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
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
Question 33 2 points Save
A bondholder that sends in a coupon to receive interest payments must have a(n)
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.
Paid-in Capital in Excess of Par.
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.