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Acct212 Financial Accounting Final Exam Answers

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ACCT 212 Final Exam
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6. (TCO 6) Depreciation is a process to allocate the cost of long-life assets to each period'sincome statement and adjusts the value of the asset on the balance sheet. (1) Explain how thestraight-line method is computed (10 points) and (2) provide an example of how this methodcould be used on a new delivery truck purchased for $25,000 to be used for 4 years with asalvage value of $0 for year one only. (15 points) (Points : 25) 7. (TCO 6) To raise capital, companies might sell bonds. This allows them to bypass lenderssuch as banks and go directly to the investing public. Your company is planning to sell bondswith a face amount of $10,000 and paying 5% annual interest. (1) The day the bonds hit themarket, the bond price is quoted at 101.5. What is the bond's selling price? (10 points) and (2)how does the company record this sale in its accounting information system? Use journal entriesto support your answer. (15 points) (Points : 25)
8. (TCO 1) Financial statement analysis is used by investors, creditors, and managers of businessto evaluate the operation and health of the business. This information is in part the basis for decision-making. (1) Identify ratios used to evaluate the profitability of a company (10 points)and (2) provide an example of how the results of this analysis could be used to make businessdecisions. (15 points) (Points : 25)
9. (TCO 7) There are three different forms of business; sole-proprietor, partnership, andcorporation. (1) Explain why a corporation's government regulations may be a disadvantage (10 points) and (2) as a stockholder explain why a stockholder would want to own

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