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Study Resources (Accounting)

Learning Objective 10.3 Questions 1) Which of the following statements is NOT true regarding common and preferred stock? A) Common stock is the most basic and common type of stock. B) All corporations issue common stock. C) Preferred stock owners do not usually have voting rights. D) Preferred stockholders have priority over common stockholders regarding.
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11) Compound interest is calculated by multiplying an interest rate by a principal amount. The principal amount increases each time interest is earned. The accumulated interest is added to the principal to become the new principal for the next period. 12) Accountants generally use future values rather than present values to.
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Learning Objective 11.7 Questions 1) Presented below are the balance sheets of Dental Works and Forgash Company at January 1, 2X13: Dental Works Forgash Company Balance Sheet Balance Sheet January 1, 2X13 January 1, 2X13 Cash $ 23 Cash $110 Net Fixed Assets 127 Net Fixed Assets 290 Total Assets $150 Total Assets $400 Accounts Payable $ 15.
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11) Milton Manufacturing manufactures and sells ornamental statues. Because of good styling and marketing, sales have grown briskly. Milton has no pre-existing deferred tax liability. During 20X3, the following transactions occurred: 1. On January 1, 20,000 new shares of common stock were sold at $100 per share. 2. Half of the proceeds.
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11) Under the equity method, the investor recognizes revenue based upon an appropriate share of the investee's net income. 12) Under the market method, the investment in another company's stock is recorded at acquisition cost and is adjusted for the investor's share of dividends and for any earnings or losses experienced.
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11) Montreal Electronics has the following data available: 2013      2012 Net Income $ 90 $ 80 Earnings Per Share $ .45 $ .40 Annual Common Dividends Per Share $ .40 $ .20 Closing Market Price Common Stock, 12/31 $9.00 $6.00 What is the dividend-payout for Montreal Electronics in 2013? Has the dividend-payout increased or decreased since.
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Learning Objective 9.5 Questions 1) Accounting for postretirement benefits requires A) no liability on the balance sheet. B) no journal entries because the benefits are to be paid in the future. C) the recognition of a liability equal to the present value of the expected payments for other postretirement benefits. D) the recognition of a.
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11) Treasury stock is a contra account with a debit balance in the stockholders' equity section of a company's balance sheet. 12) Any differences between the acquisition costs and the resale proceeds of treasury stock must never be reported as losses, expenses, revenues, or gains in the income statement. 13) Earnings per.
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Learning Objective 12.1 Questions 1) In addition to annual reports, financial information regarding a company can come from all of the following sources EXCEPT A) a company's own press releases. B) the popular press. C) stockbrokers. D) a company's Web site. E) the Internal Revenue Service. 2) When analyzing the financial statements of a potential debtor, the.
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11) Short-term liquidity refers to an organization's ability to generate enough cash to repay long-term debts as they mature. 12) Long-term solvency refers to an organization's ability to meet current payments as they become due. 13) Annual reports and 10K filings for the Securities and Exchange Commission are timely, since they usually.
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21) Debenture bonds may be subordinated, which means that their interest rates may vary depending on the prime rate. 22) A protective covenant is a contract whereby the issuing corporation of a bond promises that it will abide by stated provisions. 23) Sinking fund bonds require the issuer to make annual payments.
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Learning Objective 10.4 Questions 1) Restricted stock has the benefit of A) increasing in value when stock prices fall. B) decreasing in value when stock prices fall. C) retaining some value even if stock prices fall. D) being retained for three additional years past the original purchase date. E) being used as treasury stock. 2) Which of.
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Learning Objective 10.6 Questions 1) Chorpa, Inc., has 700,000 shares authorized and 150,000 shares issued and outstanding of $3 par value common stock. The current market price of the stock is $50 per share. On December 1, 2X13, the company declared and issued a 40% stock dividend. After the stock dividend,.
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11) When the market interest rate is 13% and the coupon rate is 10%, a bond sells at A) a discount. B) a premium. C) par. D) liquidation value. E) Cannot be determined without more information 12) Bond interest payments are typically made A) annually. B) semiannually. C) monthly. D) quarterly. E) weekly. 13) When the market interest rate is 7% and.
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21) In substance, there is absolutely no difference between the 100% stock dividend and the two-for-one stock split. 22) Kendall Corporation has 600,000 shares authorized and 150,000 shares issued and outstanding of its $4 par value common stock. The stock is currently selling for $50 per share. There is $900,000 of.
