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Study Resources (Accounting)

61) Sage Company issued $600,000, 8%, 5-year bonds for 106, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year? A) $636,000 B) $600,000 C) $628,800 D) $648,000 62) The journal entry to record payment of bond payable at maturity will include a: A) debit to bonds payable,.
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  8.1   Learning Objective 8-1 1) Long-term investments are listed on the balance sheet after current assets and property, plant, and equipment. 2) Investments can never be classified as short-term investments. 3) Stocks and bonds projected to be held for longer than one year are long-term investments. 4) On the balance sheet, assets are listed.
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57) On December 1, Goliath Corporation borrowed $10,000 on a 90-day, 6% note. Goliath Corporation's year end is December 31. Prepare the journal entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note. 58) On December 1, Goliath Corporation borrowed.
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41) Current liabilities fall into two categories which are referred to as: A) contingent liabilities and contra-liabilities. B) contingent liabilities and noncontingent liabilities. C) unearned liabilities and contra-liabilities. D) liabilities of a known amount and estimated liabilities. 42) The current portion of long-term debt should: A) be reclassified as a current liability. B) be paid immediately. C) be.
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8.4   Learning Objective 8-4 1) The consolidation method of accounting is appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock. 2) Consolidated financial statements are prepared in place of the financial statements for the parent and subsidiary companies. 3) A year-end elimination entry is.
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21) For accounting purposes, the method used to account for long-term investments in common stock is determined by: A) the amount paid for the stock by the investor. B) the extent of an investor's influence on the investee's operating decisions and policies. C) whether the stock has paid dividends in the past years. D).
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21) A noncontrolling (minority) interest arises when: A) a parent company excludes the subsidiary company from the consolidated financial statements. B) a parent company owns less than 100% of the stock of a subsidiary. C) a subsidiary company is not included in the consolidated financial statements. D) a subsidiary company represents less than 20%.
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9.3   Learning Objective 9-3 1) Earnings per share is the amount of a company's net income divided by the par value of its stock. 2) Earnings per share is a standard measure of operating performance that applies to companies of different sizes and from different industries. 3) The times-interest-earned ratio is calculated by.
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21) When the investment is readily convertible to cash and the investor plans to convert the investment to cash within one year, the investment is shown on the balance sheet as: A) short-term. B) long-term. C) equity. D) either long-term or short-term. 22) The following is the proper order for assets on a balance sheet: A).
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11) Employee compensation is a major expense for most service companies. 12) Unearned revenue will be zero when a company has earned all of the revenue it had collected in advance. 13) The exact amount of warranty expense cannot be determined, so businesses must rely on estimates. 14) The current portion of a.
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9.5   Learning Objective 9-5 1) Current maturities of long-term debt are reported separately from long-term liabilities. 2) Long-term liabilities are reported in the same section as current liabilities on the balance sheet. 3) Details about a company's liabilities should be included in the notes to the financial statements. 4) A company must include all.
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8.5   Learning Objective 8-5 1) Sales of available-for-sale investments are reported as investing activities on the Consolidated Statement of Cash Flows. 2) The purchases of available-for-sale investments would appear on a statement of cash flows in: A) the financing activities section. B) the operating activities section. C) the investing activities section. D) none of the above..
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9.1   Learning Objective 9-1 1) Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer. 2) A current liability must be paid out of current profits. 3) Purchasing merchandise inventory on account results in a liability. 4) Notes payable usually require the borrower to accrue interest expense.
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8.3   Learning Objective 8-3 1) When an investor owns 35% of the stock of another business, cash dividends received from the investee company are generally recorded by increasing the value of the Investment account. 2) The equity method is used to account for stock investments in which the investor company owns less.
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41) An investment in common stock acquired during the year at a cost of $40,000 has a year-end market value of $42,250. The year-end adjusting entry requires a: A) debit to Long-Term Investments for $2,250. B) debit to Allowance to Adjust Investments to Market for $2,250. C) credit to Allowance to Adjust Investments.
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51) The normal balance of the discount on the bonds payable account and the premium on the bonds payable account are respectively: A) debit, credit. B) credit, credit. C) debit, debit. D) credit, debit. 52) In the balance sheet, the account, Discount on Bonds Payable, is: A) added to bonds payable. B) deducted from bonds payable. C) classified.
