. She should deposit $800, multiplied by the
Responda
  • present value of a single sum factor.
  • present value of an ordinary annuity factor.
  • future value of a single sum factor.
  • future value of an ordinary annuity factor.

Questão 12

Questão
First City Bank computes interest semiannually. If the interest rate is currently 6% per annum, the amount deposited today should be multiplied by which future value factor to calculate the amount that will accumulate by the end of 10 years?
Responda
  • 20 periods at 12%
  • 20 periods at 3%
  • 10 periods at 6%
  • 10 periods at 3%

Questão 13

Questão
* A company purchases an asset on a deferred payment plan, ultimately paying $10,000. On the payment date, the company would
Responda
  • credit Cash for less than $10,000.
  • debit Interest Expense for the imputed amount.
  • debit the asset account for $10,000.
  • debit Accounts Payable for $10,000.

Questão 14

Questão
SHORT ANSWER! - (LOOK AT TABLES!) --What is the present value of receiving $1,000 at the end of each year for 6 years, assuming 7% interest compounded annually?--- --What amount must be deposited at the bank today to grow to $300 in 5 years, assuming 14% interest compounded semiannually?--
Responda
  • 1,000 x 4.67 = $4,767 --- 300 x .508 = $152.40
  • Do the math!!

Questão 15

Questão
Extraordinary gains/losses are a component of income from operations.
Responda
  • True
  • False

Questão 16

Questão
A gain on the sale of an asset is a component of income from operations.
Responda
  • True
  • False

Questão 17

Questão
The quality of a company's earnings is affected by the accounting estimates chosen by the company's management.
Responda
  • True
  • False

Questão 18

Questão
If the amount of income taxes expense exceeds the amount of actual income taxes payable for a year, the difference is recorded by a debit to a balance sheet account called Deferred Income Taxes.
Responda
  • True
  • False

Questão 19

Questão
Discontinued operations and extraordinary items should be reported in the financial statements of "net of tax."
Responda
  • True
  • False

Questão 20

Questão
Gains and losses caused by the passage of a new law should be classified as extraordinary on the income statement.
Responda
  • True
  • False

Questão 21

Questão
A business with 100,000 shares of stock outstanding for three months would use a weighted-average 25,000 shares in its EPS calculation.
Responda
  • True
  • False

Questão 22

Questão
A company with convertible bonds is considered to have a complex capital structure.
Responda
  • True
  • False

Questão 23

Questão
A debit balance in the Retained Earnings account is referred to as a deficit.
Responda
  • True
  • False

Questão 24

Questão
A synonymous phrase for retained earnings is accumulated earnings.
Responda
  • True
  • False

Questão 25

Questão
When common stock is originally issued, its market value per share should approximate its par or stated value per share.
Responda
  • True
  • False

Questão 26

Questão
Par value or stated value is arbitrarily set when stock is authorized.
Responda
  • True
  • False

Questão 27

Questão
Which of the following is not a component of income from operations?
Responda
  • costs and expenses
  • write-downs of assets
  • extraordinary losses
  • restructuring

Questão 28

Questão
When alternative acceptable accounting methods exist, a better quality of earnings generally is produced from selecting an accounting method that has the effect of reporting the
Responda
  • lowest amount of future earnings
  • greatest amount of retained earnings currently
  • lowest amount of current earnings
  • greatest amount of assets currently

Questão 29

Questão
Which of the following is analyzed when a financial statement reader is looking at the nature of nonoperating items?
Responda
  • discontinued operations
  • interest expense
  • interest revenue
  • cost of goods sold

Questão 30

Questão
An excess of income taxes expense over income taxes payable will result in recording a
Responda
  • debit to Deferred Income Taxes
  • debit to Income Taxes Payable
  • credit to Deferred Income Taxes
  • credit to Prior Period Adjustment

Questão 31

Questão
Because noncash investing and financing transactions do not affect cash, they should be excluded from the statement of cash flows.
Responda
  • True
  • False