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Learning Objective 12.2 Questions 1) Fulton Company has the following data available: Wage Expense, For the Year Ending December 31, 2X13 $95 Wage Expense, For the Year Ending December 31, 2X12 $90 What is the percentage increase or (decrease) in wage expense from 2X12 to 2X13 for Fulton Company? A) 5.3% B) (5.3)% C) 2.6% D) (5.6)% E) 5.6% 2).
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21) Interest expense on bonds exhibits the following attributes except A) interest expense is greater than the cash payment for interest when a bond is sold at a premium and effective-interest amortization is used. B) interest expense is the same dollar amount for every interest payment period, if a bond was issued.
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28) Comparative income statements are available for Floatlin Company: Floatlin Company Comparative Statements of Income For the Years Ending December 31, 2X13 and 2X12 2X13 2X12 Sales $750 $690 Cost of Goods Sold 440 400 Gross Profit $310 $290 Less: Operating Expenses 220 205 Operating Income $ 90 $ 85 Less: Income Tax Expense 40 37 Net Income $ 50 $.
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Learning Objective 11.3 Questions 1) Bond discounts are amortized by taking the difference between the A) interest based on the effective interest rate and the interest based on the coupon interest rate. B) interest based on the nominal interest rate and the interest based on the coupon interest rate. C) interest based on the.
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31) Interest expense will increase each period if a company uses the effective-interest method of amortization and the bonds are issued at a discount. 32) The net liability of bonds will decrease each interest period if the bonds were issued at a premium. 33) The effective-interest method of amortization keeps interest expense.
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Learning Objective 11.1 Questions 1) Consolidated financial statements A) are used to offset gains and losses on the parent company's income statement. B) combine the financial records of two or more separate legal entities. C) make clear distinctions between principal and secondary long-term asset owners. D) provide a depiction of process costs. E) must provide predetermined.
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Learning Objective 10.2 Questions 1) The total number of shares that may be issued by a corporation is known as A) issued shares. B) authorized shares. C) outstanding shares. D) treasury shares. E) preferred shares. 2) Those shares which have been sold to outside investors at one time or another are known as A) authorized shares. B) issued shares. C).
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Learning Objective 9.6 Questions 1) A deferred income tax liability A) arises because of differences between U.S. income tax rules and foreign income tax rules. B) can arise because of "permanent" and "temporary" differences. C) arise because managers wish to maximize taxable income. D) can arise when a firm uses special accelerated depreciation for tax.
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Learning Objective 11.4 Questions 1) Highland Cutlery acquired as a long-term investment some of the common stock of LTS Company on December 31, 2X12. During 2X13, LTS Company had net income of $300,000 and declared and paid cash dividends of $90,000. What journal entry would Highland Cutlery make for 2X13 to.
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11) The premium on bonds payable A) serves to reduce interest expense on the income statement. B) serves to increase interest expense on the income statement. C) is an adjunct account to notes payable. D) increases the cash interest payment. E) is a contra account to bonds payable 12) Under the effective-interest method of amortizing bond.
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Learning Objective 12.3 Questions 1) How is working capital calculated? A) (total current assets) minus (total current liabilities) B) (total current assets) minus (inventories and prepaid assets) C) (total current assets) divided by (total current liabilities) D) (total current assets) E) (total current liabilities) 2) Montreal Electronics has the following data available: 2X13 2X12 Sales               $999               $800 Cost.
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11) When comparing preferred stock to common stock and bonds, which of the following is incorrectly stated? A) Preferred stock and bonds have a specific maturity date. B) Both bonds and preferred stock pay a specific return to the investor. C) Both preferred stock and common stock can pay dividends. D) Both preferred stock.
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Learning Objective 9.3 Questions 1) Which of the following is false? The discount on bonds payable is A) amortized over the life of the bond. B) deducted from bonds payable. C) a contra account to bonds payable. D) reported in liabilities section of the balance sheet. E) an adjunct account to bonds payable. 2) The discount on.
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Learning Objective 9.7 Questions 1) A company has a debt-to-equity ratio of 150%. The more debt a company has, and the less stockholders' equity, the A) greater the probability that the company will report a contingency. B) lower the probability that the company will report a contingency. C) riskier it is to lend money.
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41) On January 1, 20X3, Middleton Industries issued $5 million of 5-year, 9% debentures at par which are dated as of January 1, 20X3. Prepare the journal entries to record the (a) issuance of the bonds. (b) the first semi-annual interest payment. (c) the payment of maturity value. 42) Callton, Inc., had a 6-year, 8%,.
