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Study Resources (Accounting)

21) The following details are provided by a manufacturing company. Product line Investment $1,000,000 Useful life 12 years Estimated annual net cash inflows for first year $400,000 Estimated annual net cash inflows for second year $350,000 Estimated annual net cash inflows for next ten years $300,000 Residual value $50,000 Depreciation method Straight-line Required rate of return 12% Calculate the payback period for the investment. A) 2.5 years B) 2.83 year C).
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21) GAAP are the rules that govern accounting in the United States. The acronym GAAP in this statement refers to ________. A) Globally Accepted and Accurate Policies B) Global Accommodation Accounting Principles C) Generally Accredited Accounting Policies D) Generally Accepted Accounting Principles 22) The formation of a partnership firm requires a minimum of ________. A) four.
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Learning Objective 1-3 1) Liabilities represent creditors' claims on the business's assets. 2) The left side of the accounting equation measures the amount that the business owes to creditors and to the stockholders. 3) The total of the amount of assets that a business possesses may or may not be equal to the.
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11) Which of the following is a liability account? A) Accounts Receivable B) Cash C) Building D) Notes Payable 12) Which of the following is an asset account? A) Wages Payable B) Notes Payable C) Unearned Revenue D) Accounts Receivable 13) A customer's promise to pay in the future for services or goods sold is called a(n) ________. A) Accounts Receivable B).
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21) Gamma Company is considering an investment of $500,000 in a land development project. It will yield cash flows of $200,000 for 5 years. The company uses a discount rate of 9%. What is the net present value of the investment? Present value of annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 4 3.312 3.24 3.17 5 3.993 3.89 3.791 A) $230,000 B) $278,000 C) $330,000 D) $200,000 22).
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Learning Objective 26-1 1) An operational asset used for a long period of time is known as a capital asset. 2) The acquisition or construction of a capital asset is known as a capital investment. 3) A post-audit in capital budgeting is a comparison of actual results of capital investments with the projected.
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11) Which of the following most accurately describes the term annuity? A) an investment which produces increasing cash flows overtime B) an installment loan with amortizing principal payments C) a stream of equal installments of cash flows made at equal time intervals D) a term life insurance policy 12) Lara is going to receive $10,000.
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Learning Objective 2-3 1) Source documents provide the evidence and data for accounting transactions. 2) Debits in the journal are always posted as debits in the ledger. 3) The process of transferring data from the ledger to the journal is called posting. 4) A journal entry under the double-entry system includes both debit and.
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31) For Revenues, the category of account and its normal balance is ________. A) stockholders' equity and a credit balance B) assets and a debit balance C) assets and a credit balance D) stockholders' equity and a debit balance 32) For Stockholders' Equity, the category of accounting equation and its normal balance is ________. A) equity.
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21) Accord Corporation purchased land for $100,000 by a cash payment of $20,000 and promised to pay the remaining amount at a later period. What is the net effect of this transaction on the business's accounting equation? A) assets increase by $100,000 and liabilities decrease by $20,000 B) assets increase by $100,000.
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11) When a company is evaluating an investment proposal with high risk, a low discount rate should be used, and vice versa. 12) Compound interest used in discounted cash flow calculations assumes that companies will reinvest future cash flows whenever they are received. 13) If an investment project's IRR is higher than.
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Learning Objective 3-1 1) Under accrual accounting, transactions are recorded only when cash is received or paid. 2) Recipes. Inc. purchased $2,000 of supplies on account. Under the accrual basis of accounting, no entry is made until the amount is paid. 3) In cash basis accounting, revenue is recognized when cash is received.
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11) Which of the following is a financial statement that presents a business's accounting equation? A) chart of accounts B) trial balance C) income statement D) balance sheet 12) Which of the following is used by both internal and external users to the company? A) chart of accounts B) trial balance C) balance sheet D) costing reports 13) Which of.
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11) Different users of financial statements focus on the different parts of the financial statements for the information they need. 12) Any person or business to whom a business owes money is called the business's creditor. 13) Managerial accounting provides information to ________. A) internal decision makers B) outside investors and lenders C) auditors D) taxing.
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41) Gamma Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $250,000; Year 2, $350,000; Year 3, $395,000. The company uses a discount rate of 12% and the initial investment is $750,000. The following table is available: Present Value of $1: 10% 12% 14% 15% 1 0.909 0.893 0.877 0.870 2 0.826 0.797 0.769 0.756 3 0.751 0.712 0.675 0.658 4 0.683 0.636 0.592 0.572 5 0.621 0.567 0.519 0.497 The IRR of the project will.
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11) Marsh Supply Services received $1,000 cash from a customer which was owed to the business from the previous month. Which of the following accounts would decrease as a result of this transaction? A) Cash B) Equity C) Accounts Payable D) Accounts Receivable 12) Ace Inc. had the following transactions in June: A) a $2,200 increase B).
