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Study Resources (Accounting)

71) Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par—Common Account? A) cash dividend declared B) stock split C) 10% stock dividend declared D) purchase of treasury stock 72) Which of the following actions will decrease the balance in Retained Earnings? A) repayment of bond principal B) stock split C).
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Learning Objective 12-8 1) On January 1, 2015, Finch Company issued $72,000 of 5-year bonds with a stated rate of 8%. The market rate at time of issue was 12%, so the bonds were discounted and sold for $61,401. Finch uses the effective-interest method of amortization for bond discount. Semiannual interest.
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61) Lopez Corp. uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014: 1) Long-Term Notes Payable, beginning balance, $80,000 2) Long-Term Notes Payable, ending balance, $76,000 3) Common Stock, beginning balance, $3,000 4) Common Stock, ending balance, $26,000 5) Retained Earnings, beginning balance, $75,000 6).
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11) The following information is from the balance sheet of Tudor Corporation as of December 31, 2015. Preferred Stock, $100 par $300,000 Paid-In Capital in Excess of Par—Preferred 21,000 Common Stock, $1 par 102,000 Paid-In Capital in Excess of Par—Common 306,000 Retained Earnings 78,900 Total Stockholders' Equity $807,900 What was the total paid-in capital as of December 31, 2015? A) $606,000 B) $807,900 C) $729,000 D) $708,000 12).
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21) Which of the following occurs when a cash dividend is declared? A) liabilities remain unchanged B) stockholders' equity decreases C) liabilities decrease D) assets increase 22) Dividends in arrears are ________. A) a liability on the balance sheet B) passed dividends on noncumulative preferred stock C) passed dividends on cumulative preferred stock D) passed dividends on common stock 23).
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31) On April 1, 2015, Ardos Gardening Products borrowed $100,000 on a 15%, 10-year note with annual installment payments of $10,000 plus interest due on April 1 of each succeeding year. Provide the journal entry for the first installment payment made on April 1, 2016. 32) Hernandez Carpets Company buys a.
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Learning Objective 13-1 1) A corporation is a separate legal entity and is organized independently of its owners. 2) Stockholders of a corporation are not personally liable for the corporation's debt. 3) All classes and types of a corporation's stock carry the same degrees of risk for the stockholder. 4) Preferred stockholders receive a.
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41) Which of the following will happen to a stockholder's percentage ownership in the stock of a corporation when the corporation declares a stock dividend? A) The stockholder's percentage ownership decreases. B) The stockholder's percentage ownership can increase or decrease. C) The stockholder's percentage ownership increases. D) The stockholder's percentage ownership remains unchanged. 42) Which.
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11) A business's cash receipts and cash payments for a specific period are reported on a(n) ________. A) income statement B) balance sheet C) cash flow statement D) cash reconciliation statement 12) Which of the following is one of the purposes of the statement of cash flows? A) to predict future net income B) to evaluate management.
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11) Which of the following accounting principles requires that warranty expenses must be estimated and recognized in the same period when the related sales revenue is recognized? A) the matching principle B) the disclosure principle C) the revenue principle D) the consistency principle 12) Bison Inc. reported sales revenue for 2013 of $900,000. The products.
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73) Johnson Tires Company uses the indirect method to prepare the statement of cash flows. Refer to the following comparative balance sheet for Avatar Company and complete the third column for increases or decreases. Johnson Company Comparative Balance Sheet December 31, 2014 and 2013 Increase/ 20142013decrease Cash$39,600$19,800 Accounts Receivable26,40038,500 Inventory204,000126,500 Total assets270,000184,800 Accounts Payable4,8006,600 Accrued Liabilities2,4001,100 Long-Term Notes Payable100,80099,000 Total liabilities108,000106,700 Common Stock36,0002,200 Retained Earnings135,60081,400 Treasury.
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31) Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term liabilities and stockholders' equity? A) the financing section B) the operating section C) the investing section D) the non-cash investing and financing section 32) Which of the following sections of the statement of cash flows includes.
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21) Nelson Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: Nelson Corp. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/decrease Accounts Payable $8,000 $9,000 $(1,000) Accrued Liabilities 3,000 1,500 1,500 Long-Term Notes Payable 56,000 60,000 (4,000) Total liabilities $67,000 $70,500 $(3,500) The change in Accounts Payable will be shown as a negative cash flow in the.
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Learning Objective 14-2 1) Issuing preferred stock to stockholders in exchange for cash would be shown under the financing activities section of the statement of cash flows. 2) Buying property, plant, and equipment for cash would be considered a cash outflow for the financing activities section of the statement of cash flows. 3).
