Here is 20 questions-Accounting

Quesfions I to 20: Select the best answer to each question. Note that a question and its answers may be split across a page brealr, so be sure that you have seen the entire question and, all the answers before choosing an answer. L. Centerville Company's debt-to-equity ratio is 0.60 Total assets are $320,000, current assets are $170,000, and working capital is $80,000. Centerville's long-term liabilities must be A. $30,000. B. $90,000. c. $80,000. D. $120,000. Use the following information to answer this question. The most recent balance sheet and income statement of Teramoto Corporation appear below: Ending Beginning Balance Balance $43 53 $35 59 73 Comparative Balance Sheet 69 490 Assets: Cash and cash equivalents Accounts receivable lnventory Plant and equipment Less accumulated depreciation Total assets 582 301 $4s0 Liabilities and stockholders' equity M W - $s7 $48 2l Accounts payable Wages payable Taxes payable Bonds payable Deferred taxes Common stock 18 15 13 2t 20 20 2t 55 Retained earnings Total liabilities and stocktolders' equity 50 26r t97 $450 $367 Income Statement Sales Cost of good sold Gross margin Selling and administative expense Net operating income Income taxes s893 587 306 189 117 35 Net incoine s82 & Cash dividends were $18. 2. The net cash provided by (used by) financing activities for the year was A. ($18). B. ($12). c. $s. D. $1. 3, A weakness of the intemal rate of retum method for screening invesfinent projects is that it A. implicitly as$unes that the company is able to reinvest cash flows from the project at the intemal rate of return. B. implicitly assumes that the company is able to reinvest cash flows from the project at the company's discount rate. C. doesn't consider the time value of money. D. doesnt take into account all of the cash flows from a project. 4. (Ignore income tanes in this problem.) The following data pertain to an investnent: inveshnent Life ofthe project Annual cost savings Estimated salvage value Discount rate Cost of the $18,955 5 years $5,000 $1,000 l0% The net present value of the proposed investment is A. s(3,430). B. $621. c. $3,355. D. $0. 5. Which of the following would be classified as a financing activity on the statement of cash flows? A. Dividends paid to shareholders of the company on the company's common stock B. Dividends received on invesfinents in another company's common stock C. lnterest received on investnents in another company's bonds D, Interest paid on bonds issued by the reporting company 6. The net present value method assumes that the project's cash flows are reinvested at the A. intemal rate of retum. B. simple rate of return. C. discount rate used in the net present value calculation. D. payback rate of return. Use the following information to answer this question. Financial statements for Larkins Company appear below: Larkins Company Statement of Financial Position December 31, Year 2 and Year (dollars in thousands) Year2 Year I $180 $180 2t0 180 Inventory 130 120 Prepaid expenses 50 574 530 1.540 1.480 $2,110 $2,010 Current assets: Cash and marketable securities Accounb receivable, net Total current assets Noncurrent assets: Plant & equipment, net Total assets 50 Cunent liabilities: Accounts payable Accrued liabilities Notes payable, short term Total cunent liabilities Noncurrent liabilities: Bonds payable Total liabilities Stockholders' equity: Preferred stoch $20 par, l0% Common stock, $10 par Additional paid-in capital--common stock Retained earnings Total stocktolders' equity Total liabilities & stockholders' equity $100 60 90 250 480 $130 60 120 310 730 500 810 na 120 180 180 240 840 244 660 L2A0 s2.010 1.380 $2.110 Larkins Company Income Statement For the Year Ended December 3l,Year 2 (dollars in thousands) Sales (all on account) Cost of goods sold Gross margin Selling and administative expense Net operating income Interest expense Net income before taxes Income taxes (3fflo) Net income $2,760 1"930 830 330 500 50 450 135 $3ls Dividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $150. 