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Sample Midterm

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  • November 15, 2012
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GBA 521

Multiple Choice
Identify the choice that best completes the statement or answers the question.

__C__1.Raymond Corporation reported the following information for the year ended December 31, 2012:

| Net income| $ 10,000|
| Dividends| 6,000|
| Retained earnings at December 31, 2012| 25,000|

What was the economic effect of the payment of Raymond’s dividends? a.| The dividend reduced net income for 2012.|
b.| The dividend should be equal to net income if the company’s accounting equation is in balance.| c.| The dividends reduce total retained earnings for the year.| d.| The dividends must be paid whenever Raymond Corp. reports net income.|

__B__2.If a company has $152,000 of revenues, declares and pays $55,000 in dividends, and has net income of $89,000, how much were expenses for the year? a.| $ 8,000|
b.| $ 63,000|
c.| $144,000|
d.| Unable to determine the amount due to incomplete information.|

__C__3.T. Price Company has assets of $350,000, liabilities of $130,000, and retained earnings of $180,000. How much is total owners’ equity? a.| $ 40,000| c.| $ 220,000|
b.| $ 170,000| d.| $ 350,000|

___B_4.The preparation of financial statements requires that the information be understandable a.| Only to CPAs.|
b.| To those willing to spend the time to understand it.| c.| Only to those who take an accounting course.|
d.| Only to financial analysts and brokers.|

__D__5.Which set of items below are current assets?
a.| Accounts receivable, net income, inventory, and dividends| b.| Cash, accounts receivable, capital stock, and sales|
c.| Net income, cash, office supplies, and inventory|
d.| Cash, accounts receivable, inventory, and office supplies|

__B__6.For several years, Malcom Corporation has had a current ratio that was consistent with other companies in its industry. For the most recent year, Malcom’s current ratio was...