Questão 32

Questão
The payment of taxes would be included in the operating activities section of the statement of cash flows.
Responda
  • True
  • False

Questão 33

Questão
The payment of taxes would be included in the operating activities section of the statement of cash flows.
Responda
  • True
  • False

Questão 34

Questão
A U.S. treasury bill with an original maturity of one year or less is considered cash equivalent.
Responda
  • True
  • False

Questão 35

Questão
The primary purpose of the statement of cash flows is to provide information about a company's investing and financing activities during an accounting period.
Responda
  • True
  • False

Questão 36

Questão
A negative free cash flow indicates that the company has met all its planned cash commitments and has cash available to reduce debit or expand.
Responda
  • True
  • False

Questão 37

Questão
A decrease in the balance of merchandising inventory is added to net income when calculating net cash flows from operating activities using the indirect method.
Responda
  • True
  • False

Questão 38

Questão
Cash inflows and outflows are not netted in the investing activities section of the statement of cash flows but are separately disclosed to give the reader full information.
Responda
  • True
  • False

Questão 39

Questão
Dividends paid are reflected in the financing activities section of the statement of cash flows.
Responda
  • True
  • False

Questão 40

Questão
The net income for the period would appear in the cash flows from financing activities section of a statement of cash flows prepared using the indirect method.
Responda
  • True
  • False

Questão 41

Questão
A schedule of noncash investing and financing activities is not required when a statement of cash flows is prepared using the indirect method.
Responda
  • True
  • False

Questão 42

Questão
Cash equivalents do not include
Responda
  • U.S. treasury bills
  • money market accounts
  • marketable securities
  • commercial paper

Questão 43

Questão
Management would not use the statement of cash flows to
Responda
  • access the liquidity of the business
  • determine dividend policy
  • evaluate the effects of major policy decisions involving investments and financing
  • determine the financial position of the company

Questão 44

Questão
A Corporation engaged in the transaction: Declared and issued a stock dividend. Indicate which section, if any, each transaction would appear in, or relate to, on a statement of cash flows.
Responda
  • financing activities section
  • operating activities section
  • does not represent a cash flow
  • investing activities section

Questão 45

Questão
The direct method of preparing a statement of cash flows
Responda
  • is the overwhelming choice of most companies
  • begins with net income in the operating activities section
  • is more difficult to understand than the indirect method for the average reader
  • will produce more the same net figure as the indirect method

Questão 46

Questão
The calculation of free cash flow could include all of the following except:
Responda
  • cash purchase of plant assets
  • net cash flows from operating activities
  • net income
  • dividends paid

Questão 47

Questão
Per the Sarbanes-Oxley Act of 2002, public corporations must establish a compensation committee to determine how its top executives will be compensated.
Responda
  • True
  • False

Questão 48

Questão
Liquidity is the ability to earn a satisfactory net income
Responda
  • True
  • False

Questão 49

Questão
Investors, creditors and customers are considered external users of financial statements.
Responda
  • True
  • False

Questão 50

Questão
The analysis of risk and return is important to both investors and creditors.
Responda
  • True
  • False

Questão 51

Questão
A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be comparable.
Responda
  • True
  • False

Questão 52

Questão
A 20% change in net sales will result in a 20% change in net income.
Responda
  • True
  • False

Questão 53

Questão
Vertical analysis is the same as common-size analysis
Responda
  • True
  • False

Questão 54

Questão
It is possible for horizontal analysis to indicate a decrease in revenues from one year to another and an increase in net income.
Responda
  • True
  • False

Questão 55

Questão
A primary purpose of vertical analysis is to observe trends over a 5 year period.
Responda
  • True
  • False

Questão 56

Questão
Ration analysis is useful only if the ratio states a meaningful relationship between two numbers.
Responda
  • True
  • False

Questão 57

Questão
Executive officers' compensation is typically comprised of all of the following except:
Responda
  • inventive bonuses
  • declared dividends
  • stock option awards
  • annual base salaries

Questão 58

Questão
Which of the following is the least useful in evaluating a relationship as either favorable or unfavorable?
Responda
  • past and current performances company
  • industry averages
  • past performance of the company
  • rule-of-thumb measures