7. Larkins Company's dividend payout ratio for Year 2 was closest to: 4.42.9% 8. t4.8% c.40.6% D.24.6% 8. Britfinan Corporation makes three products that use the current constraint-a particular type of machine. Data concerning those products appear below: Selling price per unit Variable cost per unit Minutes on the consfraint IP $183.57 s144.42 2.90 NI 92A7.74 $155.04 3.40 YD $348.1s S26e.s0 5.s0 Assume that suffrcient constaint time is available to satisS demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the consffained resource? A. $15.50 per minute B. $13.50 per minute C. $78.65 per unit D. $39.15 per unit 9. Part N19 is used by Malouf Corporation to make one of its products. A total of 7,000 units of this part are produced and used every year. The companfs Accounting Deparfinent reports the following costs of producing the part at this level of activity: Psr Unit materials Direct labor Direct overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Variable manufacturing $2.20 $8.50 $1.30 $5.80 $7.20 S4.60 An outside supplier has offered to make the part and sell it to the company for $24.50 each. If this offer is accepted, the supervisols salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part N19 could be used to make more of one of the company's other products, generating an additional segment margin of $25,000 per year for that product. What would be the impact on the company's overall net operating income of buying part N19 from the outside supplier? A- Net operating income would decline by $10,700 per year. B. Net operating income would decline by $60,700 per year. C. Net operating income would decline by $21,900 per year. D. Net operating income would increase by $25,000 per year. 10. (Ignore income tares in this problem.) The Keego Company is planning a $200,000 equipment investment that has an estimated five-year life with no estimated salvage value. The company has projected the following annual cash flows for the investment: Year I Cash Inflows $120,000 2 60,000 3 40,000 4 40,000 5 40.000 Total 5300,000 Assuming that the cash inflows occur evenly over the year, the payback period for the invesfinent is years. A.4.91 B.2.50 c. 1.67 D.0.75 11. Cridwell Company's selling and administrative expeffies for last year totaled $210,000. During the year, the company's prepaid expense account balance increased by $18,000, and accrued liabilities increased by $12,000. Depreciation charges for the year were S24,000. Based on this information, selling and adminisfrative expenses adjusted to a cash basis under the direct method on the statement of cash flows would be A. $192,000. B. $180,000. c. $240,000. r). $228,000. 12. Degner Inc. has some material that originally cost $19,500. The material has a scrap value of $13,300 but if reworked at a cost of $2,100, it could be sold for $14,000. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as as is, scrap? A. $11,900 B. -$7,600 c. -$1,400 D. -$20,900 13. An increase in the market price of a company's common stock will immediately affect its A. dividend payout ratio. B. debt-to-equity ratio. C. dividend yield ratio. D. earnings per share of common stock. 14. Kava Inc, manufactures industial components. One of its products, which is used in the construction of industrial air conditioners, is known as K65. Data concenring this product are given below: Per Unit Selling price $180 Direct materials $29 Direct labor $s Variable manufacturing overhead $4 Fixed manufacturing overhead $21 Variable selling expense $2 Fixed selling and administrative expense $17 The above per unit data are based on annual production of 4,000 units of the component. Direct labor can be considered to be a variable cost. (Source: CMA, adapted) The company has received a special, one-time-only order for 500 units of component K65. There would be no variable selling expense on this special order, and the total fixed manufacturing overhead and fixed selling and adminisfrative expenses of the company wouldn't be affected by the order. Assuming that Kava has excess capacity and can fill the order without cutting back on the production of any product, what is the minimum price per unit on the special order below which the company shouldn't go? A. $38 B. $78 c. $59 D. $180 Use the following information to answer this question. Financial statements for Larkins Company