Devry Acct 504 Final Exam - 2014

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DeVry ACCT 504 Final exam - 2014

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1. Which 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

2. Dividends _____.

represent an expense and are an operating activity

represent an obligation and are an operating activity

represent a distribution of earnings and are a financing activity

represent an asset and are an investing activity

3. Below is a partial list of account balances for LBJ Company:

Cash $15,000

Prepaid insurance 5,000

Accounts receivable 2,500

Accounts payable 3,000

Notes payable 6,000

Common stock 10,000

Dividends 500

Revenues 15,000

Expenses 13,000

What did LBJ Company show as total debits?





4. 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

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


The average cost method


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

6. Equipment was purchased for $55,000 on January 1, 2011. Freight charges of $2,200 were incurred and there was a cost of $1,800 for installation. It is estimated the equipment will have a $5,500 salvage value at the end of its 5-year useful life. Depreciation expense for 2011 using the...