Question : (TCOs A, B, and C) Shareholders want answers to all of the following questions except:
Student Answer: How does the company compare in profitability with competitors?
Did the company meet its operating expense budget?
Will the company be able to pay its liabilities as they come due?
Is the company earning a satisfactory return?
Instructor Explanation: Chapter 1
Points Received: 3 of 3
Comments:
Question 2. Question : (TCO C) Paying cash dividends is an example of a(n)
Student Answer: operating activity.
investing activity.
financing activity.
non-cash financing activity.
Instructor Explanation: Chapter 1
Points Received: 0 of 3
Comments:
Question 3. Question : (TCO C) Buying a new plant would be an example of which type of activity?
Student Answer: Operating
Financing
Investing
None of the above
Instructor Explanation: Chapter 1
Points Received: 3 of 3
Comments:
Question 4. Question : (TCO A) Which of the following should not be classified as a current liability?
Student Answer: Accounts Payable
A note payable due in 15 months
Income Tax Payable
Unearned Revenue
Instructor Explanation: Chapter 3
Points Received: 0 of 3
Comments:
Question 5. Question : (TCO B) For 2012, LBJ Corporation reported net income of $75,000; net sales $750,000; and weighted average shares outstanding of 7,500. There were no preferred stock dividends. What was the 2012 earnings per share?
Student Answer: $100.00
$50.00
$10.00
$110.00
Instructor Explanation: ($75,000 minus 0)divided by 7,500 shares = $10.00, Chapter 11
Points Received: 3 of 3
Comments:
Question 6. Question : (TCO D) Which of the following describes the normal balance and classification of the Unearned Revenue account?
Student Answer: debit, Expense
credit, Liability
credit, Stockholders’ equity
debit, Liability
Instructor Explanation: Chapter 3
Points Received: 3 of 3
Comments:
Question 7. Question : (TCO E) Which of the following statements is correct?
Student Answer: Cash-basis accounting records revenue when earned.
Cash-basis accounting records expenses when incurred.
Accrual accounting records expenses when incurred.
Accrual accounting records revenue when the payment is received in cash.
Instructor Explanation: Chapter 3
Points Received: 3 of 3
Comments:
Question 8. Question : (TCOs A and B) A periodic inventory system would most likely be used by a(n)
Student Answer: automobile dealership.
jewelry store.
furniture store.
local neighborhood restaurant.
Instructor Explanation: Chapter 6
Points Received: 3 of 3
Comments:
Question 9. Question : (TCOs A and B) LBJ Company recorded the following events involving a recent merchandise purchase.
– Received goods for $40,000, terms 2/10, n/30
– Returned $1,200 of the shipment for credit due to damaged goods
– Paid $1,000 for freight in
– Paid the invoice within the discount period
As a result of these events, the company’s merchandise inventory
Student Answer: increased by $39,800.
increased by $39,024.
increased by $38,988.
increased by $39,000.
Instructor Explanation: ($40,000 – $1,200) x 98% = $38,024 + $1,000 for freight = $39,024. Chapter 6
Points Received: 3 of 3
Comments:
Question 10. Question : (TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest gross profit figure?
Student Answer: FIFO method
LIFO method
Average cost method
Cannot determine based on the information given
Instructor Explanation: Chapter 6
