Please help me and answer my questions to this exam asap due tomorrow. I have completed more than half and will continue to work on it.

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West Los Angeles College Accounting 2 Fall 2016 Exam #2 Select the best answer from an accounting point of view. Take notice of special instructions. Use a Scantron answer sheet with a No. 2 or darker pencil. Leave no stray marks. The machine scoring will be final Student: ___________________________________________________________________________ 1. Risk is: A. Net income divided by average total assets. B. The reward for investment. C. The uncertainty about the expected return to be earned. D. Unrelated to expected return. E. Derived from the idea of getting something back from an investment. 2. Determine the net income of a company for which the following information is available for the month of May. A. $190,000. B. $210,000. C. $230,000. D. $400,000. E. $610,000. 3. Net Income: A. Decreases equity. B. Represents the amount of assets owners put into a business. C. Equals assets minus liabilities. D. Is the excess of revenues over expenses. E. Represents owners' claims against assets. 1 4. The group that attempts to create more harmony among the accounting practices of different countries is the: A. AICPA. B. IASB. C. CAP. D. SEC. E. FASB. 5. Revenue is properly recognized: A. When the customer's order is received. B. Only if the transaction creates an account receivable. C. At the end of the accounting period. D. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. E. When cash from a sale is received. 6. FastLane has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets. A. 7.7%. B. 8.5%. C. 9.5%. D. 11.8%. E. 13.0%. 7. Quick Computer Service had revenues of $80,000 and expenses of $50,000 for the year. Its assets at the beginning of the year were $400,000. At the end of the year assets were worth $450,000. Calculate its return on assets. A. 7.1% B. 7.5% C. 6.7% D. 20.0% E. 18.8% 2 8. A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n): A. Balance sheet. B. Income statement. C. Statement of cash flows. D. Statement of owner's equity. E. Financial Status Statement. 9. An example of an investing activity is: A. Paying wages of employees. B. Withdrawals by the owner. C. Purchase of land. D. Selling inventory. E. Contribution from owner. 10. The basic financial statements include all of the following except: A. Balance Sheet. B. Income Statement. C. Statement of Owner's Equity. D. Statement of Cash Flows. E. Trial Balance. 11. Flash has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is: A. $223,000. B. $240,000. C. $268,000. D. $274,000. E. $208,000. 12. A payment to an owner is called a(n): A. Liability. B. Withdrawal. C. Expense. D. Contribution. E. Investment. 3 13. Distributions of assets by a business to its owners are called: A. Withdrawals. B. Expenses. C. Assets. D. Retained earnings. E. Net Income. 14. A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n): A. Revenue activity. B. Operating activity. C. Expense activity. D. Investing activity. E. Financing activity. 15. Revenues are: A. The same as net income. B. The excess of expenses over assets. C. Resources owned or controlled by a company. D. The increase in equity from a company's earning activities. E. The costs of assets or services used. 4 5 16. A company is considering an investment that will return $20,000 semiannually at the end of each semiannual period for 4 years. If the company requires an annual return of 10%, what is the maximum amount it is willing to pay for this investment? A. Not more than $63,398. B. Not more than $126,796. C. Not more than $80,000. D. Not more than $129,264. E. Not more than $160,000. 17. A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period. How many years will elapse before the company accumulates the $15,529? A. 0.322 years. B. 3.1058 years. C. 5 years. D. 8 years. E. 10 years. 18. Sam has a loan that requires a single payment of $4,000 at the end of 3 years. The loan's interest rate is 6%, compounded semiannually. How much did Sam borrow? A. $3,358.40 B. $4,000.00 C. $3,660.40 D. $4,776.40 E. $3,350.00 19. What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000? A. 5%. B. 8%. C. 10%. D. 12%. E. 15%. 6 20. Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly. How much will Keisha have accumulated after 2 years? A. $4,433.80 B. $4,340.00 C. $4,390.40 D. $3,920.00 E. $3,500.00 21. How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50? A. 4 years. B. 5 years. C. 6 years. D. 2 years. E. 10 years. 22. What amount can you borrow if you make six quarterly payments of $4,000 at a 12 % annual rate of interest? A. $24,838.00. B. $21,668.80. C. $31,049.00. D. $40,000.00. E. $44,800,00. 23. An individual is planning to set-up an education fund for her children. She plans to invest $10,000 annually at the end of each year. She expects to withdraw money from the fund at the end of 10 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 10 years? A. $46,320. B. $67,107. C. $100,000. D. $144,870. E. $215,890. 