Accounting MCQ Part-II - 90543

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24. Fine Furniture Company had a net income of \$50,000. Accounts receivable increased by \$30,000; inventory decreased by \$20,000; amounts payable increased by \$4,000; and salaries payable decreased by \$1,000. The amount of cash flow from continuing operating activities under the indirect method is A. \$55,000. B. \$65,000. C. \$43,000. D. \$37,000. 25. Tucker, Inc.'s net sales decreased from \$90,000 in year one to \$45,000 in year two, and its cost of goods sold decreased from \$30,000 in year one to \$20,000 in year two. The vertical analysis based on sales for cost of goods sold for the two periods (rounded to nearest tenth of a percent) is A. 44.4% and 33.3%. B. 33.3% and 44.4%. C. 225% and 300%. D. 300% and 225%. 26. Tucker Enterprises' Accounts Receivable increased by \$48,000, and its Accounts Payable increased by \$27,000. What is the net effect on cash from operations under the indirect method? A. –\$75,000 B. –\$21,000 C. +\$75,000 D. +\$21,000 27. Hallett Industries, Inc. reported net sales of \$306,000, cost of goods sold of \$192,600, operating expenses of \$58,900, and income tax expense of 12,300. What is Hallett Industries' net income percentage? A. 62.94 B. 37.06 C. 17.81 D. 13.79 28. Allied Industrial has net sales of \$1,200,000, net income of \$85,000, average current assets of \$53,000, average fixed assets of \$184,000, and average total assets of \$237,000. What is Allied Industrial's total asset turnover ratio? A. 5.06 B. 22.64 C. 6.52 D. 0.20 29. Hanna Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Hanna's cash conversion cycle is A. 103 days. B. 43 days. C. 121 days. D. 9 days. 30. A business wanting to incorporate must file articles of incorporation with A. any state in which they will do business. B. the state office dealing with incorporation. C. the federal government. D. the local government. 31. Operating activities are transactions and events associated with selling a product or providing a service related to the A. retained earnings reported on the balance sheet. B. net income reported on the statement of retained earnings. C. assets and liabilities reported on the balance sheet. D. revenues and expenses reported on the income statement. 32. Frank's Taxidermy has a cash conversion cycle of _______ days, which means the business may be facing a cash flow crunch. A. 10 B. 40 C. 70 D. 100 33. Motor Works, Inc. has declared a \$20,000 cash dividend to shareholders. The company has 5,000 shares of \$15-par, 10% preferred stock and 10,000 shares of \$20-par common stock. The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is \$8,000 in arrears? A. \$20,000 preferred, \$0 common B. \$8,000 preferred, \$12,000 common C. \$15,500 preferred, \$4,500 common D. \$7,500 preferred, \$12,500 common 34. Eagle Ridge, Inc. issued 40 shares of \$20 par value stock to its accountant in full payment for her \$900 fee for assisting in setting up the new company. The entry for the issuance of the stock is a A. debit to Paid-in Capital in Excess of Par–Common for \$100. B. credit to Common Stock for \$800. C. credit to Common Stock for \$900. D. debit to Common Stock for \$800. 35. An example of a cash outflow from investing activities is A. the purchase of treasury stock. B. issuance of a note payable. C. paying cash dividends. D. making a loan to another company. 36. The statement of cash flows reports the sources and uses of cash from financing, investing, and _______ activities. A. managerial B. credit C. liquidation D. operating 37. The Coulter Corporation Stockholders' Equity section includes the following information: Preferred Stock \$12,000 Paid-in Capital in Excess of Par-Preferred \$2,700 Common Stock \$15,000 Paid-in Capital in Excess of Par-Common \$4,100 Retained Earnings \$8,200 What is the total selling price of the common stock? A. \$15,000 B. \$27,300 C. \$19,100 D. \$14,700 38. Galaxy Donuts has a cash conversion cycle of _______ days, which is a very healthy turnover rate. A. 90 B. 120 C. 60 D. 30 39. The stockholders' right of _______ means that stockholders will receive a proportionate share of any assets left after a company goes out of business. A. voting B. dividends C. preemption D. liquidation 40. A company has current assets of \$70,000, quick assets of \$30,000, total assets of \$150,000, current liabilities of \$50,000, and net sales of \$80,000. What is the current ratio of this company? A. 0.20 B. 1.00 C. 3.00 D. 1.40 41. The debt ratio is the relationship between A. total assets and current liabilities. B. current assets and total liabilities. C. current assets and current liabilities. D. total assets and total liabilities. 42. A business's Accounts Payable balance has decreased during the year. How would this affect the statement of cash flows operations section under the indirect method? A. It would be subtracted from net income. B. It is already included in the net income. C. It does not affect the cash flow from operations. D. It would be added back to net income.
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