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Accounting 2 Master Flashcard Set

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which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method

an increase in inventory

The details of a stock split are normally disclosed

in the notes of the financial statement

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

increase in inventory

A disadvantage of the corporate form of business entity is

corporations are subject to more governmental regulations

Which of the following statements concerning taxation is accurate?

corporations pay federal and state income taxes.

Which of the following should be shown on a statement of cash flows under the financing activities section?

the payment of cash to retire a long-term note

Calculate the total factory overhead to be charged to each unit of Hooks. a. $33 b. $50 c. $11 d. $61

$33

Rogers Co. reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash provided by operating activities for the year is

$33,000

A corporation issues 2,000 shares of common stock for $32,000. The stock has a stated value of $12 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

The common stock account is recorded for the number of shares times the stated value per share (2,000 × $12 = $24,000).

When a cash dividend is declared, which of the following accounts is credited? a. Cash Dividends Payable b. Cash Dividends c. Common Stock d. Paid-In Capital

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

Debit cash, Credit bonds payable

What does the journal entry for Date of Payment include?

Debit to Cash Dividends Payable Credit to Cash Dividends

The statement of cash flows is an optional financial statement

False

corporation

select the type of business that is most likely to obtain large amounts of resources by issuing stock a. partnership b. corporation c. sole proprietorship d. none are correct

Dylan Corporation issues for cash $2,000,000 of 8%, 15-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

the amount of annual interested paid to bondholders remains the same over the life of the bonds

There are two alernatives to reporting cash flows from operating activities in the statement of cash flows: the direct and the indirect method

True

To decrease the market value of the stock.

What is the primary reason for a stock split? a. To distribute cash to the investor. b. To decrease the market value of the stock. c. To decrease the number of shares outstanding. d. To increase the capital stock of the corporation

What is the total stockholders' equity based on the following data? common stock --$900,000 Excess of Issue Price Over Par -- 375,000 Retained Earnings (deficit) -- 50,000

$1,225,000 Note: Total stockholders' equity is common stock plus excess of issue price over par minus retained earnings because it is a deficit ($900,000 + $375,000 - $50,000) = $1,225,000

What is the total stockholders' equity based on the following data?

$1,225,000.

What is the total stockholders' equity based on the following data? Common stock $900,000 Excess of issue price over par for common stock 375,000 Retained earnings 50,000

$1,325,000

Determine the activity-based cost for each disk drive unit. a. $92.25 b. $130.69 c. $394.12 d. $279.57

$279.57

The current period of cash flows includes the following... The cash falance at the end of the period is:

$445,000

Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $50,000 b. $71,000 c. $121,000 d. $21,000

$50,000

The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks? a. $78.00 b. $19.50 c. $37.45 d. $56.00

$78.00

Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is a. $105,000 b. $118,000 c. $92,000 d. $169,000

$92,000

Accounts payable $ 30,000 Accounts receivable 35,000 Accrued liabilities 7,000 Cash 25,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 400,000 Prepaid expenses 2,000 Based on the above data, what is the quick ratio, rounded to one decimal point?

(Accounts receivable + cash + marketable securities)/(Accounts payable + accrued liabilities + notes payable)=1.7

The ratio of fixed assets to long-term libabilities can indicate the ability of the business to borrow additional funds on a long-term basis

(blank)

Earnings per common share is calculated as

(net income - preferred dividends) / average number of common shares outstanding

1, none are correct

If Dakota Company issues 1,500 shares of $10 par common stock for $75,000, what is the journal entry?

1,500 x 10= 15,000 DR. Cash 75,000 CR. Common Stock 15,000 CR. Paid In Capital 60,000 (75-15)

On January 1, $1,000,000, five-year, 10% bonds, were issued for $1,970,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize the premium on bonds payable, the semiannual amortization amount is

1,970,000-1,000,000= $970,000 is the premium Semiannual = 970,000 / 5 x 2( or 10)= $97,000

If $1,000,000 of 8% bonds are issued at 102¾, the amount of cash received from the sale is

1027500

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $3-per-share dividend is declared?

105,000

On January 1 of the current year, Barton Corporation issued 10% bonds with a face value of $101,000. The bonds are sold for $95,950. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is

11,110

A corporation has 40,000 shares of $25 par value stock outstanding and 45,000 authorized shares. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

120,000 shares

The number of equivalent units of production for the period for materials if the average cost method is used to cost inventories was a. 15,650 b. 18,000 c. 17,250 d. 17,700

18,000

Income tax was $200,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the cash flow statement using the direct method is

190000

The number of equivalent units of production for conversion costs for the period was a. 29,600 b. 32,000 c. 32,400 d. 34,000

29,600

Dora Inc. reported the following on the company's cash flow statement for 2016:

290000

Operating expenses other than depreciation for the year were $300,000. Accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be

330000

A corporation has 80,000 shares of $20 par stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be

80,000 x 4 = 320,000 shares outstanding

Fall to approximately $60

Define Deficit

A debit balance in retained earnings-accumulation of net losses

corporations are subject to more governmental regulations

A disadvantage of the corporate form of business entity is mutual agency for stockholders unlimited liability for stockholders corporations are subject to more governmental regulations the ease of transfer of ownership

The following information is available from the land account: Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include: A. cash received from sale of land, $200,000. B. gain on sale of land, $30,000. C. loss from land transactions, $(50,000). D. cash received from sale of land, $170,000.

A. cash received from sale of land, $200,000.

the glenn corporation issues 1,000 10-year 8% $2,000 bonds dated january 1 at 92. The journal entry to record the issuance will show a A. debit to discount on bonds payable for $80,000 B. debit to cash of $2,000,000 C. credit to bonds payable for $1,920,000 D.credit to cash for $1,920,000

A. debit to discount on bonds payable for $80,000

Dividends in Arrears

All of the following are normally found in a corporation's stockholders' equity section except Common Stock Paid-In Capital in Excess of Par Dividends in Arrears Retained Earnings

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

An increase in inventory

the journal entry a company records for the issuance of bonds when the contract rate is less than the market rate would be A. debit bonds payable, credit cash B.debit cash and discount on bonds payable, credit bonds payable C. debit cash, credit premium on bonds payable and bonds payable D. debit cash, credit bonds payable

B.debit cash and discount on bonds payable, credit bonds payable

the number of times interest expense is earned is computed as A. net income plus interest expense, divided by interest expense B.income before income tax plus interest expense, divided by interest expense C. net income divided by interest expense D. income before income tax divided by interest expense

B.income before income tax plus interest expense, divided by interest expense

Cost of goods sold

Beginning inventory + the cost of goods purchased - ending inventory

callable bonds

Bonds that are subject to retirement at a stated amount prior to maturity at the option of the issuer are called

101. When a stock dividend is declared, which of the following accounts is credited? A. Common Sock B. Dividend Payable C. Stock Dividends Distributable D. Retained Earnings

Horizontal analysis of comparative financial statements includes

Calculation of dollar amount changes and percentage changes from the previous to the current year

Stockholders' equity section

Common Stock Retained Earnings Paid-In Capital in Excess of Par

$12,400

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3000 and an estimated useful life of 5 years. Determine the 2nd years' depreciation using straight-line depreciation

All of the following are conditions for a cash dividend except

Conditions for a cash dividend include sufficient retained earnings, sufficient cash, and a formal action by the board of directors.

How do you report the balance of Discount on Bonds Payable?

Contra-Liability account Deduction from Bonds Payable

Which of the following statements concerning taxation is accurate?

Corporations pay federal and state taxes

Which of the following is an example of direct labor cost for a cell phone manufacturer

Cost of wages of assembly workers

Journal Common stock above par

Cr. Paid-In Capital in Excess of Par—Common Stock

The date on which a cash dividend becomes a binding legal obligation is on the last day of fiscal year declaration date date of record payment date

Declaration date

Dividends are paid on shares outstanding.This is issued shares minus reacquired shares (40,000 - 5,000). This would be 35,000 shares × $3, or $105,000

the notes to the financial statements.

Dividends in arrears are required to be reported in: a. a liability account. b. a contra-equity account. c. the stockholders' equity section of the balance sheet. d. the notes to the financial statements.

Which of the following should be shown on a statement of cash flows under the financing activity section?