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9.2   Learning Objective 9-2 1) Corporations borrow large amounts of money by issuing (selling) bonds to the public. 2) If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date. 3) If.
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8.2   Learning Objective 8-2 1) Dividend revenue is recorded in a stock dividend. 2) Unrealized Gain/Loss on investments account appears under other comprehensive income on a separate section of the income statement. 3) Available-for-sale investments in stock are reported on the balance sheet at cost. 4) Available-for-sale investments are adjusted from cost to market.
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21) Under the equity method of accounting for stock investments, the Investment account is decreased for the receipt of a dividend because: A) it is assumed that income will also be received. B) the dividend decreases the investee's owners' equity, and therefore the investor's investment decreases. C) the dividend decreases the investee's owners'.
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31) The stated interest rate is always declared as a(n): A) monthly rate. B) daily rate. C) semiannual rate. D) annual rate. 32) The organization that purchases the bonds from an issuing corporation and resells them to its clients or sells the bonds for a commission is the: A) underwriter. B) bank. C) stockholders. D) bondholders. 33) Bonds in a.
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71) ABC Corporation issued $600,000, 10%, 5-year bonds on January 1, 2012 for $612,000 when the market interest rate was 8%. Interest is paid semiannually on January 1 and July 1. The corporation uses the effective-interest method to amortize bond premium. The amount of bond interest expense recognized on July.
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51) Hoover Company has a long-term note payable for $300,000 on January 1, 2012. Each month the company is required to pay $75,000 on the note. How will this note be reported on January 31, 2012? A) Long-term liability, $300,000 B) Long-term liability, $225,000 C) Current liability, $75,000; long-term liability, $225,000 D) Current liability,.
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11) Realized gains on the sale of available-for-sale securities cannot be used to compute net income. 12) An investee should report available-for-sale securities that might be sold in the next 12 months as a short-term investment. 13) Dividends received on stock investments of less than 20% should be credited to the Investment.
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64) All Sports Company publishes a monthly magazine. Subscriptions to the magazine cost $20 per year. During November 2012, All Sports sells 15,000 subscriptions beginning with the December issue. Required: a.Prepare the entry in November to record the receipt of the subscriptions. b.Prepare the adjusting entry at December 31, 2012. 65) Wildcat Computers sells.
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31) Estimated warranty payable are reported on the balance sheet as: A) administrative expenses. B) a long-term liability. C) a current liability. D) part of cost of goods sold. 32) The accounting principle requiring that a company record the warranty expense in the same period that it records sales revenue is the: A) going concern principle. B).
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31) The balance in the Unrealized Gains and Losses on Available-for-sale Securities account appear in which financial statement? A) The balance sheet as a contra asset account. B) The income statement under Other Expenses and Losses. C) The balance sheet, as part of the stockholders' equity section. D) Not shown on the financial statements.
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107) On January 1, 2012, Peterson Corporation issued $100,000, 9%, 5-year bonds with semiannual interest payments on June 30 and December 31. The bonds were issued at $93,529 yielding an effective-interest rate of 10%. Peterson uses the effective-interest method of amortization. Prepare the journal entries that Peterson would make on.
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15) Diagnostic Corporation is considering two plans for raising $2,000,000. The first plan involves the sale of 7%, 10-year bonds at the face value of $2,000,000. The second plan involves selling 100,000 shares of $20 par value common stock. Diagnostic Corporation currently has 150,000 shares of stock outstanding and net.
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16) East-West Airlines is planning on leasing an aircraft. East-West does not receive title to the aircraft during or at the end of the lease period. Also, the lease does not contain a bargain purchase option. Using the lease information shown below indicate whether the lease is a capital lease.
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10.1    Objective 10-1 1) A corporation is not an entity that is separate from its owners. 2) A corporation acts under its own name and not the name of its stockholders. 3) If a corporation pays taxes on its income, then the stockholders will not have to pay taxes on the dividends received.
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7.6   Learning Objective 7-6 1) If an asset is impaired, the company is required to adjust the carrying value downward from its book value to its fair value. 2) Which of the following is a correct statement about asset impairment? A) An asset is impaired if the net book value exceeds the estimated.
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