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Learning Objective 13-6 1) Earnings per share is calculated as net income plus preferred dividends divided by the weighted average number of common shares outstanding. 2) A higher price/earnings ratio signifies a higher return on investment. 3) The rate of return on common stockholders' equity shows the relationship between net income available to.
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Learning Objective 12-5 1) The United Way Payable account would normally be shown on the balance sheet under current liabilities. 2) FICA—OASDI Tax Payable would normally be shown on the balance sheet under long-term liabilities. 3) Federal Unemployment Taxes Payable is typically shown on the balance sheet under the long-term liabilities section. 4) The.
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Learning Objective 13-2 1) When a corporation sells 10,000 shares of $10 par value common stock for $120,000, the Common Stock account is credited for $100,000. 2) Stock sold for amounts in excess of par value results in a gain reported on the income statement. 3) The price that the corporation receives from.
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Learning Objective 12-2 1) Bonds are short-term debt issued to multiple lenders called bondholders, usually in increments of $1,000. 2) On the maturity date, the bondholder is paid the face amount of the bond plus the last interest payment. 3) If a bond is issued at a discount, it will sell for more.
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Learning Objective 13-5 1) Companies can report a negative amount in retained earnings. 2) Companies usually report their retained earnings restrictions on the balance sheet. 3) The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period. 4) A deficit.
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Learning Objective 11-3 1) Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired. 2) The entry to accrue warranty payable includes a credit to Warranty Expense. 3) Estimated Warranty Payable would be included in the liability section of the balance sheet. 4).
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41) Walker Corp. uses indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: Walker Corp. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/decrease Cash $45,000 $27,000 $18,000 Accounts Receivable 48,000 45,000 3,000 Inventory 180,000 132,000 48,000 Total assets $273,000 $204,000 $69,000 How will the change in inventory be shown on the statement of cash flows? A) positive cash flow under the.
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Learning Objective 13-4 1) Treasury stock is a contra equity account. 2) The journal entry for the purchase of treasury stock includes a credit to the Cash account. 3) Treasury stock is recorded at cost without reference to par value. 4) The purchase of treasury stock ________. A) decreases both assets and stockholders' equity B) increases.
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Learning Objective 12-3 1) The amortization of bond premium increases interest expense over the life of the bonds. 2) The face value of a bond payable minus the current balance of the discount account or plus the current balance of the premium account is the bond's carrying amount. 3) The balance in the.
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Learning Objective 13-3 1) The declaration and payment of cash dividends cause a decrease in both assets (Cash) and stockholders' equity (Retained Earnings) for the corporation. 2) The declaration of a cash dividend does not create an obligation (liability) for the corporation. 3) Declaring and paying dividends causes an increase in both assets.
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Learning Objective 12-4 1) The main reason companies retire bonds prior to their maturity date is to relieve the pressure of paying interest payments. 2) An alternative to calling the bonds is to purchase them in the open market at their current market price. 3) Callable bonds are bonds that the issuer may.
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11) Partisan Services purchased ten delivery vehicles by issuing a 10-year installment note payable for $320,000. This transaction would be shown in the investing activities section of the statement of cash flows. 12) While preparing the statement of cash flows using the indirect method, Depreciation Expense is subtracted from Net Income.
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Learning Objective 12-7 1) The fact that invested cash earns income over time is called the time value of money. 2) Simple interest means that interest is calculated on the principal and on all previously earned interest. 3) Compound interest means that interest is calculated only on the principal amount. 4) A stream of.
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Learning Objective 11-5 1) Investors use the times-interest-earned ratio to evaluate a company's ability to pay interest expense. 2) The times-interest-earned ratio is also called the short interest ratio. 3) A high interest-coverage ratio indicates a company's difficulty in paying interest expense. 4) The times-interest-earned ratio is calculated as ________. A) earnings before interest and.
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Learning Objective 11-4 1) A contingent liability that has a remote possibility of becoming an actual loss is not included in a note to the financial statements. 2) A contingent liability that will probably become an actual liability, and can be reasonably estimated, must be recorded as an expense and a liability. 3).
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11) Which of the following corporate characteristics is a disadvantage of a corporation? A) Stockholders of a corporation have limited liability. B) A corporation has a continuous life. C) There is no mutual agency among the stockholders and the corporation. D) Earnings of a corporation are taxed twice. 12) Outstanding stock refers to the ________. A).
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