Dividends paid are a financing activity, whether on common or preferred stock.

All of the following statements are true regarding earnings per common share (EPS) except:

EPS cannot be calculated if a company has no preferred stock.

Which of the following statements is true concerning stock splits?

Each shareholder will own the same total par amount of stock before and after the split.

all the above

Earnings per share is the net income per common share must be reported by publicly traded companies helps compare companies of different sizes all of the above

The manner of reporting cash flows from investing and financing activities will be different under the direct method as compared to the indirect method

False

The paid-in capital from sale of treasury stock account is debited if the sales price of the treasury stock sold is greater than its cost.

False

When common stock is issued in exchange for land, the land should be recorded in the accounts at the par value of the stock issued.

False

issued common stock

Financing

paid cash dividends

Financing

Which of the following is not a cash flow element that would be found on the statement of cash flows?

Free cash flow

Which of the following is not a cash flow element that would be found on the statement of cash flows? a. Change in cash b. Ending cash balance c. Free cash flow d. Net cash flow from operating activities

Free cash flow

Which of the following is not a cash flow element that would be found on the statement of cash flows? a. Ending cash balance b. Change in cash c. Net cash flow from operating activities d. Free cash flow

Free cash flow

Paid-In Capital in Excess of Par will be credited for $85,000

If Smart Company issues 1,000 shares of $5 par value common stock for $90,000, the account

Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows?

Increase in common stock account

Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in treasury stock account b. Decrease in dividends payable account c. Decrease in retained earnings account d. Increase in common stock account

Increase in common stock account

purchased buildings

Investing

sold patents

Investing

The journal entry to issue 1,000,000 shares of $5 par common stock for $9 per share on July 2 would be

July 2 Cash 9,000,000 Common Stock 5,000,000 Paid-In Capital in Excess of Par—Common Stock 4,000,000

Which of the following is an example of factory overhead cost for a bicycle manufacturer

Labor to repair the welder

If the market rate interest 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

Less than $500,000

In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account is analyzed for changes? a. Current liabilities b. Long-term assets c. Stockholders' equity d. Current assets

Long-term assets

In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which types of accounts are analyzed for changes?

Long-term liabilities and stockholders' equity

The par value of the stock decreased to $1 per share.

Magnum Corporation had 60,000 of its $3 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the split. Which of the following is true as a result of the split? a. There were 20,000 shares of common stock issued after the split. b. The balance in the common stock account increased to $180,000. c. The market price of the stock was not affected. d. The par value of the stock decreased to $1 per share.

If bonds are issued at a discount, it means that the

Market interest rate is higher than the contractual interest rate

Which of the following increases retained earnings?

Net Income note: Retained earnings are increased by net income.

Identify journal entry for DATE OF RECORD

No entry

Define issued stock

Number of shares sold/ issued

receipts from the issuance of capital stock

On the statement of cash flows, the cash flows from financing activities section would include: a. receipts from the sale of investments. b. payments for the acquisition of investments. c. receipts from a note receivable. d. receipts from the issuance of capital stock

The excess of sales price of treasury stock over its cost should be credited to a. Treasury Stock Receivable b. Premium on Capital Stock c. Paid-In Capital from Sale of Treasury Stock d. Income from Sale of Treasury Stock

Paid-In Capital from Sale of Treasury Stock

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows?

Purchase of land for cash

Preferred Stock for $500,000 and Additional Paid-in Capital for $200,000.

The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $70 per share. The entry to record the transaction will consist of a debit to Cash for $700,000 and a credit or credits to: a. Preferred Stock for $700,000. b. Preferred Stock for $500,000 and Additional Paid-in Capital for $200,000. c. Preferred Stock for $500,000 and d. Retained Earnings for $200,000. d. Paid-in Capital from Preferred Stock for $700,000.

enhanced because of the limited liability and the ease of share transferability

The ability of a corporation to obtain capital is: a. less than a partnership. b. about the same as a partnership. c. restricted because of the limited life of the corporation. d. enhanced because of the limited liability and the ease of share transferability

is indicated in its charter.

The authorized stock of a corporation must be recorded in a formal accounting entry. only reflects the initial capital needs of the company. is indicated in its by-laws. is indicated in its charter.

$100,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? $ 60,000 $ 20,000 $120,000 $100,000

The effect of the declaration of a cash dividend on a company's financial statements is to a. increase total assets and stockholders' equity. b. decrease total assets and stockholders' equity. c. decrease stockholders' equity and to increase total liabilities. d. increase total expenses and total liabilities.

Cash proceeds of $72,000 include a $12,000 gain on the sale of land and the $60,000 cost (book value) of the land. Which of the following is true?

The entire cash proceeds appear as a cash inflow in the Investing Activities section. The book value does not appear as a cash inflow or outflow anywhere on the statement. The $12,000 gain is deducted from net income in the Operating Activities section.

debit insurance expense; debit premium on Bonds Payable, credit Cash

The entry to record the amortization of a premium on bonds payable on an interest payment date includes:

Paid-In Capital in Excess of Par—Common Stock

The entry to record the issuance of common stock at a price above par includes a credit to

The entry to record the issuance of common stock at a price above par includes a credit to a. Cash. b. Paid-In Capital in Excess of Par—Common Stock. c. Organizational Expenses. d. Preferred Stock.

Cash

The entry to record the issuance of common stock at a price above par includes a debit to Organizational Expenses Common Stock Cash Paid-In Capital in Excess of Par-Common Stock

premium

The excess of issue price over par of common stock is termed a(n) discount income deficit premium

LIFO

The inventory method that assigns the most recent costs to cost of good sold is

Which of the following would be shown on a statement of cash flows under the Financing Activities section? a. The issuance of bonds b. Issuance of a long-term note to acquire land c. Purchase of a building d. Sale of a long-term investment in exchange for the common stock of another company

The issuance of bonds

The purchase and resale of treasury stock is normally recorded using the a. direct method. b. equity method. c. indirect method. d. cost method.

Which of the following statements is not true about a 4-for-1 split?

Total contributed capital increases

Which of the following statements is not true about a 4-for-1 split?

Total contributed capital increases.

Total Stockholder's Equity Common Stock 900,000 Paid In Capital Excess of Par 375,000 Retained Earnings 50,000

Total stockholders' equity is Common Stock plus Excess of Issue Price Over Par plus Retained Earnings ($900,000 + $375,000 + $50,000 = $1,325,000)

The acquisition of land in exchange for common stock is an example of noncash investing and financing activity

True

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

True

determines when revenue is credited to a revenue account

What is the revenue recognition concept?

What is the total stockholders' equity based on the following account balances? Common Stock $100,000 Paid-In Capital in Excess of Par 500,000 Retained Earnings 190,000 Treasury Stock 40,000 a. $790,000 b. $600,000 c. $830,000 d. $750,000

A bond indenture is

a contract between the corporation issuing the bonds and the bondholders

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under a. investing activities. b. operating activities. c. noncash investing and financing activities. d. financing activities.

a. investing activities

If the free cash flow changed from $60,000 to $80,000, the change a. is indicative of a favorable trend. b. is indicative of an unfavorable trend. c. is not indicative. d. could be considered favorable or unfavorable depending on other surrounding circumstances. Feedback: Correct. An increase in free cash flow is considered favorable.

a. is indicative of a favorable trend.

If the free cash flow changed from $60,000 to $80,000, the change a. is indicative of a favorable trend. b. is not indicative. c. is indicative of an unfavorable trend. d. could be considered favorable or unfavorable depending on other surrounding circumstances.

a. is indicative of a favorable trend.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. a gain on the sale of land b. a decrease in accounts payable c. an increase in accrued liabilities d. dividends paid on common stock

an increase in accrued liabilities

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Purchase of inventory b. Purchase of land for cash c. Discard of fully depreciated equipment with no salvage value d. Payment of bond interest

b. Purchase of land for cash

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. an increase in inventory b. preferred dividends declared and paid c. a decrease in accounts receivable d. a decrease in accounts payable

c. a decrease in accounts receivable

Free cash flow is a. all cash in the bank b. cash from operations c. cash from financing less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends d. cash flow from operations less cash used to purchase fixed assets to maintain productive capacity

cash flow from operations less cash used to purchase fixed assets to maintain productive capacity

Which of the following is reported on the statement of cash flows?

cash flows from investing activities

which of the following is reported on the statement of cash flows

cash flows from investing activities

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results? a. improving b. controlling c. directing d. planning

controlling

corporation purchases 1,000 shares of its own common stock for $4,000 on February 13. On April 13, half of the treasury stock was sold for $3,000. On April 26, the other half of the treasury stock was sold for $1,800. The entry to record the April 26 sale would include a a. credit to Paid-In Capital from Sale of Treasury Stock for $1,200. b. debit to Treasury Stock for $2,000. c. debit to Paid-In Capital from Sale of Treasury Stock for $200. d. credit to Cash for $1,800.

