1. (TCO A) Which of the following is an advantage of the corporation relative to sole proprietorships and partnerships? (Points : 5)
Simple to establish
Unlimited personal liability of investors
Easier to raise funds
2. (TCO A) Dividends _____. (Points : 5)
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. (TCOs A, B) Below is a partial list of account balances for Langton Company:
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800c
Notes payable 4,200c
Common stock 1,400c
What did Langton Company show as total credits? (Points : 5)
4. (TCOs B, E) Why is the accrual basis of accounting preferred by GAAP? (Points : 5)
The Accrual basis is easier to use.
The Accrual basis is also preferred by the Internal Revenue Service.
The Accrual basis complies with the revenue recognition and matching principles.
The Accrual basis requires fewer accounting resources.
5. (TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income? (Points : 5)
The average cost method
Income tax expense for the period will be the same under all assumptions.
6. (TCOs A, E) Equipment with a cost of $212,000 has an estimated salvage value of $12,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the straight-line method. What is the amount...