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Study Resources (Accounting)

21) Ragas Inc. sold goods worth $50,000 in the year 2013 and estimated 4% warranty expense for the year. Customers complained of defects and goods worth $1,500 had to be replaced. Which of the following is the correct the journal entry for honoring the warranties with goods? A) Estimated Warranty Payable 1,500 Cash 1,500 B) Estimated Warranty.
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Learning Objective 14-3 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 plus the current balance of the premium account is the bond's carrying amount. 3) The balance in the Bonds.
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Learning Objective 12-6 1) The process of going out of business by selling the entity's assets, paying its liabilities, and distributing any remaining cash to the owners based on their equity balances is known as liquidation. 2) While liquidating a partnership, the cash remaining after paying all liabilities is paid to the.
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Learning Objective 11-5 1) Investors use the times-interest-earned ratio to evaluate a business'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 business's difficulty in paying interest expense. 4) The times-interest-earned ratio is calculated as: A) earnings before interest and tax.
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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) Saturn.
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Learning Objective 12-4 1) In partnership, a person can become a partner by purchasing an existing partner's interest. 2) The purchase of an existing partner's interest is not a personal transaction between the two individuals and is between the partnership and the new partner. 3) When a new partner enters into a partnership.
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Learning Objective 12-5 1) Whenever a partner mix in a partnership changes, the old partnership ceases to exist and a new partnership begins. 2) The death of a partner dissolves the partnership. 3) When a partner withdraws his interest for cash, the liabilities in the balance sheet remains unchanged. 4) If a withdrawing partner.
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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 12-1 1) A partnership is a business with two or more owners that is organized as a corporation. 2) The articles of partnership is a contract between partners that specifies such items as the name, location, and nature of the business; the name, capital contribution, and duties of each partner;.
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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) shares.
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21) In a partnership, mutual agency means that: A) the addition of a new partner does not dissolve the old partnership and mutually exchange the ownership with the exiting partner. B) every partner must bring the same amount of capital. C) the agency problem between the principal and agents are mutual and gets.
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21) Farrell and Jimmy enter into a partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net income for the year ended December 31, 2015.
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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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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).
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Learning Objective 14-2 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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11) Which of the following statements is true of partnership? A) If the partners have no partnership agreement specifying how to divide profits and losses, then they share equally. B) It is legally required to share the profit and losses equally, irrespective of the partnership agreement. C) The stated ratio of profit sharing.
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  Learning Objective 14-1 1) The current portion of notes payable is the principal amount that will be paid within two years of the balance sheet date and the remaining portion is long term. 2) The current portion of notes payable must be reported on the balance sheet under current liabilities and the.
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11) Which of the following is true of a partnership balance sheet? A) Unlike a corporation's balance sheet, it includes all information from its income statement. B) It excludes the depreciation expense. C) It reports a separate capital account for each partner. D) It details the interest expenses of the business. 12) Given below is.
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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 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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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 both.
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11) Simonsen, Paulson, and Richardson are partners in a firm with the following capital account balances: Simonsen $50,000 Paulson 160,000 Richardson 100,000 The profit-and-loss-sharing ratio among Simonsen, Paulson, and Richardson is 1:3:2, in the order given. Paulson is retiring from the partnership on December 31, 2013. Paulson's capital account is settled at book value. Journalize the cash.
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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 shareholder. 4) Preferred stockholders receive a.
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11) In a limited liability partnership, each partner is not personally liable for the malpractice committed by another partner. 12) The income of a limited liability company cannot be taxed to the members as though they were partners. 13) An S corporation is a corporation with 100 or fewer stockholders that can.
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Learning Objective 12-2 1) The statement of partners' equity shows the changes in each partner's capital account for a specific period of time. 2) In a partnership balance sheet, the each partner's assets, liabilities, and equity will be shown separately. 3) The financial statements of a partnership are similar to the statements of.
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31) Occidental Produce Company has 40,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $0.01 par value; the preferred stock is 4% noncumulative, with $100 par value. On October 15, 2015, the company declares a total dividend payment of $40,000. What is.
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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) Which of the following accounting principles requires that warranty expenses must be estimated and recognized in the same period as the related sales revenue is recognized? A) the matching principle B) the disclosure principle C) the revenue principle D) the consistency principle 12) Bison Company reported sales revenue for 2013 of $900,000. The products.
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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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11) Assume the following information for Petra Sales Company: •  Common stock, $1.00 par, 200,000 issued, 180,000 outstanding •  Paid-in capital in excess of Par—Common: $1,600,000 •  Retained earnings: $2,440,000 •  Treasury stock: 20,000 shares purchased at $12 per share If Petra Sales purchases an additional 5,000 shares of treasury stock at $14 per share,.
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Learning Objective 12-3 1) Profits and losses in a partnership must be shared based on each partner's capital balances. 2) If the partnership agreement specifies a method for sharing profits but not losses, then losses are shared the same way as profits. 3) The net income (loss) allocated to each partner should always.
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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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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 will decrease the balance in Retained Earnings? A) repayment of bond principal B) stock split C) stock.
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