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to cash dividends declared would require an entry in the Transactions columns involving a

debit to Retained Earnings.

A company uses cash to pay all of the following except

depreciation expenses

the cash flows from operating activities section

depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a. factory overhead cost b. direct labor cost c. miscellaneous costs d. direct materials cost

direct labor cost

The cost of a manufactured product generally consists of which of the following costs? a. direct materials cost and factory overhead cost only b. direct labor cost and factory overhead cost only c. direct labor cost, direct materials cost, and factory overhead cost d. direct materials cost and direct labor cost only

direct labor cost, direct materials cost, and factory overhead cost

Which of the following is not an advantage of issuing bonds instead of common stock?

earnings per share on common stock may be lower

The market interest rate related to a bond is also called the

effective interest rate

Which of the following would appear as a prior-period adjustment?

error in the computation of depreciation expense in the preceding year

A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 2-for-1 stock split, the market value of the stock is

expected to fall by approximately $60

If accounts payable have increased during a period,

expenses on an accrual basis are greater than expenses on a cash basis

When the bonds are sold for more than their face value, the carrying value of the bonds is equal to

face value plus the unamortized premium

Which of the following is an example of a factory overhead cost? a. repair and maintenance cost on the administrative building b. factory heating and lighting cost c. insurance premiums on salespersons' automobiles d. president's salary

factory heating and lighting cost

All of the following would be reported on the balance sheet as a current asset except a. factory overhead b. materials inventory c. finished goods inventory d. work in process inventory

factory overhead

An increase in the number of times interest charges are earned from one year to the next would be considered _____.

favorable

Cash dividends paid would be shown on the statement of cash flows under __________ activities.

financing

cash dividends paid would be shown on the statement of cash flows under _____ activities

financing

A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under

financing activities

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

how high the par value is

corporation

in which of the following organization forms are the owners legal responsibility for the debt of the business limited to the amount they invested in the business? a. sole proprietorship b. corporation c. partnership d. cooperative

Stockholders' equity

includes retained earnings and paid-in capital

Corporations whose stock is traded in a public market must report earnings per share on their

income statement

An acceleration in the collection of receivable will tend to cause the accounts receivable turnover to:

increase

changes in a company's long-term assets are evaluated in preparing the

investing activities section

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows? a. retirement of bond payable b. acquisition of treasury stock c. declaration of stock dividends d. issuance of long-term debt

issuance of long-term debt

number of shares that the corporation has distributed to owners to date.

issued shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has distributed to owners to date. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation.

Treasury stock shares are:

issued shares that are held by the treasurer of the corporation. note: Treasury stock shares are repurchased by the company that originally issued them.

Step 1 of preparing a spreadsheet for the statement of cash flows is to a. analyze the change during the year in each noncash account and classify the change. b. enter the balance of each balance sheet account. c. list the title of each balance sheet account in the Accounts column. d. add the column totals.

list the title of each balance sheet account in the Accounts column.

In preparing the cash flows from investing activities section of the statement of cash flows, which type of account is analyzed for changes

long term assets

If bonds are issued at a discount, it means that the

market interest rate is higher than the contractual interest rate

Long-term investments are held for all of the following reasons except to

meet current cash needs

Cash flows from operating activities, as reported on the statement of cash flows using the indirect method, would include:

net income

Define Outstanding Stock

number of shares sold/issued (less the treasury stock)

Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities? a. number of units to be produced b. number of setups c. number of inspections d. number of direct labor hours

number of units to be produced

Analysts often use free cash flow, rather than cash flows from _________ activities, to measure the financial strength of a business.

operating

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the

operating activites

depreciation is an addition to net income in the ____ ___

operating activities section

Managerial accounting reports are a. prepared according to GAAP b. prepared according to management needs c. prepared periodically only d. related to the entire business entity only

prepared according to management needs

Rent expense on a factory building would be treated as a(n) a. period cost b. product cost c. indirect cost d. direct material cost

product cost

The particular analytical measures chosen to analyze a company may be influenced by all but one of the following. Which one?

product quality of service effectiveness

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

purchase of noncurrent assets

Which of the following would not be found in a schedule of noncash investing and financing activities, reported at the end of a statement of cash flows?

purchase of treasury stock

A major objective of a stock split is to

reduce the market price per share of the stock

Using multiple department factory overhead instead of a single plantwide factory overhead rate: a. results in more accurate product costs b. results in distorted product costs c. is simpler and less expensive to compute than a plantwide rate d. applies overhead costs to all departments equally

results in more accurate product costs

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

retained earnings

When using the spreadsheet/ worksheet method to analyze noncash accounts, it is best to start with

retained earnings

All of the following statements about retained earnings are true except:

retained earnings represents surplus cash. note: The balance of Retained Earnings does not represent surplus cash or cash left over for dividends.

When the maturities of a bond issue are spread over several dates, the bonds are called

serial bonds

Characteristics of a corporation include

shareholders who have limited liability

The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as

solvency and profitability

Which of the following is NOT one of the four basic financial statements?

statement of changes in financial position

Which of the following is not one of the four basic financial statements?

statement of changes in financial position

What is treasury stock?

stock that a corporation has issued and then reacquired. It provides resale to employees, can be reissued as bonuses, and supports the market price

Under the corporate form of business organization,

stockholders wishing to sell their corporation shares need not get the approval of other stockholders, thus making it easy to transfer ownership rights.

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions combined

stockholders' equity will be increased by $500

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

stockholders' equity will be increased by $500 3,500 - 3,000

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions combined,

stockholders' equity will be increased by $500. note: The increase to stockholders' equity would be the cost of treasury stock ($2,000) minus amount it is sold for ($3000), equal to $500. Treasury stock is a contra equity account, and thus selling it would increase stockholders' equity if sold for more.

Which of the following should be shown on a statement of cash flows under the financing activities section? a. the purchase of a long-term investment in the common stock of another company b. the payment of cash to retire a long-term note c. the proceeds from the sale of a building d. the issuance of a long-term note to acquire land

the payment of cash to retire a long-term note

The column headings on a statement of stockholders' equity best represent

the row designations in the stockholders' equity section of the balance sheet.

A statement of stockholders' equity is normally prepared when

there is a change in paid-in capital accounts. there is a change in stock accounts. there is a purchase of treasury stock.

Interest revenue on bonds is reported as

part of other income

Which of the following would not be classified as an operating activity?

payment of dividends

Which of the following would not be classified as an operating activity? a. interest expense b. income taxes c. payment of dividends d. selling expenses

payment of dividends

On the statement of cash flows, the cash flows from financing activities section would include all of the following except

payments of interest on bonds payable

The retained earnings statement may be combined with the income statement.

True

To determine cash payments for merchandise for the statement of cash flows using the direct method, a decrease in accounts payable is added to the cost of merchandise sold.

True

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses payable other than depreciation.

True

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

True

When using the spreadsheet/ worksheet method to analyze noncash accounts, no order of analysis is required, but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

True

Factory overhead

All of the cost of producing a product except for direct materials and labor

All of the following are conditions for a cash dividend except a. sufficient retained earnings. b. sufficient cash. c. formal action by the board of directors. d. All of these choices are correct.

If a corporation has only one class of stock, the account is entitled common stock or

capital stock.

