Question 1. If Division C has a 10% return of sales, income of $500, and an investment turnover of 4 times, its ROI is
a) 500%
b) 100%
c) 40%
d) 10%
Question 2. If income increase while sales and investment remain constant, which of the following is true?
a) investment turnover increases
b) ROS decreases
c) ROI increase
d) ROI could increase or decrease
Question 3. Which of the following describes the computation of ROI?
a) return on sales x investment
b) investment turnover x return on sales
c) income - (investment x minimum RI)
d) sales x investment turnover
Question 4. Monico Division has net income of $60,000 on sales of $800,000. If the investment is $400,000 what is ROS?
a) 15.0%
b) 7.5%
c) 10.0%
d) 2.0
Question 5. Scottso Division has the following results for the year
Revenues $ 740,000
Variable expenses $ 260,000
Fixed expenses $ 300,000
Total division assets are $1,000,000. The company's minimum required rate of return is 14 percent. Return on sales for Scottso is
a) 10.4%
b) 18.0%
c) 24.3%
d) 48.0%
Question 6. The last step in the accounting cycle is to prepare:
a. financial statements
b. a post-closing trial balance
c. adjusting and closing entries
d. a work sheer
Question 7. Henry Company is preparing financial statements and has a mortgage note on its building, which is due in six months and will be paid in cash. The mortgage note payable will be recorded in the classified balance sheet under:
a. Current liabilities
b. Long-term liabilities
c. Accrued liabilities
d. Property, plant, and equipment
Question 8. The revenue recognition principle is primary concerned with:
a. how revenue is recorded
b. whether revenue is recorded
c. when revenue will be recorded
d. which revenue is recorded
Question 9. The statement of cash flows:
a. provides a convenient summary of information, none of which can be calculated from the other three principal financial statements
b. is required only for companies with annual revenues of over $1,000,000
c. can assist in determining whether the company needs additional financing
d. provides a measure of the goodwill that has been generated by management
Question 10. Cash paid for financing activities would include cash paid for:
a. the stock of another company
b. merchandise inventory
c. the purchase of treasury stock
d. taxes
Question 11. "Purchases" appears on the:
a. balance sheet
b. income statement
c. statement of retained earnings
d. The other answers are all incorrect
Question 12. Net purchases is equal to purchases less:
a. purchases discounts
b. purchases returns and allowances
c. purchases discounts and purchase returns and allowances
d. trade discounts
Question 13. Merchandise purchased by Award, Inc. had an invoice price of $800 and terms of 2/15, n/30, FOB shipping point. As an accommodation, the seller prepaid shipping charges of $50. If payment is made within the discount period, the purchaser' s journal entry to record total payment would include a:
a. credit to Cash of $850
b. debit to Accounts Payable of $833
c. credit to Cash of $834
d. credit to Purchases Discounts of $17
Question 14. As owners of a corporation, stockholders have a right to elect the:
a. president of the corporation
b. treasurer of the corporation
c. board of directors of the corporation
d. officers of the corporation
Question 15. The corporate board of directors:
a. is elected by the corporate officers
b. manages the day-to-day operations of the corporation
c. is responsible for declaring dividends
d. approves transfers of stock between stockholders
Question 16. In computing the book value of common stock, assets are assumed to be saleable at their:
a. book values
b. fair market values
c. book values less selling expenses
d. fair market values less selling expenses and creditor claims against the assets
Question 17. The percentage increase in shares that defines the difference between a small and large stock dividend is which percentage of the previously outstanding shares?:
a. 5 to 10%
b. 10 to 15%
c. 20 to 25%
d. over 50%
Question 18. Upon close examination of the income statement, which of the following mathematical expressions would be true?
a. Net Sales - Gross Profit = Income from Operations
b. Gross Profit + Selling, General & Admst. Expenses = Net Sales
c. Net Income - Income Taxes = Net Income Per Share of C/S
d. Income from Operations - Interest Expense - Income Tax Exp. = Net Income
Question 19. Which of the following is not a correct expression of the accounting equation?
a. Assets - Liabilities = Owner's Equity
b. Net Assets = Equities
c. Assets = Equities
d. Assets = Liabilities + Owner's Equity
Question 20. According to generally accepted accounting principles, all of the following financial statements are required except:
a. Statement of Cash Flows
b. Income Statement
c. Balance Sheet
d. Statement of Changes in Owner's Equity
Question 21. If total assets were $21,000 and total liabilities were $12,000 at the beginning of the year, and if net income for the year was $5,000, what is total owne's equity at the end of the year?
a. $4,000
b. $5,000
c. $9,000
d. $14,000
Question 22. Retained Earnings is not:
a. Increase by net Income
b. Decreased by expenses
c. Increased by revenues
d. Decreased by gains and losses
Question 23. Which of the following is not a correct expression of the accounting equation?
a. Assets = Equities
b. Assets = Liabilities - Owner's Equity
c. Assets = Liabilities + Paid-in Capital + Retained Earnings
d. Assets = Liabilities + Paid-in Capital + Revenues - Expenses
Question 24. All of the following are typically classified as current assets except:
a. Marketable Securities
b. Accounts Receivables
c. Equipment
d. Cash
Question 25. Manufacturing firms have all of the following inventories except:
a. Merchandise inventory
b. Raw Material inventory
c. Work-in Process inventory
d. Finished Goods inventory
Question 26. Credits to the Accumulated Depreciation account during the period result from:
a. recording depreciation expense, and they decrease the net book value of the related assets.
b. Recording depreciation expense, and they increase the net book value of the related assets.
c. Recording depreciation expense, and they have no effect on the net book value of the related assets.
d. Selling the related asset, and they decrease the net book value of the related assets.
Question 27. Which depreciation method results in equal depreciation expense amounts for each year of an asset's useful life?
a. Units-of-production
b. Straight-line
c. Sum-of-the-years-digits
d. Double-declining-balance
Question 28. All of the following are examples of "accrued expense" types of liabilities except the liability for:
a. short-term notes taken out at a bank during the year.
b. Payroll taxes owed by the employer for the year
c. Property taxes owed to local governments for the year
d. Salaries and wages owed to employees at the end of the year
Question 29. The amount of interest expense that would accrue on a $32,600 note payable maturing in 90 days with a 14% rate would be computed as:
a. $32,600 X 14%
b. $32,600 X 14% X 3/24
c. $32,600 X 14% X 3
d. $32,600 X 14% X 90/360
Question 30. Michael sells Melissa his grand piano and wished to avoid both the cost of shipping it, and the risk of loss while the piano is in transit. He should send the piano:
a. FOB shipping point, freight collect
b. FOB shipping point, freight prepaid
c. FOB destination, freight collect
d. FOB destination, freight prepaid