1. A corporation has which of the following sets of characteristics? Shared control, tax advantages, increased skills, and resourcesSimple to set up and maintains control with the founderEasier to transfer ownership and raise funds, no personal liability for stockholdersHarder to raise funds and gives owner control2. The Dividends account . is increased with a debitis decreased with a creditis not an expense accountAll of the above3. Denton Company showed the following balances at the end of its first year:Cash $7,000Prepaid insurance 700Accounts receivable 3,500Accounts payable 2,800Notes payable 4,200Common stock 1,400Dividends 700Revenues 21,000Expenses 17,500What did Denton Company show as total credits on its trial balance? $30,100$29,400 $28,700$30,8004. Under the accrual basis of accounting, . cash must be received before revenue is recognizednet income is calculated by matching cash outflows against cash inflowsevents that change a companys financial statements are recognized in the period they occur rather than in the period in which cash is paid or receivedthe ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles5. In a period of increasing prices, which inventory cost flow assumption will result in the lowest amount of income tax expense? FIFOLIFOThe average cost methodIncome tax expense for the period will be the same under all assumptions.6. 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 . $14,160$11,760 $9,840$9,6007. Mendez Corporation issues 2,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 103. The journal entry to record the issuance will show a . debit to Cash of $2,000,000debit to Premium on Bonds Payable for $60,000credit to Bonds Payable for $2,000,000 credit to Cash for $2,060,0008. Accounts receivable arising from sales to customers amounted to $40,000 and $35,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is . $110,000$105,000$115,000 $150,0009. One variation of the horizontal analysis is known as . nonlinear analysisvertical analysistrend analysiscommon-size analysis10. Comparisons of data within a company are an example of the following comparative basis. Industry averagesIntercompanyIntracompanyInterregional11. Which one of the following is not a characteristic generally evaluated in ratio analysis? LiquidityProfitabilityMarketability of the productSolvency12. A common measure of liquidity is . return on assetscurrent ratioprofit margindebt to equity13. Long-term creditors are usually most interested in evaluating . liquiditymarketabilityprofitabilitysolvency14. To calculate the market value of a bond, we need to . find out the present value of all of the future cash payments promised by the bondcalculate the present value of the principal onlycalculate the present value of the interest onlymultiply the bond price by the interest rate
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