The entry to record the issuance of common stock at a price above par includes a debit to

cash

The ending figure on the statement of cash flows should match what figure on the balance sheet?

cash balance

On the statement of cash flows, the cash flows from investing activities section would include

receipts from the sale of investments

On the statement of cash flows, the cash flows from investing activities section would include a. receipts from the issuance of capital stock b. payments for dividends c. payments for retirement of bonds payable d. receipts from the sale of investments

receipts from the sale of investments

Cash flows from operating activities, as part of the statement of cash flows, include cash transactions that enter into the determination of net income

true

Identify a bond sold at a discount

Contract rate < market rate Selling price is less than face amount

Identify a bond sold at premium

Contract rate > market rate Selling price is greater than face amount

Corporation

Corporations have a separate legal existence, transferable units of stock, unlimited life, and limited stockholders' liability

Which of the following is Not characteristic of a corporation?

Corporations have less regulatory costs than other business forms. note: Corporations have greater regulatory costs than other business forms.

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

true

Changes in valuation for trading securities are reported as _____.

unrealized gains or losses on the income statement under Other Income (Loss)

An analysis is which all of the components of an income statement are expressed as a percentage of net sales is called:

vertical analysis

Lean manufacturing attempts to significantly reduce a. profits b. inventory needed to produce products c. waste and simplify the production process d. processing time

waste and simplify the production process

Nebraska Inc. issues 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

$30,000

95. The date on which a cash dividend becomes a binding legal obligation is on the A. declaration date. B. date of record. C. payment date. D. last day of the fiscal year.

A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? a. $0 b. $5,000 c. $2,500 d. $10,000

Based on the data above, what is the amount of working capital?

$143,000

Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290. a. $543,800 b. $187,900 c. $731,700 d. $384,200

$384,200

Compute conversion costs given the following data: Direct materials, $347,500; Direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290

$384,200 (196,300 + 187,900) = 384200

On January 1, $2,000,000, 5-year, 10% bonds, were issued for $1,960,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the semiannual amortization amount is

$4,000

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year? a. $6,000 overapplied b. $6,000 underapplied c. $54,800 overapplied d. $54,800 underapplied

$54,800 overapplied

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is a. $48 per machine hour b. $62 per machine hour c. $45 per machine hour d. $50 per machine hour

$62 per machine hour

What is the overhead cost per unit for Rings? a. $65.25 b. $23.25 c. $44.10 d. $64.50

$64.50

What is the total stockholders' equity based on the following account balances? Common Stock $500,000 Paid-In Capital in Excess of Par—C/S 50,000 Retained Earnings 190,000 Treasury Stock 40,000

$700,000

What is the total stockholders' equity based on the following account balances?

$750,000.

Determine the overhead in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system. a. $49.60 per unit b. $99.20 per unit c. $28.80 per unit d. $64.00 per unit

$99.20 per unit

Sanchez Inc. reported the following on the company's cash flow statement for 2017:

440000

When the market rate of interest for bonds is lower than the contract rate, The bonds will sell at

A premium

No entry is necessary

After a corporation declares a cash dividend, what takes place on the date of record? a. Cash decreases. b. Liabilities decrease. c. Equity decreases. d. No entry is necessary

on january 1, $2,000,000, 5-year 10%bonds were issued for $1,960,000 Interest is paid semi annually on january 1 and july 1 if the issuing corporation uses the straight line method to amortize discount on bonds payable the semiannual amortization amount is A.$8,000 B.$2,000 C.$4,000 D.$10,000

C.$4,000

the interest expense recorded on an interest payment date is increased A. only if the market rate of interest is less than the stated rate of interest on that date B. by the amortization of premium on bonds payable C.by the amortization of discount on bonds payable D. only if the bonds were sold at face value

C.by the amortization of discount on bonds payable

Bonds with a face amount $1,000,000 are sold at 98. the entry to record the issuance is A. cash $1,000,000 premium on bonds payable $20,000 bonds payable $980,000 B. cash $980,000 premium on bonds payable $20,000 bonds payable $1,000,000 C.cash $980,000 discount on bonds $20,000 payable bonds $1,000,000

C.cash $980,000 discount on bonds $20,000 payable bonds $1,000,000

Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? a) Cash Dividneds Cash Dividends Payable b) Retained Earnings Cash c) Paid-in capital Cash Dividends Payable d) Cash Dividends Payable Cash

Cash Dividends Cash Dividends Payable

Which of the following is not included in the Investing Activities section of the statement of cash flows?

Depreciation on equipment

net sales

In a common size income statement, the 100% figure is:

In the calculation of earnings per share, preferred stock dividends are a. not used in the calculation. b. subtracted in the denominator. c. subtracted from net income. d. added to net income.

The excess of sales price of treasury stock over its cost should be credited to

Paid-In Capital from Sale of Treasury Stock

In a vertical analysis, the base for cost of goods sold is

Sales

A common measure of liquidity is

The account receivable turnover

The number of shares remaining in the hands of shareholders after some stock has been reacquired is referred to as the shares a. authorized. b. issued. c. in arrears. d. outstanding.

effective interest rate

The market interest rate related to a bond is also called the

Issued shares that are held by the treasurer of the corporation

Treasury stock shares are

temporary investments

are reported as current assets

The statement of cash flows is NOT useful for

calculating the net worth of a company

Free cash flow is

cash flow from operations less cash used to purchase fixed assets to maintain productive capacity

If the investor owns more than 50% of the outstanding stock of the investee, the accounting method utilized will be

consolidation

net sales

in performing a vertical analysis, the base for cost of goods sold is

What effect does a discount have on interest expense?

increases the interest expense causing it to be higher than the bond interest paid

If the free cash flow changed from $60,000 to $80,000, the change

indicates a favorable trend

The authorized stock of a corporation

is indicated in its charter

Which of the following statements are true regarding free cash flow?

none

Temporary investments such as in trading securities are

recorded at cost but reported at fair market value

If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to

reduce the amount of retained earnings available for dividend declarations.

The two main sources of stockholders' equity are

retained earnings and paid-in capital.

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

separate schedule

net income - preferred dividends

the numerator of the rate earned on common stockholders' equity ratio is equal to

a corporations resources are limited to their individual stockholders resources

which of the following is not a characteristic of a corporation? a. corporations are organized as a separate legal taxable entity b. ownership is divided into shares of stock c. corporations experience an ease in obtaining large amounts of resources by issuing stock d. corporations resources are limited to their individual stockholders resources

Goods that are partially completed by a manufacturer are a. merchandise inventory b. work in process inventory c. finished goods inventory d. materials inventory

work in process inventory

Determine the activity rate for procurement per purchase order. a. $43.53 b. $18.50 c. $15.42 d. $37.00

$18.50

Calculate the cost of services for a haircut. a. $4.00 b. $7.50 c. $3.50 d. $11.50

$7.50

The number of times interest charges are earned is calculated as _____.

(Income Before Income Taxes + Interest Expense) ÷ Interest Expense

The higher the ratio of number of time interest charges earned, the higher the rick that interest payments will not be made if earnings decrease

(blank)

What are the 3 important dates when cash dividends are distributed?

1. Date of Declaration 2. Date of Record 3. Date of Payment

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding? a) 40,000 b) 10,000 c) 50,000 d) 30,000

30,000

The number of equivalent units of production for material costs for the period was a. 34,000 b. 29,800 c. 29,000 d. 32,000

34,000

Sanchez Inc. reported the following on the company's cash flow statement for 2017: Net cash flow from operating activities $500,000 Net cash flow used for investing activities (200,000) Net cash flow from financing activities 150,000 Thirty percent of the cash flow used for investing activities was used to replace existing capacity. What is the free cash flow

440,000

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

44000

Income statement information for Sadie Company is below: Sales $175,000 7. MC.15-74 8. MC.15-86 9. MC.15-99 10. MC.15-112 Cost of goods sold 115,000 Gross profit $ 60,000 Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin

60000/175000=34%

On January 1, Elias Corporation issued 7% bonds with a face value of $86,000. The bonds are sold for $83,420. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

6378

135. Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels' earnings per share for 2011 is A. $4.00 B. $5.25 C. $6.50 D. $5.00

137. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the second year. A. $2.25 and $0.00 B. $2.25 and $0.45 C. $0.00 and $0.45 D. $2.00 and $0.45

139. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends in arrears for preferred stock for the second year. A. $25,000 B. $10,000 C. $0 D. $30,000

90. Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded, credits are made to: A. Common Stock $15,000 and Paid-in Capital in Excess of Par Value $7,000. B. Common Stock $22,000 and Retained Earnings $15,000. C. Common Stock $7,000 and Paid-in Capital in Excess of Stated Value $15,000. D. Common Stock $22,000.

