University of Phoenix
ACC/400 Accounting for Decision Making
PLEASE PUT YOUR ANSWERS ON THE EXCEL SPREADSHEET
PART I — MULTIPLE CHOICE -2 pts each (40 points)
Designate the best answer for each of the following questions.
1. A measure of a company’s solvency is the a. acid-test ratio. b. current ratio. c. times interest earned ratio. d. asset turnover ratio.
2. Allowance for Doubtful Accounts is presented as a(n) a. addition to Accounts Receivable on the balance sheet. b. operating expense on the income statement. c. deduction from Sales on the income statement. d. contra asset on the…show more content… Cost of goods sold for 2007 was $1,520,000. Average days in inventory is approximately a. 52.9. b. 7.6. c. 48. d. 6.9.
17. If common stock is issued for an amount greater than par value, the excess should be credited to a. Cash. b. Retained Earnings. c. Paid-in Capital in Excess of Par Value. d. Legal Capital.
18. Paid-in Capital in Excess of Par Value a. is credited when no-par stock does not have a stated value. b. is reported as part of paid-in capital on the balance sheet. c. represents the amount of legal capital. d. normally has a debit balance.
19. The financial statements of the Bolton Manufacturing Company reports net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the receivables turnover ratio for Bolton? a. 7 times b. 10 times c. 16.7 times d. 12.5 times
20. The following credit sales are budgeted by Rodriguez Company:
February 50,000 March 70,000 April 60,000
The company’s past experience indicates that 80% of the accounts receivable are collected in the month of sale, 20% in the month following the sale. The anticipated cash inflow for the month of April is a. $48,000. b. $56,000. c. $60,000. d. $62,000.