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Question 1 2 points Save Current liabilities are

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Question 1 2 points    Save    
Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

   Question 2 2 points    Save    
During the month, a company sells goods for a total of $108,000, which includes sales taxes of $8,000; therefore, the company should recognize $100,000 in Sales Revenues and $8,000 in Sales Tax Expense.

   Question 3 2 points    Save    
Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet.

   Question 4 2 points    Save    
Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

   Question 5 2 points    Save    
A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

   Question 6 2 points    Save    
If $150,000 face value bonds are issued at 102, the proceeds received will be $102,000.

   Question 7 2 points    Save    
Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds.

   Question 8 2 points    Save    
A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate.

   Question 9 2 points    Save    
If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

   Question 10 2 points    Save    
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.

   Question 11 2 points    Save    
If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

   Question 12 2 points    Save    
If $800,000, 8% bonds are issued on January 1, and pay interest semiannually, the amount of interest paid on July 1 will be $32,000.

   Question 13 2 points    Save    
The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account.

   Question 14 2 points    Save    
The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds.

   Question 15 2 points    Save    
Bonds that mature at a single specified future date are called term bonds.

   Question 16 2 points    Save    
The terms of the bond issue are set forth in a formal legal document called a bond indenture.

   Question 17 2 points    Save    
Premium on Bonds Payable is a contra account to Bonds Payable.

   Question 18 2 points    Save    
All of the following are reported as current liabilities except
    accounts payable.
   bonds payable.
   notes payable.
   unearned revenues.

   Question 19 2 points    Save    
Liabilities are classified on the balance sheet as current or

   Question 20 2 points    Save    
A corporation is not an entity which is separate and distinct from its owners.

   Question 21 2 points    Save    
A corporation must be incorporated in each state in which it does business.

   Question 22 2 points    Save    
A stockholder has the right to vote in the election of the board of directors.

   Question 23 2 points    Save    
A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

   Question 24 2 points    Save    
Treasury stock should not be classified as a current asset.

   Question 25 2 points    Save    
Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.

   Question 26 2 points    Save    
A 3 for 1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

   Question 27 2 points    Save    
Retained earnings represents the amount of cash available for dividends.

   Question 28 2 points    Save    
Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

   Question 29 2 points    Save    
A dividend based on paid-in capital is termed a liquidating dividend.

   Question 30 2 points    Save    
The chief accounting officer in a company is known as the

   Question 31 2 points    Save    
From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that
    bond interest is deductible for tax purposes.
   interest must be paid on a periodic basis regardless of earnings.
   income to stockholders may increase as a result of trading on the equity.
   the bondholders do not have voting rights.

   Question 32 2 points    Save    
Investors who receive checks in their names for interest earned on bonds must hold
    registered bonds.
   coupon bonds.
   bearer bonds.
   direct bonds.

   Question 33 2 points    Save    
A bondholder that sends in a coupon to receive interest payments must have a(n)
    unsecured bond.
   bearer bond.
   mortgage bond.
   serial bond.

   Question 34 2 points    Save    
A $1,000 face value bond with a quoted price of 98 is selling for

   Question 35 2 points    Save    
A bond with a face value of $100,000 and a quoted price of 102 1/4 has a selling price of

   Question 36 2 points    Save    
Mendez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2008, at 103. The journal entry to record the issuance will show a
    debit to Cash of $2,000,000.
   credit to Premium on Bonds Payable for $60,000.
   credit to Bonds Payable for $2,030,000.
   credit to Cash for $2,060,000.

   Question 37 2 points    Save    
On the date of issue, Chudzick Corporation sells $2 million of 5-year bonds at 97. The entry to record the sale will include the following debits and credits:


   Question 38 2 points    Save    
Becker Company is a publicly held corporation whose $1 par value stock is actively traded at $20 per share. The company issued 2,000 shares of stock to acquire land recently advertised at $50,000. When recording this transaction, Becker Company will
    debit Land for $50,000.
   credit Common Stock for $40,000.
   debit Land for $40,000.
   credit Paid-In Capital in Excess of Par Value for $48,000.

   Question 39 2 points    Save    
New Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to
    Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000.
   Common Stock $14,000.
   Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000.
   Common Stock $10,000 and Retained Earnings $4,000.

   Question 40 2 points    Save    
Kim, Inc. issued 5,000 shares of stock at a stated value of $10/share. The total issue of stock sold for $15/share. The journal entry to record this transaction would include a
    debit to Cash for $50,000.
   credit to Common Stock for $50,000.
   credit to Paid-in Capital in Excess of Par Value for $25,000.
   credit to Common Stock for $75,000.

   Question 41 2 points    Save    
Rancho Corporation sold 100 shares of treasury stock for $40 per share. The cost for the shares was $30. The entry to record the sale will include a
    credit to Gain on Sale of Treasury Stock for $3,000.
   credit to Paid-in Capital from Treasury Stock for $1,000.
   debit to Paid-in Capital in Excess of Par Value for $1,000.
   credit to Treasury Stock for $4,000.

   Question 42 2 points    Save    
Each of the following is correct regarding treasury stock except that it has been
   fully paid for.

   Question 43 2 points    Save    
Dividends in arrears on cumulative preferred stock
    never have to be paid.
   must be paid before common stockholders can receive a dividend.
   should be recorded as a current liability until they are paid.
   enable the preferred stockholders to share equally in corporate earnings with the common stockholders.

   Question 44 2 points    Save    
The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
    decrease total liabilities and stockholders' equity.
   increase total expenses and total liabilities.
   increase total assets and stockholders' equity.
   decrease total assets and stockholders' equity.

   Question 45 2 points    Save    
If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is
    Common Stock Dividends Distributable.
   Common Stock.
   Paid-in Capital in Excess of Par.
   Retained Earnings.

   Question 46 2 points    Save    
Which of the following is not a significant date with respect to dividends?
    The declaration date
   The incorporation date
   The record date
   The payment date

   Question 47 2 points    Save    
On the dividend record date,
    a dividend becomes a current obligation.
   no entry is required.
   an entry may be required if it is a stock dividend.
   Dividends Payable is debited.

   Question 48 2 points    Save    
The declaration and distribution of a stock dividend will
    increase total stockholders' equity.
   increase total assets.
   decrease total assets.
   have no effect on total assets.

   Question 49 2 points    Save    
On January 1, Sandford Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a
    debit to Retained Earnings for $120,000.
   credit to Cash for $120,000.
   credit to Common Stock Dividends Distributable for $120,000.
   credit to Common Stock Dividends Distributable for $40,000.

   Question 50 2 points    Save    
A prior period adjustment that corrects income of a prior period requires that an entry be made to
    an income statement account.
   a current year revenue or expense account.
   the retained earnings account.
   an asset account.



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Amol Srivastava, Accountant
Category: Finance
Satisfied Customers: 626
Experience: More than 4years + of industry experience ,CFA level2 cleared, Chartered Accountant from India
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