A company's ability to generate earnings is called a. profitability. b. liquidity. c. solvency. d. None of these choices are correct.

A company's times interest earned ratio is 12.1. This means that a. the company has more than enough earnings to make its interest payments. b. the company has 12 times more debt than equity. c. bondholders are at risk of not receiving their interest payments. d. None of these choices are correct.

A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? a. $0 b. $5,000 c. $2,500 d. $10,000

A process cost system be appropriate for a a. natural gas refinery b. custom cabinet builder c. jet airplane builder d. catering business

An annual report includes all of the following except a. résumés of all key executives. b. an auditor's report. c. management discussion and analysis section. d. notes to the financial statements.

Given the following income statement information, what percentage would appear for selling expenses in a vertical analysis? Sales $600,000 Cost of goods sold 400,000 Selling expenses 50,000 Net income 36,000 a. 8% b. 6% c. 67% d. Cannot be determined with information provided.

Given the following information, determine the price-earnings ratio. Market price of common stock at year-end $64.00 Earnings per share 4.00 Dividends per share 2.00 a. 16.0 b. 2.0 c. 32.0 d. 0.6

Given the following information, in which company do stock market participants seem to have the least confidence regarding future prospects? Company W Company X Company Y Company Z Earnings per share $4.35 $4.75 $4.20 $5.25 Price-earnings ratio 25.1 17.2 18.3 22.0 Dividend yield 3.0% 3.2% 0.0% 2.8% a. Company X b. Company Y c. Company W d. Company Z

If a gain of $7,000 results from selling (for cash) office equipment having a book value of $55,000, the total amount reported in the Cash Flows from Investing Activities section of the statement of cash flows is a. $62,000. b. $55,000. c. $48,000. d. $7,000.

In horizontal analysis, each item is expressed as a percentage of the a. earliest year figure. b. total assets. c. net income figure. d. latest year figure.

In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account is analyzed for changes? a. Long-term assets b. Stockholders' equity c. Current assets d. Current liabilities

Nebraska Inc. issues 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for a. $30,000 b. $45,000 c. $15,000 d. $3,000

Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded, credit(s) are made to: a. Common Stock, $15,000, and Paid-In Capital in Excess of Par, $7,000 b. Common Stock, $22,000, and Retained Earnings, $15,000 c. Common Stock, $7,000, and Paid-In Capital in Excess of Stated Value, $15,000 d. Common Stock, $22,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? a. $80,000 b. $10,000 c. $90,000 d. $100,00

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to a. decrease total liabilities and stockholders' equity b. increase total expenses and total liabilities c. increase total assets and stockholders' equity d. decrease total assets and stockholders' equity

The date on which a cash dividend becomes a binding legal obligation is on the a. declaration date b. date of record c. payment date d. last day of fiscal year

The ending figure on the statement of cash flows should match what figure on the balance sheet? a. Cash balance b. Total stockholders' equity c. Retained earnings balance d. Total assets

The numerator in the calculation of the ratio of liabilities to stockholders' equity is a. Total Liabilities. b. Total Assets. c. Total Liabilities - Total Stockholders' Equity. d. Total Stockholders' Equity.

The two categories of cost comprising conversion costs are a. direct labor and factory overhead b. factory overhead and direct materials c. direct labor and direct materials d. direct labor and indirect labor

When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of a. $12.40 b. $12,400 c. $124 d. $1,240

Which of the following is a period cost? a. salary of telephone receptionist in the sales office b. salary of a security guard for the factory parking lot c. depreciation on factory lunchroom furniture d. computer chips used by a computer manufacturer Feedback

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. A gain on a sale of a building b. A loss on a sale of equipment c. A decrease in accounts receivable d. An increase in accounts payable

Which one of the following would not be considered an advantage of the corporate form of organization? a. government regulation b. separate legal existence c. continuous life d. limited liability of stockholders

Which two reports on internal control are sometimes combined into a single report on internal control? a. One report by management and one report by a public accounting firm regarding the adequacy of internal controls b. The MD&A and the Report of Independent Registered Public Accounting Firm c. The unqualified audit opinion report and the qualified audit opinion report d. The income statement and the balance sheet

A debit to a cash dividends for 120,000 and a credit to cash dividends payable for 120,000

The entry to record the amortization of a premium on bonds payable on an interest payment date would

A debit to interest expense and premium on bonds payable and a credit to cash

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

A decrease in inventory

Cash dividends paid would be shown on the statement of cash flows under __________ activities. a. investing b. directing c. operating d. financing

d. financing

investing activities

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 5% stock dividend on a date when the market price was $11 per share. What is the amount transferred from the retained earnings account to the paid-in capital accounts as a result of the stock dividend? a. $22,000 b. $16,000 c. $8,000 d. None of these choices are correct.

decrease retained earnings, increase common stock, and increase paid-in capital

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to decrease retained earnings, increase common stock, and increase paid-in capital increase retained earnings, decrease common stock, and decrease paid-in capital increase retained earnings, decrease common stock, and increase paid-in capital decrease retained earnings, increase common stock, and decrease paid-in capital

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be a. 10,000 shares. b. 40,000 shares. c. 120,000 shares. d. 160,000 shares.

Aaron Company has 80,000 shares of $10 par common stock outstanding. On May 25, Aaron Company declared a $1.50 cash dividend. The market price of the stock on May 25 was $17 per share. The journal entry to record the cash dividend would include a. a debit to Cash for $560,000. b. a debit to Cash Dividends for $120,000. c. a credit to Paid-In Capital in Excess of Par—Common Stock for $560,000. d. All of these choices are correct. Feedback: Correct. The journal entry to record the cash dividend would include a debit to Cash Dividends for $120,000. Cash Dividends 120,000 Cash Dividends Payable 120,000

99. Which of the following is not a prerequisite to paying a cash dividend? A. formal action by the board of directors B. market value in excess of par value per share C. sufficient cash D. sufficient retained earnings

A company's ratio of liabilities to stockholders' equity decreased from 0.6 to 0.4 during the year. This is a. a negative change in the company's financial position. b. an improvement in the margin of safety for creditors. c. an indication that the company's level of debt is increasing. d. None of these choices are correct

A reduction of par or stated value of stock results from a a. liquidating dividend b. stock split c. stock option d. preferred dividend

Aspen Technologies has the following budget data: Estimated direct labor hours 15,000 Estimated direct labor dollars $90,000 Estimated factory overhead costs $198,000 If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is a. $7.50 b. $13.20 c. $16.50 d. $2.20

Assume the following sales data for a company: Year 2 $562,500 Year 1 $450,000 What is the percentage increase in sales from Year 1 to Year 2 (to the nearest whole percent)? a. 20% b. 25% c. 80% d. 139%

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to a. decrease by $3,400,000 b. increase by $1,700,000 c. increase by $3,400,000 d. decrease by $1,700,000

Based on the following data, what is the inventory turnover? Sales on account during year $400,000 Cost of goods sold during year 255,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 80,000 a. 1.6 b. 3.0 c. 10.0 d. 2.8

Bondholders and other long-term creditors are most interested in which dimension of company analysis? a. Accessibility b. Solvency c. Liquidity d. Profitability

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. separate schedule. b. cash inflow in the Investing Activities section. c. cash inflow in the Operating Activities section. d. cash inflow in the Financing Activities section.

Dividends declared during the year were $48,000. The dividends payable account increased by $4,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? a. Cash paid for dividends, $(52,000) b. Cash paid for dividends, $(44,000) c. Dividends declared, $(48,000) d. Change in dividends payable, $4,000

Given the following information, which company had the highest profits per share of stock? Company W Company X Company Y Company Z Earnings per share $4.35 $4.75 $4.20 $5.25 Price-earnings ratio 25.1 17.2 18.3 22.0 Dividend yield 3.0% 3.2% 0.0% 2.8% a. Company Y b. Company Z c. Company W d. Company X

How is treasury stock shown on the balance sheet? a. as an asset b. as a decrease in stockholders' equity c. as an increase in stockholders' equity d. treasury stock is not shown on the balance sheet

Sometimes called the coverage ratio, this ratio measures the risk that interest payments will not be made if earnings decrease. a. Ratio of fixed assets to long-term liabilities b. Times interest earned ratio c. Ratio of liabilities to stockholders' equity d. Number of days' sales in inventory

Step 1 of reconciling net income to net cash flow from operating activities is to a. subtract gains or add losses from investing activities. b. add depreciation expense. c. subtract depreciation expense. d. add gains or subtract losses from investing activities.

