MBA Accounting Questions Set

1. In the year 20X1, the Afarian Companys cash receipts were $186,000 and its cashexpenditures were $181,000. It reported 20X1 net income of $32,000 and total expensesof$124,000. What was Afarian Corporations revenues for 20X1?(a) $5,000(b) $62,000(c) 156,000(d) $186,000(e) $213,0002. The office manager at the Gallego Pediatric Clinic is reconciling its bank statement toits accounting records. The accounting records show a balance of $18,674 as of6/30/20X3. The office manager has the following information:*deposits in transit were $2,000*outstanding checks totaled $2,500*bank service charges were $75*NSF check for $500 was included with the bank statement.The clinics reconciled true balance as of 6/30/20X3 is:(a) $17,099(b) $18,099(c) $19,174(d) $18,1743. On 01/01/20X1, the Stewart and Sole Company bought a truck with an estimateduseful life of 8 years for $80,000. Its estimated salvage value at the end of its useful lifeis $8,000. At what amount should the truck be reported on the balance sheet of year20X3 (make any assumptions you need)? [no commas or dollar signs]Answer:___________________4. On Dec 15, 20X1, Mid-Atlantic Medical Corporation (MAMC) properly recorded thedeclaration of cash dividends of $5,000,000 to be paid to stockholders of record Jan 15,20X2. What is the effect of the payment of these dividends in 20X2 on MAMCs assets,liabilities, equity, and income?Assets: Increase, Decrease, No Effect. ____________________Liabilities: Increase, Decrease, No Effect. _________________Equity: Increase, Decrease, No Effect. _________________Income: Increase, Decrease, No Effect. _____________________5. The Lisa Hausch Company sells 200,000 of its $0.50 par value common shares for $25per share. Which of the following journal entries should the firm make to record thisissue?(a)Debit cash $5,000,000; credit common stock $100,000; credit retained earnings$4,900,000(b)Debit cash $5,000,000; credit common stock $1,000,000; credit additional paid-Incapital $4,000,000(c)Debit cash $5,000,000; credit common stock $100,000; credit additional paid-Incapital $4,900,000(d)Credit cash $5,000,000; debit common stock $100,000; debit additional paid-In capital$4,900,0006.Here is the accounts receivable as presented on the Mallow Corporations 20X9 balancesheet.12/31/X9 $173,20012/31/X8 $236,400Accounts receivable, less allowance for bad debts of $9,500 and $17,900 for X9 & X8respectivelyMallow wrote off $10,650 of receivables as bad debts during 20X9. What amount of baddebt expense was recognized for the year 20X9?Answer:____________________ [no commas or dollar signs]7. The Aisha Sparks Company experienced an accounting event that affected its financialstatements as indicated below:Assets-Liabilities-Equity-RevenueNAExpenses+Income-Cash Flow-FA -OAWhich of the following accounting events could have caused these effects on Sparksstatements?A. paid interest and principal on loanB. borrowed funds through a line of creditC. paid interest on bondsD. repaid principal on bonds at maturity8. The following is the Crawford & Afrasiabi Restaurant Corporations 20X0 balancesheet.Cash3,850Accounts receivable5,150Inventory10,150Plant and equipment, net of depreciation19,500Land11,600Total assets50,250Accounts payable2,310Salaries payable9,040Bonds payable (due 20X8)8,400Capital stock no par15,800Retained earnings14,700Total liabilities + stockholders equity50,250The company’s debt to equity ratio is nearest to:A. 28%B. 53%C. 65%D. 125%9. Which of the following is not normally a preference given to the holders of preferredstock?A. The right to vote before the common stockholders at the corporation’s annual meeting.B. The right to receive a specified amount of dividends prior to any being paid tocommon stockholders.C. The right to receive preference over common stockholders in the distribution of assetsduring a liquidation process.D. The right to receive preference over bondholders in bankruptcy proceedings.10. Ravi Vij and Peter Yerkovich started a partnership on January 1, 2012. Vij invested$25,000in the business, and Yerkovich invested $20,000. The partnership agreementstated that profits would be divided between the partners based on their initial investmentin the partnership. The businesss