Exam_1_key_Fall_2010 - ACC 200 Exam 1 KEY Fall 2010...

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ACC 200 Exam 1 KEY Fall 2010 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Compared to S-corporations, large publicly-traded C-corporations: a. are harder to form. b. have greater access to raising money (capital).* c. receive more favorable tax treatment. d. allow the owners to avoid disclosing financial information about their firm. ____ 2. Which of the following is a false statement? a. S-corp shareholders and LLC owners both have limited liability b. LLCs with two or more owners are typically taxed as a pass-through entity (partnership) c. Limited partnerships provide limited liability for all of their partners * d. S-corporations must have 100 or fewer shareholders ____ 3. ABC Corporation is an accrual basis insurance agency. The company sells a comprehensive liability policy to a customer receiving $2,400 cash for an insurance policy which will provide coverage to the customer for the next 24 months. From ABC’s perspective, this is an example of: a. Deferred expense b. Accrued expense c. Deferred revenue * d. Accrued revenue ____ 4. ABC Corporation uses the accrual basis and performs work for a client in August 2010 and bills the client late in the month. However, the client does not pay the bill until October 2010. From ABC’s perspective, in August this transaction would be recorded as: a. Deferred revenue b. Prepaid revenue c. Unearned revenue d. Accrued revenue * ___ 5. XYZ Corporation (an accrual basis C-corporation) borrows $15,000 cash from the bank. From the perspective of XYZ Corp, how would this transaction affect the elements of the balance sheet equation? a. Assets increase and stockholders' equity increase b. Assets increase and liabilities increase * c. Assets increase and stockholder’s equity decrease d. Assets, liabilities and stockholder’s equity are not changed but one asset goes up and one asset goes down in equal amounts 1
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6. After recording all of its transactions for the first month of operations, O’Brien Inc. had the following account balances (listed in alphabetical order): Cash 34,000 Common Stock 6,000 Dividends Paid 10,000 Equipment 80,000 Land 20,000 Miscellaneous expense 12,000 Notes Payable 25,000 Rent expense 15,000 Salaries expense 60,000 Sales revenue 200,000 What is O’Brien’s ending balance in retained earnings? a. $113,000 b. $123,000 c. $133,000 d. None of the above * ___ 7. XYZ Corporation has taxable income of $20 million and pays its shareholders (all individuals) a dividend of $8 million. If the corporate income tax rate is a flat rate of 35% and dividends are taxed at a flat rate of 15%, the total amount of federal income tax paid by the corporation and its shareholders on XYZ’s earnings would be: a. $4,200,000 b. $5,400,000 c. $7 million d. $8,200,000* ____ 8. Refer to the data below. What was the company’s net income assuming no common stock was issued during the year, and dividends of $10,000 were paid? a.
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This note was uploaded on 01/11/2011 for the course ACC 200 taught by Professor Buckless during the Winter '08 term at N.C. State.

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Exam_1_key_Fall_2010 - ACC 200 Exam 1 KEY Fall 2010...

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