Acct 504 Final Exam

ACCT 504 FINAL EXAM

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ACCT 504 Final Exam,

1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5)

it has limited life

its owner’s personal resources are at stake

its ownership is easily transferable via the sale of shares of stock

it is simple to establish

(TCO A) When a corporation distributes a dividend, _____. (Points : 5)

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

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

Cash $7,000

Prepaid insurance 700

Accounts receivable 3,500

Accounts payable 2,800

Notes payable 4,200

Common stock 1,400

Dividends 700

Revenues 21,000

Expenses 17,500

What did Denton Company show as total credits? (Points : 5)

$30,100

$29,400

$28,700

$30,800

(TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5)

sales under $1,000,000

no accountants on staff

insignificant receivables and payables

all sales and purchases on account

(TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the lowest amount of income tax expense? (Points : 5)

FIFO

LIFO

The average cost method

Income tax expense for the period will be the same under all assumptions.

(TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5)

$14,160...