Acct 504 Final Test

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ACCT504 FINAL EXAM A GRADED v1. August 24, 2013 1. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? Reduced legal liability for investors Harder to transfer ownership Lower taxes Most common form of organization 2. Dividends _____. represent an expense and are an operating activity represent an obligation and are an operating activity represent a distribution of earnings and are a financing activity represent an asset and are an investing activity 3. Below is a partial list of account balances for LBJ Company: Cash $15,000 Prepaid insurance 5,000 Accounts receivable 2,500 Accounts payable 3,000 Notes payable 6,000 Common stock 10,000 Dividends 500 Revenues 15,000 Expenses 13,000 What did LBJ Company show as total debits? $34,000 $36,000 $70,000 $31,000 4. Under the accrual basis of accounting, revenues are recorded and reported _____. when companies receive payments for jobs performed or products provided when companies have provided products or performed services when companies receive payments prior to providing products or performing services when companies receive payments after providing products or performing services 5. In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income? LIFO The average cost method FIFO Income tax expense for the period will be the same under all assumptions. 6. Equipment was purchased for $55,000 on January 1, 2011. Freight charges of $2,200 were incurred and there was a cost of $1,800 for installation. It is estimated the equipment will have a $5,500 salvage value at the end of its 5-year useful life. Depreciation expense for 2011 using the straight-line method will be _____. $10,340 $10,700 $10,260 $9,900 7. Payne Corporation issues 100 twenty-year, 6%, $1,000 bonds dated

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