practice final_student

practice final_student - Practice Final BUSACC 0030 Part I...

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Practice Final BUSACC 0030 Part I True/False Questions (10 points) 1. A callable bond grants the option to the bondholder of electing to turn the bond in for early retirement. 2. A stock split results in the reduction of the par or stated value per share and a proportionate increase in the number of shares outstanding. 3. When a company borrows money from a bank, it leads to a cash inflow from an investing activity. 4. Use of an accelerated depreciation method would lead to a higher reported expense and lower income in the first year of an asset's life in comparison to a straight-line method. 5. A machine was purchased January 1, 2001 for $150,000. It has an estimated residual value of $30,000 and useful life of 10 years. Under the straight-line method, the asset's book value at the end of the first year is $138,000. 6. The separate-entity assumption assumes a stable monetary unit (not affected by inflation or deflation). 7. We calculate return on equity (ROE) by dividing operating income by average common stockholders' equity. 8. Financial leverage is computed by dividing average stockholders' equity by average total assets. 9. The purchase of equipment for cash has no effect on the right side of the accounting equation. 10. Income taxes incurred but not yet paid at the end of the accounting period is an example of a deferred expense adjustment. 1
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Part II Multiple Choice Questions (18 points) 1. Spot Corporation declared a cash dividend on December 30, 2000, payable on January 10, 2001. If Spot did not make a journal entry for the dividend declaration in December 2000, A) retained earnings and liabilities were understated. B) retained earnings and liabilities were overstated. C) expenses were understated. D) retained earnings was overstated and liabilities understated. 2.All assets appear on the A) Balance sheet. B) Income statement. C) Statement of stockholders' equity. D) Statement of cash flows. 3. Which of the following is not an asset account? A) Long-term investments. B) Deferred revenue. C) Machinery. D) Patent. 4. Kovacic Company purchased a computer that cost $10,000. It had an estimated useful life of five years and residual value of $0. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. Kovacic should record A) a gain of $1,000. B) a loss of $1,000. C) neither a gain nor a loss - the computer was sold at its book value. D) neither a gain nor a loss- the gain that occurred in this case would not be recognized. 5. The Sigma Corporation had 2001 revenues of $200,000, expenses of $140,000, and an income tax rate of 30 percent. Net income after taxes would be A) $60,000. B) $18,000. C) $42,000.
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practice final_student - Practice Final BUSACC 0030 Part I...

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