Accounting Bonus Quiz

When a corporation decides to pay a cash dividend, which of the following is an important consideration?

The balances in the corporation's cash and retained earnings accounts

When a corporation pays a previously declared cash dividend, which of the following is true?

liabilities decrease

It is important that the petty cash custodian

maintains supporting documentation for all payments made from the petty cash fund

Each of the following documents is used in the reconciliation of cash receipts except a.bank credit memos. b.bank deposit slips. c.outstanding checks. d.NSF checks.

outstanding checks

Which internal control activity is followed when inventory storage areas are secured with limited access?

safeguarding of assets and records

What will be the increase in the additional paid-in capital-common stock account if a corporation issues 20,000 shares of $1.00 par common stock for $6 per share?

$100,000 20,000 shares x ($6-$1 par) = 100,000

On June 1, the board of directors declared a $100,000 cash dividend to be distributed to common stockholders of record on June 15. The dividend will be paid on July 1. The required journal entry on June 1 includes a

100,000 debit to dividends declared

Which of the following statements is false regarding the issuance of stock versus bonds to raise capital for a corporation? a.The declaration of dividends reduces the amount of the corporation's taxable income. b.The payment of bond interest is a contractual requirement. c.The payment of dividends is at the discretion of the board of directors. d.Interest accrues, whereas dividends do not accrue.

A. The declaration of dividends reduces the amount of the corporation's taxable income

During the bank reconciliation process, an accountant identified an error. A check written for $20 to pay a supplier for goods purchased on credit was erroneously recorded in the company's records as $200. Which of the following entries would correct this error?

Cash 180 Accounts Payable 180

Which internal control activity is followed when the work of one department is inspected by another department?

Checks on recorded amounts

If a corporation declares a 2-for-1 stock split, which of the following is true? a.The amount of capital stock is doubled as a result of the split. b.The amount of stockholders' equity is doubled as a result of the split. c.The price of each will be doubled as a result of the split. d.A stockholder who previously held 100 shares will have 200 shares after the split.

D. A stockholder who previously held 100 shares will have 200 shares after the split

Which of the following is not considered to be a cash equivalent? a.corporate commercial paper due in 60 days after purchase b.a certificate of deposit with a term of 75 days when acquired c.a money market account with a bank d.U.S. Treasury bills with an original maturity of 6 months

D. U.S Treasury bills with an original maturity of 6 months

Which of the following statements is true with regard to equity capital ?

The number of shares actually in the hands of stockholders is called outstanding shares

A corporation began operations on October 1, 2021, with 3,000 shares of $2 par common stock authorized. The company issued common stock on several occasions during 2021 and 2022. On December 31, 2022, the company repurchased 1,000 shares of its outstanding shares and then reissued 500 of these shares on March 1, 2023. On June 1, 2023, the company's board of directors declared a 2-for-1 stock split. As a result of this stock split, which of the following is true?

Total stockholders' equity remained the same

The account that records differences between amounts of cash deposited and amounts from the cash register tapes is called

cash over and short

Which internal control activity is followed when the management authorizes only the purchasing department to order goods and services for the company?

clearly defined authority and responsibility

Authorized stock represents the

maximum number of shares that can be issued for each class of stock

Issued shares represent the

number of shares that the corporations has sold

Each of the following items is considered a cash equivalent except a.a 60-day corporate commercial paper. b.a 75-day U.S. Treasury bill. c.a 30-day certificate of deposit. d.a 180-day note issued by a local government.

D. a 180-day note issued by a local government

Which of the following statements is false regarding a credit memo and its relationship to a company's bank reconciliation procedures? a.It is issued when the bank collects a note on behalf of the company. b.It is issued to notify a company of the cancelled checks that have been paid by the bank. c.It must be recorded as a debit to the balance per the company's records. d.It is issued to notify a company of interest earned that needs to be recorded on the company's records.

It is issued to notify a company of the cancelled checked that have been paid by the bank

A Day Spa accepted a check from a customer as payment for services. Unfortunately, the customer's check bounced. The journal entry required on the company's books as a result of this bank reconciliation item will

have no net impact on total assets

Which of the following statements is true pertaining to participating preferred stock?

It includes the right to share in dividends in excess of the regular annual dividend

Having the same employee prepare company checks and sign those checks relates to which internal control activity?

a violation of proper segregation of duties