Acct 504 Final Exam Answers

ACCT 504 Final Exam Answers

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ACCT 504 Final Exam Answers

(TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Reduced legal liability for investors

Harder to transfer ownership

Lower taxes

Most common form of organization

(TCO A) When a corporation distributes a dividend, _____.

the most common form of distribution is a cash dividend

the Dividends account will be increased with a credit

the Retained Earnings account will be directly increased with a debit

the Dividends account will be decreased with a debit

(TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000

Prepaid insurance 500

Accounts receivable 2,500

Accounts payable 2,000

Notes payable 3,000

Common stock 1,000

Dividends 500

Revenues 15,000

Expenses 12,500

Under the accrual basis of accounting, revenues are recorded and reported _____.

when companies receive payments for jobs performed or products provided

when companies have provided products or performed services

when companies receive payments prior to providing products or performing services

when companies receive payments after providing products or performing services

In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income?

LIFO

The average cost method

FIFO

Payne Corporation issues 100 twenty-year, 6%, $1,000 bonds dated July 1, 2010, at 94. The journal entry to record the issuance will show a _____.

debit to Cash of $100,000

credit to Bonds Payable of $94,000

credit to Premium on Bonds Payable of $4,000

debit to Discount on Bonds Payable of $6,000

What did Cerner Company show as total credits?

$21,500

$21,000

$20,500

$22,000

(TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____.

when they are incurred, whether or not cash is paid

when they are...