7 24. Jon Shear expects an investment of $25,000 to return $6,595 annually. His investment is earning 10% per year. How many annual payments will he receive? A. Five payments. B. Six payments. C. Four payments. D. Three payments. E. More than six payments. 25. Interest is: A. Time. B. A borrower's payment to the owner of an asset for its use. C. The same as a savings account. D. Always a liability. E. Always an asset. 26. A pension plan A. Is a contractual agreement between an employer and its employees in which the employer provides benefits to employees after they retire. B. Can be underfunded if the accumulated benefit obligation is more than the plan assets. C. Can include a plan administrator who receives payments from the employer, invests them in pension assets, and makes benefit payments to pension recipients. D. Can be a defined benefit plan in which future benefits are set, but the employer's contributions vary depending on assumptions about future pension assets and liabilities. E. All of these. 27. A company has bonds outstanding with a par value of $100,000. The unamortized premium on these bonds is $2,700. If the company retired these bonds at a call price of 99, the gain or loss on this retirement is: A. $1,000 gain. B. $1,000 loss. C. $2,700 loss. D. $2,700 gain. E. $3,700 gain. 8 28. An advantage of bond financing is: A. Bonds do not affect owners' control. B. Interest on bonds is tax deductible. C. Bonds can increase return on equity. D. It allows firms to trade on the equity. E. All of these. 29. A discount on bonds payable: A. Occurs when a company issues bonds with a contract rate less than the market rate. B. Occurs when a company issues bonds with a contract rate more than the market rate. C. Increases the Bond Payable account. D. Decreases the total bond interest expense. E. Is not allowed in many states to protect creditors. 30. All of the following statements regarding accounting treatments for liabilities under U.S. GAAP and IFRS are True except: A. Accounting for bonds and notes under U.S. GAAP and IFRS is similar. B. Both U.S. GAAP and IFRS require companies to distinguish between operating leases and capital leases. C. The criteria for identifying a lease as a capital lease are more general under IFRS. D. Both U.S. GAAP and IFRS require companies to record costs of retirement benefits as employees work and earn them. E. Use of the fair value option to account for bonds and notes is not acceptable under U.S. GAAP or IFRS. 31. A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is: A. $3,386.30. B. $3,500.00. C. $3,613,70. D. $6,633.70. E. $7,000.00. 32. The Discount on Bonds Payable account is: A. A liability. B. A contra liability. C. An expense. D. A contra expense. E. A contra equity. 9 33. Sinking fund bonds: A. Require the issuer to set aside assets to retire the bonds at maturity. B. Require equal payments of both principal and interest over the life of the bond issue. C. Decline in value over time. D. Are registered bonds. E. Are bearer bonds. 34. A company may retire bonds by: A. Exercising a call option. B. The holders converting them to stock. C. Purchasing the bonds on the open market. D. Paying them off at maturity. E. All of these. 35. A bond traded at 102 means that: A. The bond pays 2.5% interest. B. The bond traded at $1,025 per $1,000 bond. C. The market rate of interest is 2.5%. D. The bonds were retired at $1,025 each. E. The market rate of interest is 2 % above the contract rate. 36. Par value of a stock refers to the: A. Issue price of the stock. B. Value assigned per share of stock by the corporate charter. C. Market value of the stock on the date of the financial statements. D. Maximum selling price of the stock. E. Dividend value of the stock. 37. In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the: A. Par value of preferred. B. Minimum legal capital. C. Premium capital. D. Stated value. E. Working capital. 10 38. A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $60,000. The entry to record this exchange is: A. Debit Land $60,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value, Common Stock $10,000. B. Debit Land $60,000; credit Common Stock $60,000. C. Debit Land $50,000; credit Common Stock $50,000. D. Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value, Common Stock $10,000; credit Land $60,000. E. Debit Common Stock $60,000; credit Land $60,000. 39. A corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record this dividend is: A. Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000. B. Debit Retained Earnings $135,000; credit Cash $135,000. C. Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000. D. Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000. E. No entry is made until the stock is issued. 40. Rights to purchase common stock at a fixed price over a specified period are: A. Preferred stocks. B. Class B stocks. C. Stock options. D. Stock restrictions. E. Preemptive rights. 11