accounting final multiple choice

C

A bank reconciliation explains the differences between: A) Cash receipts and cash disbursements for the period. B) The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period. C) The balance per bank statement and the cash balance per the accounting records of the depositor. D) The balance per bank statement and cash expected to be on hand according to the cash forecast.

C

All the following are steps included in the preparation of a bank reconciliation except: A) Comparing deposits listed on the bank statement with the deposits shown in the accounting records. B) Arranging checks by serial numbers and comparing with those listed in the accounting records. C) Deducting any debit memoranda from the balance on the bank statement. D) Preparing journal entries for any adjustments to the depositor's records.

A

Assuming there are no dividends in arrears, the book value per share of common stock is: A) $26.25. B) $25.00. C) $16.25. D) $5.00.

D

Employers are required to pay all of the following on the wages paid to each employee except: A) Social security taxes B) Worker's compensation insurance C) Medicare taxes D) Health insurance benefits.

D

For the financial statements of publicly traded companies, MACRS: A) Is recommended. B) Is required. C) Is optional. D) Is not considered to be in conformity with GAAP.

B

On December 1, Inventive Corporation borrowed $55,000 from a bank and signed a 12%, 90-day note payable in the amount of $55,000. The December 31 adjusting entry will be: A) Debit Interest Expense $550 and credit Notes Payable $550. B) Debit Interest Expense $550 and credit Interest Payable $550. C) Debit Discount on Notes Payable $1100 and credit Interest Payable $1100. D) Debit Interest Expense $550 and credit Cash $550.

C

The current portion of long-term debt should be reported: A) Separately in the long-term liabilities section of the balance sheet. B) In the long-term liabilities section of the balance sheet, along with the other long-term debt. C) In the current liabilities section of the balance sheet. D) In a separate section of the balance sheet, between long-term liabilities and shareholders' equity.

D

The overall effect of declaring and distributing a cash dividend includes each of the following except: A) Reducing total assets. B) Reducing stockholders' equity. C) Reducing the balance of the Retained Earnings account. D) Reducing net income for the period.

B

When treasury stock is reissued at a price above cost: A) The corporation recognizes a gain to be recorded on the income statement. B) Total paid-in capital is increased. C) The reissuance is treated as an extraordinary item in the corporation's income statement. D) Retained earnings is increased.

C

Which of the following does not affect the market price of an outstanding bond issue? A) Fluctuations in the current market rate of interest. B) The credit rating of the issuing corporation. C) The price at which the bonds were originally issued. D) The length of time remaining until the bonds' maturity date.

C

A capital lease is recorded in the accounting records of the lessee by an entry: A) Debiting Rent Expense and crediting Cash each time a lease payment is made. B) Debiting Cash and crediting Rental Revenue each time a lease payment is received. C) Debiting an asset account and crediting a liability account for the present value of the future lease payments. D) Debiting an asset account and crediting Sales for the present value of the future lease payments.

B

If a company uses a percentage of net sales in computing the amount of uncollectible accounts expense: A) No valuation allowance will be required. B) The relationship between revenue and expenses is being stressed more than the valuation of receivables at the balance sheet date. C) The existing balance in the Allowance for Doubtful Accounts will be increased sufficiently to equal the probable loss indicated by the percentage of net sales computation. D) Any past-due accounts will be listed as a separate item in the balance sheet.

A

If a corporation has issued a single class of stock, it must be: A) Common. B) Preferred. C) Par-value. D) Cumulative preferred.

A

In order to limit the use of a shell company, the SEC has proposed: A) Greater financial disclosures. B) Eliminating this type of company. C) Arresting promoters of shell companies for fraud. D) That its stock only be sold in foreign countries.

B

On November 1 of the current year, Century Company borrowed $60,000 by issuing a 12%, six-month note payable, all due at maturity date. Interest expense on this note to be recognized during the current year amounts to: A) $ 600. B) $1,200. C) $1,800. D) $4,800.

C

On September 1, 2005, Saturn Corporation's common stock was selling at a market price of $300 per share. On that date, Saturn announced a 3 for 2 stock split. At what price would you expect the stock to trade immediately after the split goes into effect? A) $150. B) $450. C) $200. D) $300.

C

Refer to the above data. Assume that in its financial statements, Phoenix Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2005 and 2006 will be: A) $3,250 in 2005 and $13,000 in 2006. B) $3,800 in 2005 and $14,000 in 2006. C) $8,000 in 2005 and $12,000 in 2006. D) $4,000 in 2005 and $126,000 in 2006.

C

Refer to the above data. Assume that in its financial statements, Phoenix Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2005 and 2006 will be: A) $7,500 in 2005 and $13,000 in 2006. B) $8,000 in 2005 and $16,000 in 2006. C) $6,000 in 2005 and $12,000 in 2006 D) $5,000 in 2005 and $10,000 in 2006

A

Refer to the above data. Assume that in its financial statements, Phoenix Products uses the 150%-declining-balance method and the half-year convention. Depreciation expense in 2005 and 2006 will be: A) $9,900 in 2005 and $16,830 in 2006. B) $9,000 in 2005 and $15,300 in 2006. C) $9,000 in 2005 and $16,700 in 2006. D) $9,750 in 2005 and $16,575 in 2006.

