TCOs A, B, and C) Which type of corporate information is available to investors?

Keller ACCT 504 Financial Accounting Midterm Answers


    1. TCOs A, B, and C) Which type of corporate information is available to investors?
    2. (TCO C) Paying cash dividends is an example of a(n)
    3. (TCO A) Assets include
    4. TCO A) On a classified balance sheet, prepaid expenses are classified as
    5. (TCO B) For 2012, LBJ Corporation reported net income of $25,000; net sales $250,000; and weighted average shares outstanding of 5,000. There were no preferred stock dividends. What was the 2012 earnings per share?
    6. (TCO D) Which of the following describes the normal balance and classification of the dividends account?
    7. (TCO E) The accrual accounting term used to indicate recording an expense before paying cash for the item is _____
    8. (TCOs A and B) A perpetual inventory system would most likely be used by a(n) _____
    9. TCOs A and B) LBJ Company recorded the following events involving a recent purchase of merchandise.
      - Received goods for $75,000, terms 2/10, n/30
      - Returned $2,500 of the shipment for credit due to damaged goods
      - Paid $1,200 for freight in
      - Paid the invoice within the discount period
      As a result of these events, the company's merchandise inventory
    10. (TCO A) In a period of increasing prices, which of the following inventory methods generally results in the highest gross profit?
    11. (TCO D) An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased, and the normal balance of each type of accounts.
    12. (TCOs B and E) The adjusted trial balance of Gertz Company included the following selected accounts.
  • Debit
  • Credit
  • Sales
  • $575,000
  • Sales returns and allowances
  • $ 50,000
  • Sales discounts
  • 9,500
  • Cost of goods sold
  • 347,000
  • Freight-out
  • 2,000
  • Advertising expense
  • 15,000
  • Interest expense
  • 19,000
  • Store salaries expense
  • 74,000
  • Utilities expense
  • 18,000
  • Depreciation expense
  • 3,500
  • Interest revenue
  • 25,000

  • Instructions: 
    •Use the above information to prepare a multiple-step income statement for the year ended December 31, 2010. 
    •Calculate the profit margin ratio and gross profit rate. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.
  1. (TCOs D and E) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.
    Investors invest $600,000 in exchange for 30,000 shares of common stock.
    Company paid rent of $3,000.
    Company billed $5,000 for services performed.
    Company purchased supplies of $3,000.
    Company received $20,000 for services not yet performed.
  2. (TCO D) Your friend Wendy plans to open a hair salon. Wendy states that she does not have time to develop and implement a system of internal controls.
    Explain to Wendy the objectives of a system of internal control.
    Explain to Wendy at least four key controls she must establish to protect herself against fraud. You should state specific internal control procedures and relate your answer to her hair salon business.