accounting 2

An appropriation of retained earnings represents:

a portion of retained earnings that is currently unavailable for dividends.

Treasury Stock

has a normal debit balance

The worksheet for a corporation and a sole proprietorship are almost identical. The major difference is the:

income tax adjustment.

When bonds are issued at a discount, the bond discount:

increases the amount of interest expense over the life of the bonds.

The financial ratios and percentages that reflect averages for similar companies are called:

industry averages.

A declaration and distribution of a 20 percent stock dividend on common stock will:

not change the total stockholders' equity.

When bonds mature, a corporation will pay the bondholders:

the face amount of the bonds.

On December 31, 2019, a corporation issued $200,000 face value, 12 percent bonds that mature 10 years from the date of issue. The issue price was 97. If the firm uses the straight-line method of amortization, interest expense for 2020 will be reported at:

$24,600.

A corporation paid $104,000 to retire bonds with a face value of $100,000 and an unamortized premium balance of $3,000. The entry to record the early retirement of the bonds will include the recognition of a loss of:

$1,000.

A company's net income before income tax is $55,000. Income tax for the year was $5,000. Dividend requirements for preferred stock are $20,000. There are 20,000 shares of common stock outstanding. Earnings per common stock are:

1.5

If current assets are $90,000 and total assets are $270,000, what percentage of total assets are current assets?

33 percent.

Current Ratio

Current assets divided by current liabilities

A stock split will do which of the following?

Decrease the par value of the stock.

Return on common stockholders' equity is calculated as:

Income available to common stockholders divided by Common stockholders' equity.

Times bond interest earned is calculated as:

Income before bond interest and income taxes divided by Bond interest cash requirement.

When the amount of future taxes that will be paid as a result of the MACRS depreciation deduction taken in this and prior years, an adjustment for the future taxes is made with a debit to the:

Tax Expense account and a credit to Deferred Income Tax Liability account.

A horizontal analysis of balance sheet data involves a comparison of a balance sheet amount on a given date with the:

amount for the same balance sheet item on a previous date.

All of the following are disadvantages of raising capital through the issue of bonds

bonds are classified as a long term liability interest must be paid even if the firm suffers a loss face amount must be repaid at maturity

The City of St. Charles purchased land ten years ago for $100,000. The land is now worth $120,000. The city wishes to attract new industry to its town and gives the land to Crowning Corporation for a plant site. Crowning Corporation will record this transaction with a:

credit to the Donated Capital account for $120,000.

The entry to record the adjustment for accrued bond interest includes a:

debit to the Bond Interest Expense account and a credit to the Bond Interest Payable account.

On April 1, 2019, Tyler Corporation issued 100 registered, unsecured bonds that will mature in 10 years. The face value of each bond is $1,000. The bond interest rate is 10 percent. Interest will be paid on April 1 and October 1 of each year. The entry to record the first interest payment on October 1, 2019, would include a:

debit to the Bond Interest Expense account for $5,000 and credit to Cash for 5,000

Tyler Corporation decides to accumulate funds in a bond sinking fund for each of the years that its bonds are outstanding. The net earnings of the fund will reduce the amount that the corporation has to add each year. At the maturity date of the bonds, the sinking fund will have the $1,000,000 needed to retire the bonds. The entry to record the retirement of the bonds will include a:

debit to the Bonds Payable account for $1,000,000.

Suppose that the board of directors of Charles Corporation decided to appropriate $100,000 of retained earnings during each of the last five years its bonds are outstanding. When the bonds are retired, the entries to record the retirement will include a:

debit to the Retained Earnings Appropriated for Bond Retirement account for $500,000.

The entry to record the declaration of a cash dividend includes a:

debit to the Retained Earnings account and a credit to the Dividends Payable account.