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Acct 504 Final Exam

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Please use only as a guide! Thanks! Message me for further clarifications :) 1. (TCO A) Which of the following is an advantage of the sole proprietorship relative to the corporate form of business organization? (Points : 5) | Limited liability of investor Transferability of ownership Simple to establish Unlimited life | 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 LBJ Company:

Cash $15,000
Prepaid insurance 5,000
Accounts receivable 2,500
Accounts payable 3,000
Notes payable 6,000
Common stock 10,000
Dividends 500
Revenues 15,000
Expenses 13,000

What did LBJ Company show as total debits?
(Points : 5) | $34,000 $36,000 $70,000 $31,000 | 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) | LIFO The average cost method FIFO Income tax expense for the period will be the same under all assumptions. | 6. (TCOs A, E) Equipment was purchased for $75,000 on January 1,…...

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