A

Refer to the above data. Assume that in its financial statements, Phoenix Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2005 and 2006 will be: A) $13,200 in 2005 and $21,120 in 2006. B) $13,000 in 2005 and $26,000 in 2006. C) $13,000 in 2005 and $20,800 in 2006. D) $12,000 in 2005 and $19,200 in 2006.

D

Refer to the above data. Employees' annual "take-home-pay," totals approximately: A) $765,000. B) $722,500. C) $784,975. D) $699,975.

A

Refer to the above data. In the year 2009, Phoenix Products sells this machinery for $3,000. At the date of sale, the machinery had been depreciated by Phoenix Products to its estimated residual value of $6,000. This sale results in: A) A $3,000 loss in both the company's financial statements and income tax return. B) No gain or loss in either the financial statements or income tax return. C) A $3,000 loss in the financial statements, a $3,000 gain in the income tax return. D) A $3,000 loss in the financial statements, but no gain or loss in the income tax return.

B

Refer to the above data. The company's annual payroll-related expenses amount to approximately: A) $ 914,800. B) $1,081,825. C) $1,146,850. D) Some other amount.

A

Responsibility for selection of the depreciation methods used in financial reporting rests with: A) Company management. B) The FASB. C) The IRS. D) The CPA firm that audits the company's financial statements.

D

Roberts Corporation has net assets of $1,872,000 and paid-in capital of $700,000. The only stock issue consists of 72,000 outstanding shares of common stock. From this information, it can be deduced that the company has: A) Retained earnings of $1,872,000. B) A deficit of $1,172,000. C) A book value of $10 per share of common stock. D) A book value of $26 per share of common stock.

C

Royal Corp. has total stockholders' equity of $5,100,000. The company's outstanding capital stock includes 100,000 shares of $10 par value common stock and 20,000 shares of 6%, $100 par value preferred stock. (No dividends are in arrears.) The book value per share of common stock is: A) $19. B) $29. C) $31. D) $51.

C

Under the allowance method, when a receivable that had been previously written off is collected: A) Net income is increased. B) Net assets are increased. C) Net income and net assets are not affected. D) Net assets and net income are both increased.

B

Sigma Corporation is authorized to issue 4,000,000 shares of $2 par value capital stock. The corporation issued half the stock for cash at $4 per share, earned $280,000 during the first three months of operation, and declared a cash dividend of $40,000. The total paid-in capital of Sigma Corporation after three months of operation is: A) $7,960,000. B) $8,000,000. C) $8,250,000. D) $8,280,000.

D

The term "junk bonds" describes bonds with: A) Low interest rates. B) Indefinite maturity dates. C) Low maturity values. D) High risk.

D

When a bank reconciliation has been satisfactorily completed, the only related entries to be made in the depositor's records are: A) To correct errors made by the bank in recording the dollar amounts of cash transactions during the period. B) To reconcile items that explain the difference between the balance per the books and the balance per the bank statement. C) To record outstanding checks and bank service charges. D) To record items that explain the difference between the balance per the accounting records and the adjusted cash balance.

B

When a corporation has a right to redeem bonds in advance of the maturity date, it is known as: A) Convertible. B) Callable. C) Junk bonds. D) Debentures.

D

When preparing a bank reconciliation, checks outstanding will: A) Increase the balance per depositor's records. B) Decrease the balance per depositor's records. C) Increase the balance per the bank statement. D) Decrease the balance per the bank statement.

C

Which of the following is not a characteristic of the corporate form of organization? A) The owners of a corporation cannot lose more than the amount of their investment. B) Shares of stock in a corporation are more readily transferable than is an interest in a partnership. C) Stockholders have authority to decide by majority vote the amount of dividends to be paid. D) The corporation is a very efficient vehicle for obtaining large amounts of capital required for large-scale production.

A

Which of the following is not an accurate statement regarding the distinction between debt and equity? A) Only equity is considered a source of financing for operations of the business, since debt must be repaid at a specified maturity date. B) If a business ceases operations and liquidates, claims of all creditors have legal priority over claims of the stockholders. C) Most debt requires the borrower to pay interest annually; equity financing does not obligate the company to make a specified annual payment. D) The providers of equity are owners of the business; the providers of borrowed funds are creditors.

C

Which of the following situations is impossible? A) Book value is greater than residual value. B) Book value is equal to the residual value. C) Book value is less than residual value. D) Book value is less than the original cost.

C

Which statement is true about a stock split? A) Total shareholders' equity increases. B) Total shareholders' equity decreases. C) Total shareholders' equity remains the same. D) A change in total stockholders' equity depends upon whether it is a 2-for-1 split or a 1-for-2 split.