The Botosan Factory has determined that its budgeted factory overhead budget for the year is $457,440 and budgeted direct labor hours are 285,900. If the actual direct labor hours for the period are 260,200, how much overhead would be allocated to the period? a. $353,872 b. $416,320 c. $428,810 d. $503,747

Which of the following is not a right possessed by common stockholders of a corporation? a. the right to vote in the election of the board of directors b. the right to receive a minimum amount of dividends c. the right to sell their stock to anyone they choose d. the right to share in assets upon liquidation

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to a. Preferred Stock for $750,000 b. Preferred Stock for $500,000 and Paid-In Capital in Excess of Par—Preferred Stock for $250,000 c. Preferred Stock for $500,000 and Retained Earnings for $250,000 d. Paid-In Capital from Preferred Stock for $750,000

The balance sheets at the end of each of the first two years of operations indicate the following: Year 2 Year 1 Total current assets $600,000 $560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 150,000 80,000 Total long-term liabilities 350,000 250,000 Preferred 9% stock, $100 par 100,000 100,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—common stock 60,000 60,000 Retained earnings 325,000 210,000 If net income is $125,000 and preferred dividends are $9,000 for Year 2, what is the earnings per share on common stock for Year 2? a. $2.08 b. $1.93 c. $0.19 d. $1.75

Which of the following measures an important financial relationship as a single number? a. Common-sized statement b. Ratio c. Chart d. Comparative statement

Which of the following would indicate a cash OUTFLOW to appear in the Financing Activities section of the statement of cash flows? A. Increase in retained earnings account B. Increase in treasury stock account C. Increase in common stock account D. Increase in paid-in capital account

B. Increase in treasury stock account

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation? A. Common Stock B. Retained Earnings C. Organizational Expenses D. Treasury Stock

B. Retained Earnings

117. Which of the following would appear as a prior-period adjustment? A. loss resulting from the sale of fixed assets B. difference between the actual and estimated uncollectible accounts receivable C. error in the computation of depreciation expense in the preceding year D. loss from the restructuring of assets

120. What is the total stockholders' equity based on the following data? Common Stock $630,000 Excess of Issue Price Over Par 375,000 Retained Earnings (deficit) (65,000) A. $1,070,000 B. $1,005,000 C. $940,000 D. $565,000

125. A corporation has 50,000 shares of $28 par value stock outstanding that has a current market value of $150. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately A. $7.00 B. $112.00 C. $37.50 D. $600.00

133. A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be: A. 60,000 B. 10,000 C. 300,000 D. 30,000

134. Earnings per share A. is the net income per common share B. must be reported by publicly traded companies C. helps compare companies of different sizes D. all of the above

136. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the first year. A. $0.50 and $0.10 B. $0.00 and $0.10 C. $0.50 and $0.00 D. $2.00 and $0.00

91. When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a A. debit to Cash for $90,000 B. credit to Common Stock for $207,000 C. credit to Paid in Capital in Excess of Par for $117,000 D. debit to Common Stock for $90,000

A disadvantage of the corporate form of business entity is a. single taxation of dividends b. unlimited liability for stockholders c. corporations are subject to more governmental regulations d. the ease of transfer of ownership

Assume the following sales data for a company: Year 2 $684,000 Year 1 $600,000 What is the percentage increase in sales from Year 1 to Year 2 (to the nearest whole percent)? a. 12% b. 114% c. 14% d. 88%

Based on the following data, what is the quick ratio? Accounts payable $ 20,000 Accounts receivable 45,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Notes payable (short-term) 10,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Temporary investments 36,000 a. 3.1 b. 5.0 c. 3.0 d. 4.9

Corporate annual reports typically do not contain which of the following? a. Accompanying footnotes b. Auditor's report c. Next year's budget d. Management discussion and analysis

Department M had 2,000 units 40% completed in process at the beginning of June, 12,000 units completed during June, and 1,200 units 25% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories? a. 11,200 units b. 15,200 units c. 11,500 units d. 10,000 units

Given the following information, determine the dividend yield. Market price of common stock at year-end $64.00 Earnings per share 4.00 Dividends per share 2.00 a. 6.3% b. 32.0% c. 3.1% d. 50%

Given the following information, what is the ratio of fixed assets to long-term liabilities? Fixed assets (net) at year-end $400,000 Average fixed assets 450,000 Total assets 500,000 Long-term liabilities 300,000 Total liabilities 350,000 Total stockholders' equity 250,000 Total liabilities and stockholders' equity 500,000 Interest expense 5,000 Income before income tax 150,000 Net income 100,000 a. 1.5 b. 1.6 c. 1.3 d. 1.1

Given the following information, what is the times interest earned ratio? Fixed assets (net) at year-end $400,000 Average fixed assets 450,000 Total assets 500,000 Long-term liabilities 300,000 Total liabilities 350,000 Total stockholders' equity 250,000 Total liabilities and stockholders' equity 500,000 Interest expense 5,000 Income before income tax 150,000 Net income 100,000 a. 21 b. 20 c. 31 d. 30

In a common-sized income statement, which of the following is given a percentage of 100%? a. Net income b. Total liabilities c. Sales d. Property, plant, and equipment

In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which types of accounts are analyzed for changes? a. Long-term assets b. All liabilities and stockholders' equity c. Long-term liabilities and stockholders' equity d. Current liabilities and stockholders' equity

In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results? a. Management discussion and analysis section b. Balance sheet c.Report of Independent Registered Accounting Firm d. Notes to the financial statements

In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost? a. $218,000 b. $323,000 c. $158,000 d. $53,000

In which analytical method are no dollar amounts shown? a. Vertical analysis b. Horizontal analysis c. Common-sized statement d. None of these choices are correct.

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported? a. other expense on income statement b. intangible asset on the balance sheet c. stockholders' equity on balance sheet d. other income on income statement

Materials purchased on account during the month amounted to $190,000. Materials requisitioned and placed in production totaled $156,000. The entry to record the transaction for materials requisitioned by the production department is a. Work in Process 156,000 Cash 156,000 b. Work in Process 190,000 Materials 190,000 c. Work in Process 156,000 Materials 156,000 d. Materials 156,000 Work in Process 156,000

Stockholders are most interested in which dimension of company analysis? a. Accessibility b. Liquidity c. Profitability d. Solvency

Stockholders' equity a. is usually equal to cash on hand b. includes paid-in capital and liabilities c. includes retained earnings and paid-in capital d. is shown on the income statement

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? a. 35,000 b. 70,000 c. 25,000 d. 30,000

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to a. Organizational Expenses b. Goodwill c. Common Stock d. Cash

The entry to record the issuance of common stock at a price above par includes a debit to a. Organizational Expenses b. Common Stock c. Cash d. Paid-In Capital in Excess of Par—Common Stock

The par value per share of common stock represents the a. minimum selling price of the stock established by the articles of incorporation b. minimum amount the stockholder will receive when the corporation is liquidated c. dollar amount assigned to each share d. amount of dividends per share to be received each year

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors? a. the financial condition, earnings record, and dividend record of the corporation b. investor expectations of the corporation's earning power c. how high the par value is d. general business and economic conditions and prospects

The times interest earned ratio is computed as a. Income before Income Tax ÷ Interest Expense. b. (Net Income + Interest Expense) ÷ Interest Expense. c. (Income before Income Tax + Interest Expense) ÷ Interest Expense. d. Net Income ÷ Interest Expense.