Questão 59

Questão
Dun & Bradstreet publishes
Responda
  • data on average ratios and relationships
  • credit ratings of companies
  • data on industry norms
  • all of these

Questão 60

Questão
One of the best places to look for early signs of change in a company's profitability is the
Responda
  • annual report sent to the SEC (10K)
  • year-end financial statement
  • interim financial statement
  • annual report sent to stockholders

Questão 61

Questão
Horizontal analysis of comparative financial statements include the
Responda
  • development of common-size statements
  • calculation of dollar amount changes and percentage changes from the previous to the current year
  • calculation of the percentage of net sales for each listed
  • calculation of liquidity ratios

Questão 62

Questão
A company with $50,000 in current assets, $25,000 in quick assets, and $30,000 in current liabilities makes a payment of a $1,500 current debt. As a result of this transaction, the current ratio and quick ratio will
Responda
  • both decrease
  • increase and decrease, respectively
  • both increase
  • remain the same and decrease, respectively

Questão 63

Questão
A high receivable turnover indicates that
Responda
  • many customers are defaulting on their debts
  • a large proportion of the company's sales is on credit
  • the company's inventory is moving very quickly
  • customers are making payments very quickly

Questão 64

Questão
The higher the debit to equity ratio, the great the financial risk the company is taking
Responda
  • True
  • False

Questão 65

Questão
* When a monthly mortgage payment is made and recorded, the debit to Mortgage Payable represents the reduction in the principal balance
Responda
  • True
  • False

Questão 66

Questão
A capital lease is the lease of property, plant or equipment that is in effect an installment purchase
Responda
  • True
  • False

Questão 67

Questão
Bondholders are creditors of the issuing corporation
Responda
  • True
  • False

Questão 68

Questão
Secured bonds are also known as debentures
Responda
  • True
  • False

Questão 69

Questão
An $80,000 bond issue priced at 97-3/4 is sold for $78,200.
Responda
  • True
  • False

Questão 70

Questão
The par value of a bond is equal to its face value
Responda
  • True
  • False

Questão 71

Questão
It is the bondholder rather than the issuer who may exercise the call feature of a callable bond.
Responda
  • True
  • False

Questão 72

Questão
The entry to record the issuance of bonds between interest payment dates will include a debit to Bond Interest Expense.
Responda
  • True
  • False

Questão 73

Questão
A company with income before income taxes of $94,000 and $20,000 in interest expense, has an interest coverage ratio of
Responda
  • 5.7 times
  • 4.7 times
  • 3.7 times
  • 6.7 times

Questão 74

Questão
If bonds are issued at a premium the face interest rate is
Responda
  • lower than the market rate of interest
  • higher than the market rate of interest
  • too low to attract investors
  • adjusted to higher effective rate of interest

Questão 75

Questão
Ten $1000 bonds issued at 99.75 on the interest date result in a debit to the Cash account for
Responda
  • $990.75
  • $9,907.50
  • $997.50
  • $9,975.00

Questão 76

Questão
A Corporation issued $100,000 of 20-year, 6% bonds at 98 on one of its semiannual interest dates. The straight-line method amortization is to be used. What is the total interest cost of the bonds?
Responda
  • $120,000
  • $122,000
  • $118,000
  • $117,500

Questão 77

Questão
*Short Answer!* A corporation has a 7% $600,000 bond issue that originally was issued 5 years ago. There are now ten years remaining on the bond issue, and the market interest rate is 12%. Interest is paid semiannually. Calculate the current market value of the bond issue, using the present value tables.
Responda
  • Single Amount Table 3 M arket F ace M arket Annuity/Semi annuity - Series Amount Table 4
  • Be sure to use tables!

