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Take Test: Exam 1
Test Information
Description
Take this exam after completing Modules 1 through 3. This exam can also be found in the Exams area (in the course menu).
Instructions
Timed Test This test has a time limit of 1 hour and 30 minutes.This test will save and submit automatically when the time expires.
Warnings appear when half the time, 5 minutes, 1 minute, and 30 seconds remain.
Multiple Attempts Not allowed. This test can only be taken once.
Force Completion This test can be saved and resumed at any point until time has expired. The timer will continue to run if you leave the test.
Your answers are saved automatically.
Remaining Time: 1 hour, 20 minutes, 36 seconds.
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QUESTION 1
A company’s transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:
Indirect activities.
Financing activities.
Operating activities.
Investing activities.
Direct activities.
4 points
QUESTION 2
The cash flow on total assets ratio:
Is the same as profit margin.
Is average net assets divided by cash flows from operations.
Can measure a company’s ability to meet its obligations.
Is the same as return on assets.
Is highly affected by accounting principles of income recognition and measurement.
4 points
QUESTION 3
A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:
4.8%.
24.0%.
20.0%.
5.0%.
20.8%.
4 points
QUESTION 4
When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from investing activities generally are affected by:
Both noncurrent assets and noncurrent liabilities.
Noncurrent assets.
Noncurrent liability and equity accounts.
Net income, current assets, and current liabilities.
Equity accounts only.
4 points
QUESTION 5
Use the following information to calculate cash paid for salaries:
Salaries expense $ 175,000
Salaries payable, January 1 20,000
Salaries payable, December 31 12,000
$155,000.
$167,000.
$143,000.
$175,000.
$183,000.
4 points
QUESTION 6
When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except:
A decrease in accrued expenses payable.
Proceeds from the disposal of a long-term asset with no gain or loss.
A decrease in accounts payable.
An increase in accounts receivable.
An increase in prepaid expenses.
4 points
QUESTION 7
Wesson Company sold 10,000 units of its only product in the first half of the year. If sales decrease by 15% in the second half of the year, which cost will not change?
Sales commissions.
Direct materials.
Factory supplies.
Direct labor.
Depreciation on equipment.
4 points
QUESTION 8
Using the information below, calculate gross profit for the period:
Beginning Raw Materials Inventory $ 25,000
Ending Raw Materials Inventory 30,000
Beginning Work in Process Inventory 55,000
Ending Work in Process Inventory 64,000
Beginning Finished Goods Inventory 80,000
Ending Finished Goods Inventory 67,000
Cost of Goods Sold for the period 540,000
Sales Revenues for the period 1,254,000
Operating Expenses for the period 232,000
$482,000.
$187,000.
$727,000.
$1,022,000.
$714,000.
4 points
QUESTION 9
A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is:
Product versus period.
Fixed versus variable.
Financial versus managerial.
Direct versus indirect.
Service versus manufacturing.
4 points
QUESTION 10
The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:
Beginning Ending
Raw materials inventory $ 547,000 $ 610,000
The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to:
$892,000.
$1,081,000.
$1,565,000.
$955,000.
$408,000.
4 points
QUESTION 11
Use the cost information below for Ruiz, Inc. to determine cost of goods manufactured for the year:
Work in Process, January 1 $ 50,000
Work in Process, December 31 37,000
Total factory overhead 5,500
Direct materials used 12,500
Direct labor used 26,500
$44,500.
$52,000.
$13,000.
$57,500.
$94,500.
4 points
QUESTION 12
A company’s prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:
$14,000,000.
$3,000,000.
$2,000,000.
$1,000,000.
$4,000,000.
4 points
QUESTION 13
A corporation reports the following year-end balance sheet data. The company’s debt-to-equity ratio equals:
Cash $ 40,000 Current liabilities $ 75,000
Accounts receivable 55,000 Long-term liabilities 35,000
Inventory 60,000 Common stock 100,000
Equipment 145,000 Retained earnings 90,000
Total assets $ 300,000 Total liabilities and equity $ 300,000
0.37
0.58
2.07
1.27
0.63
4 points
QUESTION 14
Refer to the following selected financial information from Gomez Electronics. Compute the company’s return on total assets for Year 2.
Year 2 Year 1
Net sales $ 478,500 $ 426,250
Cost of goods sold 276,300 250,120
Interest expense 9,700 10,700
Net income before tax 67,250 52,680
Net income after tax 46,050 39,900
Total assets 317,100 288,000
Total liabilities 181,400 167,300
Total equity 135,700 120,700
9.6%.
2.6%.
22.2%.
14.5%.
15.2%.
4 points
QUESTION 15
A company’s sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:
115%.
100%.
13%.
15%.
87%.
4 points
QUESTION 16
Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:
Current ratio.
Total asset turnover.
Days’ sales in inventory.
Inventory turnover ratio.
Profit margin.
4 points
QUESTION 17
Refer to the following selected financial information from Phantom Corp. Compute the company’s inventory turnover for Year 2.
Year 2 Year 1
Merchandise inventory 271,000 253,500
Cost of goods sold 486,400 433,100
1.75.
0.93.
1.85.
1.71.
1.79.
4 points
QUESTION 18
Carducci Corporation reported net sales of $3.6 million, average total assets of $1.1 million, and net income of $847,000. The total asset turnover is:
4.30 times.
0.77 times.
0.31 times.
2.27 times.
3.27 times.
4 points
QUESTION 19
On January 1, $300,000 of par value bonds with a carrying value of $310,000 is converted to 50,000 shares of $5 par value common stock. The entry to record the conversion of the bonds includes all of the following entries except:
Credit to Common Stock $250,000.
Credit to Paid-In Capital in Excess of Par Value, Common Stock $60,000.
Debit to Bonds Payable $310,000.
Debit to Bonds Payable $300,000.
Debit to Premium on Bonds Payable $10,000.
4 points
QUESTION 20
Sinking fund bonds:
Are bearer bonds.
Are registered bonds.
Require equal payments of both principal and interest over the life of the bond issue.
Decline in value over time.
Require the issuer to set aside assets to pay the bonds at maturity.
4 points
QUESTION 21
A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $102,105 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:
$3,318.41.
$6,573.90.
$3,500.00.
$7,000.00.
$1,750.00.
4 points
QUESTION 22
Chang Industries has bonds outstanding with a par value of $200,000 and a carrying value of $203,000. If the company calls these bonds at a price of $201,000, the gain or loss on retirement is:
$2,000 gain.
$2,000 loss.
$1,000 gain.
$3,000 gain.
$1,000 loss.
4 points
QUESTION 23
On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the first interest payment using straight-line amortization is:
Debit Bond Interest Expense $14,717.70; credit Discount on Bonds Payable $1,217.70; credit Cash $13,500.00.
Debit Bond Interest Expense $12,282.30; debit Discount on Bonds Payable $1,217.70; credit Cash $13,500.00.
Debit Bond Interest Expense $12,282.30; debit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.
Debit Interest Payable $13,500; credit Cash $13,500.00.
Debit Bond Interest Expense $14,717.70; credit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.
4 points
QUESTION 24
A company’s total liabilities divided by its total stockholders’ equity is called the:
Pledged assets to secured liabilities ratio.
Times secured liabilities earned ratio.
Debt-to-equity ratio.
Return on total assets ratio.
Equity ratio.
4 points
QUESTION 25
On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What amount of principal will be included in the first annual payment?
$17,258
$232,742
$20,000
$37,258
$25,000
4 points
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