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Learning Objective 1-1 1) Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers. 2) Accounting is referred to as the language of business because it is the method of communicating business information to stakeholders. 3) Managerial accounting focuses on information for.
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Learning Objective 1-5 1) The balance sheet of a business summarizes an entity's revenues and expenses. 2) By looking at a statement of retained earnings, the effect of dividends on the ending balance in retained earnings can be determined. 3) Financial statements are business documents that are used to communicate information needed to.
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Learning Objective 26-2 1) The accounting rate of return method and the payback method are often used as preliminary screening measures, but are insufficient to fully evaluate a capital investment. 2) All else being equal, investments with longer payback periods are preferable. 3) Net cash inflows from a capital investment arise from an.
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21) Which of the following groups of accounts normally have a debit balance? A) assets and expenses B) revenues and expenses C) liabilities and stockholders' equity D) assets and liabilities 22) Which of the following groups of accounts will decrease with a debit? A) assets and expenses B) revenues and expenses C) liabilities and stockholders' equity D) assets and.
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31) The taxable income of a sole proprietorship is ________. A) combined with the personal income of the proprietor B) not combined with the proprietor's personal income C) not taxable. D) handled similarly to that of a corporation 32) Genity Inc., located in Texas, records business transactions in dollars and disregards changes in the value.
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11) Payback provides management with valuable information about the time period within which the cash invested will be recouped. 12) Net present value and internal rate of return consider the time value of money, so they are appropriate for longer-term capital investments 13) Which of the following best describes a post-audit in.
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Learning Objective 1-2 1) As per the economic entity assumption, an organization and its owner should be seen as the same entity. 2) The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP). 3) IFRS is the main U.S. accounting rule book and is currently created and governed by the FASB. 4).
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Learning Objective 1-4 1) John contributed $6,000 in the business by opening a bank account in the name of the business, United Internists. The corporation issued common stock to John. This transaction results in an increase in the assets of the business. 2) For an accounting equation to balance, a transaction must.
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Learning Objective 26-4 1) Net present value is defined as the difference between the present value of the project's net cash inflows and the cost of investment. 2) Management's minimum desired rate of return on a capital investment is known as the return on investment. 3) The residual value is discounted as a.
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Learning Objective 26-3 1) The fact that invested cash earns income over time is called the time value of money. 2) An annuity refers to a series of equal cash flows received or paid annually. 3) All else being equal, the shorter the investment period, the higher the total amount of interest earned. 4).
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25) The following transactions have been journalized and posted to the proper accounts. Prepare a trial balance at the end of the first month using the following details: a.The business received $15,000 cash and issued common stock. b.Paid the first month's rent with $800 cash. c.Purchased equipment by paying $4,000 cash and executing.
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41) A business paid cash dividends to shareholders. Which of the following accounts will be debited? A) Cash B) Dividends C) Accounts Payable D) Common Stock 42) A business paid cash dividends to shareholders. Which of the following accounts will be credited? A) Common Stock B) Dividends C) Cash D) Accounts Payable 43) An accounting entry that is characterized by.
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31) The following details are provided by Dopler Company: Project A Project B Project C Project D Initial investment $420,000 $200,000 $550,000 $500,000 PV of cash inflows $570,000 $380,000 $800,000 $390,000 Payback period (years) 3.6 3.2 4.0 2.0 NPV of project $150,000 $180,000 $250,000 ($110,000) Calculate the profitability index for Project A. A) 0.98 B) 1.08 C) 1.36 D) 1.66 32) The following details are provided by Dopler Company: Project A Project B Project C Project D Initial investment $420,000 $200,000 $550,000 $500,000 PV of cash inflows $570,000 $380,000 $800,000 $390,000 Payback period (years) 3.6 3.2 4.0 2.0 NPV of.
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51) Sharon Foods Inc. reported the following transactions for September, 2015. A)The business received $25,000 cash and issued common stock. It was credited to Common Stock. B)The business purchased office equipment for $11,500 for which $2,500 cash was paid and the balance was put on a note payable. C)Paid insurance expense of $1,800.
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Learning Objective 1-6 1) The income statement shows whether or not a business can generate enough cash to pay its liabilities. 2) The balance sheet shows whether or not a business is earning profits. 3) The statement of retained earnings informs users about how much of the earnings were kept and reinvested in.
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21) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows: Volume 900 units per month Variable cost per unit $8 per unit Fixed costs $14,000 per month A factory in Indonesia has offered to.
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Learning Objective 2-1 1) A chart of accounts is a detailed record of the changes in a particular asset, liability, or stockholders' equity. 2) A chart of accounts is a list of all of a company's accounts with their account numbers. 3) Liabilities are economic resources that are expected to benefit the business.
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