net income for the year was $36,000. During the year,Mr. Vij withdrew $8,000, andMr. Yerkovich withdrew $6,000. The balances in thepartners’ accounts at the end of 2012 werechoice:A $42,000$37,000B $17,000$33,500C $24,000$30,000D $14,000$33,500(a) Choice A(b) Choice B(c) Choice C(d) Choice D11. The Shah and Seigle Company sold merchandise costing $1,600 for $2,500 cash. Allof the merchandise was later returned by the customer. If the perpetual inventory methodis used, what effect will the sales return have on the accounting equation?A. Total assets and total equity increase by $900.B. Total assets increase by $1,600 and total equity is decreased by $900.C. Total assets increase by $1,600 and total equity decrease by $2,500.D. Total assets and total equity decrease by $900.12. The Rizvi and Plaskett Corporation paid $150,000 for a purchase that included land,building, and office equipment and furniture. An appraiser provided the followingestimates of the market values of the assets if they had been purchased separately:Land: $20,000Building: $120,000Office equipment and furniture: $60,000Based on this information the annual straight line depreciation on the office furniture(estimated life 3 years, salvage value zero)would beA. $17,500.B. $20,000.C. $25,000.D. $15,000.13. On Sept 1, 20X1, the Walter Peters Corporation (WPC) signed a 10 year, $75,000promissory note at 6% interest, with interest being paid every 6 months. On its 20X1annual financials, because of this debt, WPC will report:(a) interest expense of $4,500 & interest payable of $4,500(b) interest expense of $2,250 & cash payment of $2,250(c) interest expense of $2,250 & cash receipts of $2,250(d) interest expense of $3,000 & interest payable of $3,000(e) interest expense of $1,500 & interest payable of $1,50016. Sikka Company experienced a transaction that had the following effect on thefinancial statements:Which transaction would have this effect?A. Freight-in cost incurred; payment to be made in 30 daysB. Return to a supplier of merchandise that was purchased on accountC. Return by a customer of a sale that was made on accountD. A loss on land that was sold for cash18. During the month of January, the Pratt & Wallace Corporations assets increased by$100and its liabilities increased by $50. If it paid dividends of $20 in January and it hadno othertransactions with owners, what was its net income for the month? [Hint: Use thebalance sheetequation to calculate the change in equity.](a) $20(b) 50(c) $70(d) $8019. During Dec 20X5, the balance in the supplies inventory account increased by $32,000atthe Shawn Sarin Clinic. $125,000 of supplies were purchased during the month.Supplies consumed in December were $[no commas or $ signs]20. The Smith and Branch Medical Labs Corporation provides a 3 year warranty on theinfusion pumps it sells. When will the cost of a warranty appear on its cash flowstatement?A. When there is a settlement of a warranty claim made by a customer.B. When the warranty obligation is recognized.C. When merchandise is sold.D. Are you crazy? Its none of these.21. If the firm of Shah and Bell has a high current ratio but a low acid-test ratio, one canconclude that:A. the company has a large outstanding accounts receivable balance.B. the company has a large investment in inventory.C. the company has a large amount of current liabilities.D. the company’s financial leverage is very high.22.The Franco Corporation had net income of $3,000,000. Depreciation was $500,000,purchases of plant assets were $250,000, and disposals of plant assets with net book valueof$100,000 resulted in a $60,000 gain. Stock was issued in exchange for an outstandingnote payable of $125,000. Accounts receivable decreased by $25,000. Accounts payabledecreased by $40,000. Dividends of $30,000 were paid to shareholders. Franco hadinterest expense of$5,000.How much was Francos net cash flow from investing activities?Answer:__________ [no dollar signs or commas]24. Du Pont analysis analyzes the ROA into two multiplicative ratios. Calculate thevalues for those ratios for 20X1. Fill in the values below. Express as 3 decimal digitswithout rounding.(a) Name of ratio: Calculated value of ratio:(b) Name of ratio: Calculated value of ratio:________________