2023 QUESTIONS 692RR CORPORATIONS When you have completed your exam and reviewed your answers click Submit Exam | Assignments Online

QUESTIONS :

 

692RR -CORPORATIONS 

 

 

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Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page 

 

break, so be sure that you have seen the entire question and all the answers before choosing an answer. 

 

1. Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and 

$90,000 at the end of the year. There were no changes in the amount in accounts payable for the year. 

Cash payment for merchandise to be reported under the direct method is 

A. $910,000. 

B. $850,000. 

C. $880,000. 

D. $940,000. 

2. The Isaiah Corporation Stockholders’ Equity section includes the following information: 

Preferred Stock $22,000 

Paid-in Capital in Excess of ParPreferred 2,980 

Common Stock 48,000 

Paid-in Capital in Excess of ParCommon 3,400 

Retained Earnings 7,350 

 

 

Total par value of the preferred and common stock is 

 

A. $83,730. 

B. $70,000. 

C. $76,380. 

D. $77,350. 

3. The accuracy of the statement of cash flows can be verified by computing the change in the balance of 

the 

A. asset and liability accounts. 

B. revenue accounts. 

C. cash and cash equivalent accounts. 

D. equity account. 

4. 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 CapitalTreasury Stock is 

A. $26,000. 

B. $34,000. 

C. $8,000. 

 

D. $30,000. 

5. 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. Operating activities 

D. Investing activities 

6. 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. 62.5% and 75.0% 

B. 75.0% and 62.5% 

C. 160.0% and 133.3% 

D. 133.3% and 160.0% 

7. The records of Ashley Boutique showed a net loss of $30,000; depreciation expense of $25,000; and an 

increase in supplies on hand of $5,000. The amount of net cash flow from operating activities using the 

indirect method is 

A. ($10,000). 

B. ($15,000). 

C. $20,000. 

D. $15,000. 

8. For vertical analysis purposes, the base item on the income statement is 

A. net income. 

B. total expenses. 

C. gross profit. 

D. net sales. 

9. 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. $40,000 preferred; $0 common 

B. $6,000 preferred; $34,000 common 

C. $0 preferred; $40,000 common 

D. $34,000 preferred; $6,000 common 

10. To determine why net income and cash on the balance sheet don’t equal, an accountant can prepare 

a/an 

A. balance sheet. 

B. statement of cash flows. 

 

C. statement of retained earnings. 

D. income statement. 

11. Net sales at Kelly’s Bakery increased from $40,000 to $60,000, and its cost of goods sold increased 

from $20,000 to $40,000. Vertical analysis based on net sales would show which percentages for cost of 

goods sold (rounded to the nearest %)? 

A. 40% and 20% 

B. 67% and 40% 

C. 10% and 30% 

D. 50% and 67% 

12. In a common-size income statement, selling expenses are 55%. This means that they’re 55% of 

A. net profit. 

B. net income. 

C. gross profit. 

D. net sales. 

13. Operating cash flows affect 

A. long-term asset accounts. 

B. equity accounts. 

C. long-term liability accounts. 

D. current assets and current liabilities. 

14. 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. $78,750. 

B. $183,750. 

C. $131,250. 

D. $52,500. 

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. 500 

B. 800 

C. 300 

D. 0 

16. Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current 

market value of $3,000. Which of the following is not part of the journal entry for this transaction? 

A. Crediting Common Stock for $3,000 

B. Crediting Common Stock for $2,400 

C. Debiting Equipment for $3,000 

 

End of exam 

D. Crediting Paid-in Capital in Excess of ParCommon for $600 

17. Isaiah Corporation’s Accounts Receivable increased by $35,000, and its Accounts Payable decreased 

by $18,000. What is the net effect on cash from operations under the indirect method? 

A. -$18,000 

B. +$17,000 

C. +$35,000 

D. -$53,000 

18. 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. 

19. 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. 3.217. 

B. 1.550. 

C. 1.133. 

D. 0.933. 

20. 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 

cumulative. How much will be distributed to the preferred and common stockholders on the date of 

payment if the preferred stock is $12,000 in arrears? 

A. $18,000 preferred; $22,000 common 

B. $40,000 preferred; $0 common 

C. $6,000 preferred; $34,000 common 

D. $20,000 preferred; $20,000 common