Treasury stock that was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined a. income will be increased by $500 b. stockholders' equity will be increased by $3,500 c. stockholders' equity will be increased by $500 d. stockholders' equity will not change

Using a plantwide factory overhead rate distorts product costs when: a. significant differences exist in the factory overhead rates used across different production departments b. products require different ratios of allocation-base usage in each production department c. Both "products require different ratios of allocation-base usage in each production department" and "significant differences exist in the factory overhead rates used across different production departments" are true. d. Neither "products require different ratios of allocation-base usage in each production department" nor significant differences exist in the factory overhead rates used across different production departments" are true.

When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,000 shares of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 8,500 shares of stock at a price of $16 per share. The entry to record the above transaction would include a a. debit to Cash for $85,000 b. credit to Common Stock for $136,000 c. credit to Paid-In Capital in Excess of Par for $51,000 d. debit to Common Stock for $85,000

Identify correct journal entry accounts for common stock issuance if sold greater than par

DR. Cash (Total Cash Recorded) CR. Common Stock (Par value per share x # of shares) CR. Paid in Capital

Which of the following clarifies information presented in the financial statements, as well as expands upon it where additional detail is needed? a. Report on adequacy of internal control b. Report on fairness of financial statements c. Management discussion and analysis section d. President's state of the company report

Which of the following is not a quick asset? a. Cash b. Temporary investments c. Inventories d. Accounts receivable

Which of the following is not a solvency ratio? a. Ratio of liabilities to stockholders' equity b. Times interest earned ratio c. Number of days' sales in inventory d. Ratio of fixed assets to long-term liabilities

Step 4 of preparing a spreadsheet for the statement of cash flows is to: A. enter the balance of each balance sheet account. B. add the column totals. C. analyze the change during the year in each noncash account and classify the change. D. list the title of each balance sheet account in the Accounts column.

C. analyze the change during the year in each noncash account and classify the change.

If the market rate of interest is greater than the contractual rate of interest, bonds will sell A. at a premium B. at face value C. as a discount D. only after the stated rate of interest is increased

C. as a discount

Horizontal analysis of comparative financial statements includes A. development of common sized statements B. calculation of liquidity ratios C. calculation of dollar amount changes and percentage changes from previous to the current year D. evaluation of each component in a financial statement to a total within the statement

C. calculation of dollar amount changes and percentage changes from previous to the current year

When a cash dividend is declared, which of the following accounts is credited?

Cash Dividends Payable is the liability account and is credited; the cash dividends account would be debited. It is a contra equity account.

127. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend? A. $3,200 B. $6,400 C. $4,800 D. $8,800

131. A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately: A. $25 B. $150 C. $5 D. $30

87. If common stock is issued for an amount greater than par value, the excess should be credited to A. Retained Earnings. B. Cash. C. Legal Capital. D. Paid-in Capital in Excess of Par Value.

Which of the following is NOT a cash flow element that would be found on the statement of cash flows? A. Ending cash balance B. Change in cash C. Net cash flow from operating activities D. Free cash flow

D. Free cash flow

All of the following are examples of activity bases except a. quality inspections of products b. number of machine setups c. raw materials storage d. salaries of supervisors

An analysis in which all the components of a balance sheet are expressed as a percentage of total assets is called a. horizontal analysis. b. current ratio. c. liquidity. d. vertical analysis.

Cash dividends paid would be shown on the statement of cash flows under __________ activities. a. operating b. directing c. investing d. financing

Cash proceeds of $72,000 include a $12,000 gain on the sale of land and the $60,000 cost (book value) of the land. Which of the following is true? a. The book value does not appear as a cash inflow or outflow anywhere on the statement. b. The entire cash proceeds appear as a cash inflow in the Investing Activities section. c. The $12,000 gain is deducted from net income in the Operating Activities section. d. All of these choices are correct.

Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period? a. 6,700 units b. 7,300 units c. 5,640 units d. 5,850 units

Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period; 30,000 units of direct materials were added during the period; 32,000 units were completed during the period; and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was a. 31,950 b. 26,000 c. 32,450 d. 29,450

Department S had no work in process at the beginning of the period. It added 10,800 units of direct materials during the period at a cost of $75,600; 8,100 units were completed during the period; and 2,700 units were 38% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $53,900 and factory overhead was $8,200. The total cost of units completed during the period was a. $104,540 b. $134,182 c. $56,700 d. $111,818

Identify journal entry for bond issuance at a discount (when contract rate is less than market rate)

DR. Cash ($Proceeds) DR. Discount on Bonds Payable (FV - Proceeds) CR. Bonds Payable (FV)

If common stock is issued for an amount greater than par value, the excess should be credited to a. Retained Earnings b. Cash c. Legal Capital d. Paid-In Capital in Excess of Par

In a vertical analysis of a balance sheet, which of the following would be shown at 100%? a. Total liabilities b. Total stockholders' equity c. Total property, plant, and equipment d. Total liabilities and stockholders' equity

If Smart Company issues 1,000 shares of $5 par value common stock for $90,000, the account

D. Cash 90,000 Cr. CS 5,000 Cr. Paid-In Capital in Excess of Par 85,000

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $285,252, using 216,100 direct labor hours. The overhead budget for the Production Department is $280,884 using 53,400 direct labor hours. If the budget estimates that a table lamp will require 2 hours of finishing and 5 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to table lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 10,300 units are produced? a. $151,460 b. $54,178 c. $109,194 d. $298,082

The Roget Factory has determined that its budgeted factory overhead budget for the year is $15,500,000. They plan to produce 2,000,000 units. Budgeted direct labor hours are 1,050,000 and budgeted machine hours are 750,000. Using the single plantwide factory overhead rate based on direct labor hours, calculate the factory overhead rate for the year. a. $7.75 b. $77.50 c. $20.67 d. $14.76

The excess of issue price over par of common stock is termed a(n) a. discount b. income c. dividend d. premium

Identify journal entry for bond issuance at a premium when issuance is 106.

DR. Cash (1.06 x FV) CR. Bonds Payable (FV) CR. Premium on Bonds Payable (Proceeds - FV)

The numerator in the current ratio calculation is a. Current Liabilities. b. Intangible Assets. c. Property, Plant, and Equipment. d. Current Assets.

Treasury stock should be reported in the financial statements of a corporation as a(n) a. investment b. liability c. current asset d. deduction from stockholders' equity

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to a. Treasury Stock for $8,500 b. Paid-In Capital from Sale of Treasury Stock for $8,500 c. Paid-In Capital in Excess of Par—Common Stock for $2,900 d. Paid-In Capital from Sale of Treasury Stock for $2,900

Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet? a. the number of shares of common stock outstanding b. the number of shares of common stock issued c. the number of shares of common stock authorized d. all of these

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Ending cash balance b. Cash flows from financing activities c. Beginning cash balance d. Cash flows from operating activities

Which of the following does not fall under the category of current position analysis? a. Inventory turnover b. Number of days' sales in inventory c. Accounts receivable turnover d. All of these choices are correct.

Dividends declared during the year were $48,000. The dividends payable account increased by $4,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? A. Cash paid for dividends, $(52,000) B. Change in dividends payable, $4,000 C. Dividends declared, $(48,000) D. Cash paid for dividends, $(44,000)

D. Cash paid for dividends, $(44,000)

Which of the following is not classified as paid-in capital on the balance sheet? a. common stock b. common stock distributable c. excess of issue price over par d. treasury stock

Which of the following is the correct flow of manufacturing costs? a. raw materials, finished goods, cost of goods sold, work in process b. cost of goods sold, raw materials, work in process, finished goods c. work in process, finished goods, raw materials, cost of goods sold d. raw materials, work in process, finished goods, cost of goods sold

Which of the following is the formula to calculate the predetermined factory overhead rate? a. actual total factory overhead costs divided by estimated activity base b. estimated total factory overhead costs divided by actual activity base c. actual total factory overhead costs divided by actual activity base d. estimated total factory overhead costs divided by estimated activity base

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Cash received from stock issued b. Depreciation expense on equipment c. Cash received from bonds payable d. Cash paid for equipment

Which of the following would indicate a cash outflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in retained earnings account b. Increase in paid-in capital account c. Increase in common stock account d. Increase in treasury stock account

Which statement below is not a reason for a corporation to buy back its own stock? a. resale to employees b. bonus to employees c. for supporting the market price of the stock d. to increase the shares outstanding

Which type of stakeholder is most interested in the liquidity of a company? a. Customers b. Bondholders and other long-term creditors c. Stockholders d. Banks and other short-term creditors

Which of the following would NOT appear in the Cash Flows from Investing Activities section of the statement of cash flows? A. Purchase of land for $70,000 cash B. Sale of fully depreciated equipment with $5,000 salvage value for $5,000 cash C. Purchase of building for $20,000 cash and a $160,000 note payable D. Cash paid to retire bonds, $2,000

D. Cash paid to retire bonds, $2,000

Identify journal entry for bond issuance at a discount when issuance is 96.