appear below: Larkins Company Statement of Financial Position December 31, Year 2 oadYear (dollars in thousands) 1 Year2 120 530 1.480 $2,110 Total assets 180 1.540 Prepaid expenses Total current assets Noncurrent assets: Plant & equipment net $180 210 50 570 Inventory $180 130 Current assets: Cash and mmketable securities Accounts receivable, net Year I $2,010 i0 Cunent liabilities: Accounts payable Accrued liabilities Notes payable, short tenn Total current liabilities Noncurrent liabilities 250 $130 60 120 310 480 ru $100 60 90 : Bonds payable 730 Total liabilities Stoc*holders' equity: Preferred stock, $20 par, Common stock, $10 par l0% 810 120 120 180 180 Additional paid-in capital--common stock earnings stockholders'equity Total liabilities & stoctholders'equity Retained Total 240 840 138q $2.110 240 660 1.?00 $2.01Q Larkins Company Income Statement For the Year Ended December (dollars in thousands) 3l,Year 2 Sales (all on account) $2,760 Cost of goods sold Gross margin Selling and administrative expense Net operating income Interest expense Net income before taxes 1.930 830 330 500 50 450 15 lncome taxes (30%) Net income $3ls Dividends during Year 2 totaled $135 thousand, of which $12 thousand were prefered dividends. The market price of a share of common stock on December 31, Year 2 was $150. 15, Larkins Company's price-earnings ratio on December 31, Year 2 was closest to: A.8.91 8.20.79 c.8.57 D.6.00 Use the following information to answer this question. Financial statements for Larkins Company appear below: Larkins Company Statement of Financial Position December 31, Year 2 andYear (dollars in thousands) 1 Year Current assets: Cash and marketable Accounts receivable, securities net Inventory Prepaidexpenses Total current assets Noncurrent assets: Plant & equipmen! Total assets Current liabilities: Accounts payable net 2 $180 2lO 130 5P 570 1.540 $2,110 $100 Year I $180 180 120 50 530 1.480 $2,010 $130 Accruedliabilities Notes payable, short term Total cunent liabilities 60 90 250 60 120 310 480 730 500 810 120 180 240 840 1.380 $2.110 120 Noncurrent liabilities: Bondspayable Total liabilities Stockholders' equity: $20par,10% par stock Retained earnings Total stockholders'equity Total liabilities & stockholders'equity Preferredstock, Common stoclg $10 Additional paid-in capital--common 180 240 66q 1.200 $2.010 Larkins Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (all on account) s2,760 Cost of goods sold Gross margin Selling and administative sxpnse Net operating income Interest expense Net income before taxes Income taxes (307o) Net income 1.930 830 310 500 50 450 135 $315 Dividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $150. 16. Larkins Company's return on total assets for Year 2 was closest to: L. r53%. B.17.Oo/o. c.16.0%. D.l3.6Yo. . Use the following information to answer this question. Financial statements for Larkins Company appear below: Larkins Company Statement of Financial Position December 31, Year 2 and Year (dollars in thousands) 1 Year Current assets: Cash and marketable Accounts receivable, securities net 2 $180 2t0 Year I $180 180 hventor] Prepaid expenses Total current assets Noncurrent assets: Plant & equipment net Total assets 130 120 50 570 s30 1.540 1.480 $2,110 $2,010 50 Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Noncurrent liabilities: Bonds payable Total liabilities Stockholders' equity: Preferred stock, $20 par, 10% Common stock, $10 par Additional paid-in capital--common stock $100 60 90 250 480 500 730 810 120 120 180 180 240 840 Retained earnings Total stockholders' equity Total liabilities & stockfiolders' equity $130 60 120 310 240 660 1"380 1.200 $2.110 $2.010 Larkins Company lncome Statement For the Year Ended December 31, Year 2 (dollars in thousands) Sales (all on account) Cost of goods sold Gross margin Selling and administrative expeilse Net operating income Interest expense Net income before taxes Income taxes (307o) Net income $2,760 1.930 830 330 500 50 450 135 $31s Dividends furing Year 2 totaled $135 thousando of which S12 thousand were prefered dividends. The market price of a share of common stock on December 31, Year 2 was $150. 17. Larkins Company's return on corlmon stocl