ACC 291 FINAL EXAM NEW 2017

ACC 291 FINAL EXAM NEW 2017

The term “receivables” refers to

  • cash to be paid to debtors.
  • merchandise to be collected from individuals or companies.
  • cash to be paid to creditors.
  • amounts due from individuals or companies.

 

Three accounting issues associated with accounts receivable are

  • depreciating, valuing, and collecting.
  • depreciating, returns, and valuing.
  • accrual, bad debts, and accelerating collections.
  • recognizing, valuing, and accelerating collections.

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when:

  • management estimates the amount of uncollectibles.
  • a customer’s account becomes past due.
  • an account becomes bad and is written off.
  • a sale is made.

Which one of the following is not a principle of sound accounts receivable management?

  • Determine a payment period.
  • Determine to whom to extend credit.
  • Delay cash receipts from receivables if necessary.
  • Monitor collections.

The accounts receivable turnover is used to analyze

  • profitability.
  • long-term solvency.
  • liquidity.
  • risk.

The following information is provided for Sunland Company and Marigold Corp.:

1

What is Marigold’s return on assets (rounded) for 2017?

  • 3%
  • 2%
  • 3%
  • 9%

Which of the following is not properly classified as property, plant, and equipment?

  • A truck held for resale by an automobile dealership.
  • Land improvement, such as parking lots and fences.
  • Building used as a factory.
  • Land used in ordinary business operations.

A characteristic of a plant asset is that it is

  • held for sale in the ordinary course of the business.
  • used in the operations of a business.
  • not currently used in the business but held for future use.
  • intangible

A current liability is a debt that can reasonably be expected to be paid

  • out of cash currently on hand.
  • within one year, or the operating cycle, whichever is longer.
  • out of currently recognized revenues.
  • between 6 months and 18 months.

A current liability is a debt that can reasonably be expected to be paid

  • out of cash currently on hand.
  • within one year, or the operating cycle, whichever is longer.
  • out of currently recognized revenues.
  • between 6 months and 18 months.

 

The 2017 financial statements of Blossom Company contain the following selected data (in millions).

2

The debt to assets ratio (rounded) is

  • 40%.
  • 7.1 times.
  • 44.4%.
  • 2.25%.

In a recent year Monty Corp. had net income of $152000, interest expense of $28700, and income tax expense of $41500. What was Monty Corp.’s times interest earned (rounded) for the year?

  • 7.74
  • 6.30
  • 6.74
  • 5.30

If bonds are issued at a discount, it means that the

  • bondholder will receive effectively less interest than the contractual rate of interest.
  • market interest rate is lower than the contractual interest rate.
  • financial strength of the issuer is suspect.
  • market interest rate is higher than the contractual interest rate.

If bonds are issued at a premium, the stated interest rate is

  • higher than the market rate of interest.
  • too low to attract investors.
  • lower than the market rate of interest.
  • adjusted to a higher rate of interest. 

The chief accounting officer in a company is known as the

  • treasurer.
  • controller.
  • vice-president.
  • president.

Which one of the following would not be considered an advantage of the corporate form of organization?

  • Separate legal existence.
  • Continuous life.
  • Limited liability of stockholders.
  • Government regulation.

Which of the following would not be true of a privately held corporation?

  • It is usually smaller than a publicly held company.
  • It is sometimes called a closely held corporation.
  • Its shares are regularly traded on the New York Stock Exchange.
  • It does not offer its shares for sale to the general public.

The following information pertains to Sheffield Company. Assume that all balance sheet amounts represent average balance figures

3

What is Sheffield’s payout ratio?

  • 11%.
  • 39%.
  • 19%.
  • 26.05%.

 

Ayayai Corp. had net income of $91875 and paid dividends of $39000 to common stockholders and $16500 to preferred stockholders in 2017. Ayayai Corp. common stockholders’ equity at the beginning and end of 2017s was $440000 and $565000, respectively. Ayayai Corp. return on common stockholders’ equity is

  • 15%.
  • 14%.
  • 10%.
  • 19%.

The primary purpose of the statement of cash flows is to

  • facilitate banking relationships.
  • provide information about the investing and financing activities during a period.
  • prove that revenues exceed expenses if there is a net income.
  • provide information about the cash receipts and cash payments during a period

Which one of the following items is not generally used in preparing a statement of cash flows?

  • Current income statement.
  • Additional information.
  • Adjusted trial balance.
  • Comparative balance sheets.

The category that is generally considered to be the best measure of a company’s ability to continue as a going concern is

  • cash flows from investing activities.
  • usually different from year to year.
  • cash flows from financing activities.
  • cash flows from operating activities.

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, a stock dividend declared and issued would be classified on the statement of cash flows.

  • Does not represent a cash flow.
  • Investing activities section.
  • Financing activities section.
  • Operating activities section.

Free cash flow provides an indication of a company’s ability to

  • generate cash to invest in capital expenditures.
  • generate cash to pay dividends.
  • generate cash to invest in capital expenditures and to pay dividends.
  • generate net income

When using the indirect method to compute cash provided by operating activities

  • increases in accounts receivable are added to net income.
  • income taxes paid may be ignored.
  • amortization expense is added to net income.
  • decreases in inventory are subtracted from net income

To determine the net cash provided (used) by operating activities, it is necessary to analyze

  • the current year’s income statement.
  • a comparative balance sheet.
  • additional information.
  • all of these answer choices are correct.

Which of these is not a liquidity ratio?

  • Current ratio
  • Accounts receivable turnover
  • Asset turnover
  • Inventory turnover

The current ratio would be of most interest to

  • long-term creditors.
  • stockholders.
  • customers.
  • short-term creditors