Questão 78

Questão
The P/E (price/earnings) ratio is a measure of investors' confidence in a company's future.
Responda
  • True
  • False

Questão 79

Questão
Stockholders elect the board of directors which appoints the officers of a corporation.
Responda
  • True
  • False

Questão 80

Questão
The board of directors carries out the day-to-day operations of a corporation.
Responda
  • True
  • False

Questão 81

Questão
The board of directors carries out the day-to-day operations of a corporation.
Responda
  • True
  • False

Questão 82

Questão
The liability of a stockholder is usually limited to the stockholders' investment in the corporation.
Responda
  • True
  • False

Questão 83

Questão
The declaration of a cash dividend causes an increase in a corporation's liabilities at the date of record.
Responda
  • True
  • False

Questão 84

Questão
No entry is required on the date of record for a cash dividend.
Responda
  • True
  • False

Questão 85

Questão
Stock options are often granted by a corporation to management personnel as a means of additional compensation to and motivation of employees.
Responda
  • True
  • False

Questão 86

Questão
The stockholders' equity in a corporation consists of capital contributed by a stockholders and retained earnings.
Responda
  • True
  • False

Questão 87

Questão
Retained earnings consist of a pool of funds to be distributed to stockholders.
Responda
  • True
  • False

Questão 88

Questão
The cost of treasury stock is deducted from total Contributed Capital and Retained Earnings in determining total stockholders' equity.
Responda
  • True
  • False

Questão 89

Questão
Dividends yield equals
Responda
  • market price per share divided by dividends per share
  • net income divided by dividends per share
  • dividends per share divided by net income
  • dividends per share divided by market price per share

Questão 90

Questão
A disadvantage of the corporate form of business is
Responda
  • centralized authority and responsbility
  • its status as a separate legal entity
  • government regulation
  • continuous existence

Questão 91

Questão
Par value
Responda
  • is established for a share of stock after it is issued
  • is the legal capital established for a share of stock
  • represents what a share of stock is worth
  • represents the original selling price for a share of stock

Questão 92

Questão
The Board of Directors of B Corporation declared a cash dividend on January 18th, 2011, to be paid on February 18th, 2011, to shareholders holding the stock on February 2nd, 2011. Given these facts, the date February 2nd, 2011 is referred to as the
Responda
  • date of declaration
  • date of payment
  • ex-dividend date
  • date of record

Questão 93

Questão
All of the following are stockholders' equity accounts except
Responda
  • Treasury Stock
  • Preferred Stock
  • Retained Earnings
  • Dividends Payable

Questão 94

Questão
Any act that lies beyond the authority of a corporation to perform is an ultra vires act.
Responda
  • True
  • False

Questão 95

Questão
When stock is sold at par you...
Responda
  • Debit Cash / Credit Par Value
  • Debit Par Value / Credit Cash

Questão 96

Questão
A corporation set up perfectly is considered....
Responda
  • Dejeur
  • Defactor

Questão 97

Questão
A corporation set up with mistakes is....
Responda
  • Defacto
  • Dejeur

Questão 98

Questão
Name the accounts in the Income Statement
Responda
  • Do it!
  • XXOXOJOIJOSIJDOISJ

Questão 99

Questão
Contributed Capital includes all of these EXCEPT
Responda
  • Common & Preferred Stock
  • Retained Earnings
  • Paid in Capital in Excess
  • Treasury Stock

Questão 100

Questão
A fraudulent dividend declaration is considered an act of....
Responda
  • Piercing the Corporate Veil
  • Deferred Income Tax
  • Defacto
  • Ultra vire

Questão 101

Questão
No journal entry is required on
Responda
  • Date of Declaration
  • Date of Record
  • Date of Payment
  • Date of Issuance

Questão 102

Questão
A Bondholder is a Debter
Responda
  • True
  • False

Questão 103

Questão
Interest Formula =
Responda
  • Principal x Rate x Time
  • Income before Taxes + Interest Expense / Interest Expense
  • Current Assets / Current Liabilities
  • Dividends per share / Market $ per share

Questão 104

Questão
What measures how much a risk a company represents
Responda
  • Interest Cover Ratio
  • Debt to Equity Ratio
  • Dividends Yield Ratio
  • Return on Equity Ratio

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