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11) Presented below are the balance sheets of Tallton Company and Handel Company at January 1, 2X13: Handel Company Tallton Company Balance Sheet Balance Sheet January 1, 2X13 January 1, 2X13 Cash $ 70 Cash $240 Net Fixed Assets 210 Net Fixed Assets 210 Total Assets $280Total Assets $450 Accounts Payable $ 20 Accounts Payable $ 70 Long-term.
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21) Net income must be greater than zero in order to pay dividends. 22) Florenza Establishment had 2,500,000 shares of common stock authorized. Shares issued were 1,050,000. There were 50,000 shares in treasury. a. How many shares have been sold to shareholders? b. How many shares are outstanding? c. How many shares are unissued? d..
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11) Manchester Technology has the following data available: Inventory, December 31, 2013 $120 Inventory, December 31, 2012 $200 What is the percentage increase or (decrease) in inventory from 2012 to 2013 for Manchester Technology? A) (120.0)% B) 120.0% C) 40.0% D) 62.5% E) (40.0)% 12) What issue would be of most concern on behalf of banks or other creditors.
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Learning Objective 11.6 Questions 1) ________ represent the rights of nonmajority shareholders in the assets and earnings of a company that is consolidated into the accounts of its majority shareholder. A) Parent interests B) Noncontrolling interests C) Subsidiary interests D) Consolidated interests E) Intercompany interests 2) Presented below are the balance sheets of Blanco, Inc. and Stalle.
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21) Harris Enterprises owns 100% of the outstanding stock of Staton Company. The following transactions occurred during 2X13: a) Harris Enterprises sold inventory costing $2,750 on account to Staton Company for $3,800. As of year-end, the amount due had not been paid. Harris Enterprises and Staton Company use a perpetual inventory.
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17) U.S. Treasury obligations are interest-bearing notes, bonds, and bills issued by the U.S. federal government. 18) Comprehensive income includes both net income and the change in market value of available-for-sale securities. 19) The market method applies to short-term debt securities classified as trading securities and, as a result, a drop in.
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Learning Objective 9.8 Questions 1) The amount earned by an investor expressed as a percentage of the amount invested is called A) discount rate. B) rate of return. C) present value. D) future value. E) expected past rate. 2) An amount that is calculated by multiplying an interest rate by a principal amount that is increased each.
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Learning Objective 10.1 Questions 1) By using ________, shareholders may express (vote) their preference without traveling to the site of the annual meeting. A) a preemptive right B) a corporate proxy C) a stock option D) a stock split E) a stock dividend 2) A preemptive right is A) the right of stockholders to acquire a proportional amount.
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Learning Objective 10.7 Questions 1) What type of account is the Treasury stock and Additional paid-in capital? A) Treasury stock Additional paid-in capital retained earnings retained earnings B) Treasury stock Additional paid-in capital asset contra stockholders' equity C) Treasury stock Additional paid-in capital contra stockholders' equity stockholders' equity D) Treasury stock Additional paid-in capital common stock contra stockholders' equity E).
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Learning Objective 9.4 Questions 1) Which of the following statements is FALSE? A) The lessee will always record the liability associated with future cash payments but never an asset associated with the property being leased. B) Leases can take the form of a capital lease or an operating lease. C) Some leases are substantially.
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7) Which of the following statements is false? A) Trading securities are short-term investments with unrealized gains and losses due to changes in market value that are recognized in the income statement. B) The unrealized gains and losses from changes in market value of available-for-sale securities are not recognized in the income.
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21) Common-size statements aid in comparing companies of different sizes. 22) The common-size income statement percentages use Cost of Goods Sold as the base amount at 100%. 23) Each element on a common-size balance sheet is compared to total liabilities. 24) Component percentages are line items of income statements that express each line.
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11) Alexander Pools has 700,000 shares authorized and 250,000 shares issued and outstanding of its $4 par value common stock. The stock is currently selling for $60 per share. If Alexander Pools declared and issued a three-for-one stock split by issuing 500,000 new shares and accounts for it as a.
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Learning Objective 10.8 Questions 1) Joino Manufacturing issued 2,000 shares of $100 par 9% convertible preferred stock for $112 per share. Each share of preferred stock can be converted into 8 shares of $2 par value common stock. On June 20, 2X13, 300 shares of preferred stock were converted when the.
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