Accounting Principles covers chapter 15-17 of bookAccounting Principles, 8th edition, Weygandt 7. Which of the following accurately describes a debenture? a. a legal contract between the bond issuer and the bondholders b. a type of bond issued in the names and address of the bondholders. c. a type of bond which requires the bond issuer to create a sinking fund of assets set aside at a specified amounts and dates to repay the bonds. d. a type fo bond which is not collateralized but backed only by the issuer's general credit standing. e. a type fo bond that can be exchanged for a fixed number of shares of the issuing corporation's common stock. 10. A company issued 5-year, 7% bonds with a par value of $100,000. the company received $97,947 for the bonds. Using the straight-line method, the amount of intrest expense for the first semiannual interest period is: a. $3,294.70 b. $3,500.00 c. 3,705.30 d. 7,000.00 e. 7,410.60
12. At acquisition, debt securities are:
a. recorder at their cost, plus total interest that will be paid over the life of the security.
b. recordered at the amount of interest that will be paid over the life of the security.
c. recorded at cost
d. not recorded, because no interest is due yet.
e. recorded at the amount of dividend income to eb received.
13. Equtiy securities are:
A. Recorded at cost to aquire them plus accrued intrest.
b. Recorded at cost to aquire them plus dividends earned.
c. Recorded at cost.
d. Not recorded until dividends are received.
e. Not recorded until interest is received
14. A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:
15. Accounting for long-term investments in equity securities with controlling influence uses the:
a. controlling method
b. equity method with consolidation
c. investor method
d. investment method
e. consolidated method
18. Investments can be classified as:
a. trading securities
b. Held-to-maturity debt securities
c. Available-for-sale debt securities
d. Available-for -sale equity securities
e. all of the above
19. A decrease in the fair market value of a security that has not yet been realized through an actual sale of the security is called a(n)
20. Morgan Company purchased 2,000 shares of Asta's common stock for $143,000 as a long-term investment. This investment is considered available-for sale. The par value of the stock was $1 per share. Morgan paid $375 in commissions on the transaction. The entry to record the transaction would include a:
a. Credit to common stock for $2,000
b. Credit to common stock for $143,000
c. credit to common stock for $143,375
d. debit to long-term investments for $143,000
e. debit to long-term investments for $143,375
21. If a company owns more then 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?
A. equity method
b. market value method
c. historical cost method
d. straight line method
e. effective method
22. Chung owns 40%of lu's common stock. Lu pays $97,000 in total cash dividends to its shareholders Chung's entry to record this transaction should include a:
a. debit to dividends for $97,000
b. debit to dividends for $38,000
c. debit to long-term investments for $97,000
d. credit to long-term investments for $38,000e. credit to cash for $97,000
24. The appropriate section in the statement of cash flows for reporting the cash payment of wages is:
a. operating activities
b. financing activities
c. investing activities
d. schedule of non cash investing or financing activity
e. None of these. This is not reported on the statement of cash flows
25. Cash flows from interest received are reported in the statement of cash flows as part of:
d. non cash activities
e. none of these. This is not reported in the statement of cash flows
26. The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is :
d. Schedule of noncash investing or financing activity
e. none of these. This is not reported on the statement of cash flows.
27. The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:
a. Direct method of reporting net cash provided or used by operating activites
b. cash basis of accouintion
c. classified statement of cash flows
d. indirect method of reporting net cash provided or used by operating activities
e. net method of reporting cash flows from operating activities
28. A statement of cash flows should reconcile the differences between the beginning and ending balances of:
A. net income
c. cash and cash equivalents
d. working capital
e. cash, cash equivalents, and short-term investments
29. use the following information to calculate cash paid for wages and salaries:
Salaries expense $168,000
Salaries payable, January 1 $6,400
Salaries payable, December 31 $10,600
31. A company's inventory balance at 12/31/07 was $200,000 and was $188,000 at 12/31/08. Its accounts payable balance at 12/31/07 was $80,000 and was $84,000 at 12/31/08, and its cost of goods sold for 2008 was $720,000. The company's total amount of cash payments for merchandise in 2008 equals:
32. A company's income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on sale of plant assets, $14,000 . An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities; accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. calculate the net cash provided or used by operating activities.
33. Investing activities include the:
a. purchase of plant assets
b. lending and collecting on notes receivable\
c. sale of short-term investments other than cash equivalents
d. sale of plant assets