DR. Cash (FV x .96) DR. Discount on Bonds Payable (FV - Proceeds) CR. Bonds Payable (FV)

D a. $500,000 b. $15,000 c. $105,000 d. $120,000 Feedback: Incorrect. Dividends are paid on shares outstanding.

franklin corporation issues $50,000 10% 5-year bond on january 1, for $52,100. Interest is paid semiannually on january 1 and july 1 if franklin uses the straight line method of amortization of bond premium the amount of bond interest expense to be recognized on july 1 is A. $10,290 B. $2,710 C. $2,500 D. $2,290

D. $2,290

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing (20,000) activities Net cash flow used for financing 60,000 activities Ending cash balance 100,000 What was the beginning cash balance? A. $(25,000) B. $75,000 C. $65,000 D. $25,000

D. $25,000 $100,000 - ($35,000 − $20,000 + $60,000) = $100,000 - $75,000 = $25,000

The following changes occurred in accounts over the year: Accounts Payable increased by $6,000, Bonds Payable decreased by $12,000, Common Stock increased by $10,000, Paid-In Capital increased by $10,000, and Retained Earnings increased by $20,000. No dividends were paid during the year. What is the net cash flow from financing activities? A. $22,000 B. $20,000 C. $(8,000) D. $8,000

D. $8,000

Which of the following should be SUBTRACTED from net income in calculating net cash flow from operating activities using the indirect method? A. A decrease in accounts receivable B. An increase in accounts payable C. A loss on a sale of equipment D. A gain on a sale of a building

D. A gain on a sale of a building

All of the following are normally found in a corporation's stockholders' equity section except:

Dividends Payable

If two companies have the same current ratio, their ability to paid short-term debt is the same

FALSE

The manner of reporting cash flows from investing and financing activities will be different under the direct method compared to the indirect method

FALSE

When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio, the management of the company has effectively used leverage (using debt to increase the return on an investment)

FALSE

The recording of the application of factory overhead costs to jobs would include a credit to a. Factory Overhead b. Wages Payable c. Work in Process d. Cost of Goods Sold

Factory Overhead

Which one of the following would not be considered an advantage of the corporate form of organization? a. Government regulation b. Separate legal existence c. Continuous life d. Limited liability of stockholders

Government regulation

A favorable change in the company's profitability is indicated

If earnings per share for a company changes from $4.50 to $5.20, what does this indicate about the company's profitability?

a separate schedule

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

Corporate annual reports typically do not contain which of the following?

SEC statement expressing an opinion

Sarbanes-Oxley Act requires what report

Securities exchange commission SAR

The major rights that accompany ownership of a share of stock include all of the following except

The right to use and access company assets

authorized stock

The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called treasury stock issued stock outstanding stock authorized stock

70,000 shares.

The stockholders' equity accounts of Jamison Corporation include $37,500 of common stock with a par value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. The total number of shares outstanding for Jamison Corporation are: a. 32,500 shares. b. 70,000 shares. c. 75,000 shares. d. 80,000 shares.

Direct labor

The wages of factory workers who were directly involved in converting materials into a finished product

A statement of stockholders' equity is normally prepared when

There is a change in stock accounts. There is a change in paid-in capital accounts. There is a purchase of treasury stock.

What does the entry for Date of Record include?

There is no entry

Cash decreases.

When a corporation declares a small stock dividend, which of the following is false? a. Cash decreases. b. Total stockholders' equity remains the same. c. The capital stock accounts increase. d. Retained earnings decreases.

stockholders' equity will be increased by $500

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined income will be increased by $500 stockholders' equity will be increased by $3,500 stockholders' equity will be increased by $500 stockholders' equity will not change

Cash, as the term is used for the statement of cash flows, could indicate either cash or cash equivalents.

True

If 800 shares of $40 par common stock are sold for $43,000, the $43,000 would be reported in the cash flows from financing activities section of the statement of cash flows

True

If a business issued bonds payable in exchange for land, the transaction would be reported in a separate schedule on the statement of cash flows.

True

entries for stock at par, and more than par and no par stock

Stock issued at par is recorded by debiting Cash and crediting the class of stock issued for its par amount. Stock issued for more than par is recorded by debiting Cash, crediting the class of stock for its par, and crediting Paid-In Capital in Excess of Par for the difference. When no-par stock is issued, the entire proceeds are credited to the stock account. No-par stock may be assigned a stated value per share, and the excess of the proceeds over the stated value may be credited to Paid-In Capital in Excess of Stated Value.

Which of the following is not recorded with a journal entry?

Stock split

A firm selling food should have a higher inventory rate than a firm selling office furniture

TRUE

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions

TRUE

Ratios and various other analytical measures are NOT a substitute for sound judgement, nor do they provide definitive guides for action

TRUE

The direct method of preparing the operating activities section of the statement of cash flows reports major classes of gross cash receipts and gross cash payments

TRUE

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed

TRUE

In determining the cash flows from operating activities for the statement of cash flows by the indirect method, the depreciation expense for the period is added to the net income for the period

True

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

True

Which account uses deficit?

Statement of Stockholders Equity

Steak Company acquired a building valued at $170,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $16 per share. At what amount should the building be recorded by Steak Company? a. $200,000 b. $170,000 c. $160,000 d. $50,000 Feedback: Incorrect. An asset exchanged for stock is valued at the verifiable market value. A property tax evaluation would not be considered a market value.

When a stock dividend is declared, which of the following accounts is credited? a. Common Sock b. Dividend Payable c. Stock Dividends Distributable d. Retained Earnings

Stock Dividends Distributable

The direct method of preparing the operating activities section of the statment of cash flows reports major classes of cash receipts and cash payments related to the day-to-day operations of the business

True

Date of payment

The date on which cash dividends are paid is on the

LIFO

The inventory costing method that reports the earliest costs in ending inventory is

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

This would be a purchase of an office building through incurring a long-term liability for the asset. No cash is involved because this is a noncash investing and financing activity. As such, the transaction is reported in a separate section of the statement of cash flows. This section usually appears at the bottom of the statement of cash flows.

What is the total stockholders' equity based on the following data? Common Stock --------------$900,000 Excess of Issue Price over Par for C/S ----- 375,000 Retained Earnings ----- 50,000

Total Stockholders' equity is common stock plus excess of issue price over par plus retained earnings ($900,000 + $375,000 + $50,000 = $1,325,000)

Common Stock is credited for the full amount of the proceeds

When no-par stock is issued,

A plant manager's salary is a. a direct cost and an indirect cost b. a direct cost c. an indirect cost d. a period cost

an indirect cost

Job order costing and process costing are a. pricing systems b. cost accounting systems c. cost flow systems d. inventory tracking systems

cost accounting systems

The purchase and resale of treasury stock is normally recorded using the

cost method

When bonds are issued at their face amount, the journal entry will include a _____.

credit to bonds pauanle

Financing activities include

issuing debt

$60.

What is the gross profit for Adams Company at the end of the first quarter? a. $1,685 b. $2,685 c. $1,000 d. $685

$1,000

If $1,000,000 of 8% bonds are issued at 102 3/4, The amount of cash received from the sale is

$1,027,500 102.75-> 1.0275 x 1000 = 102750 102750 x 1000 = $1027500

What is the total stockholders' equity based on the following data? Common Stock $800,000 Excess of Issue Price Over Par 375,000 Retained Earnings (deficit) 25,000

$1,150,000 800,000 + 375,000 - 25,000

What is the total stockholders' equity based on the following data? Common Stock $900,000 Excess of Issue Price Over Par 375,000 Retained Earnings (deficit) 50,000

$1,225,000

Hurd Company acquired a building valued at $160,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Hurd Company? a. $50,000 b. $150,000 c. $160,000 d. $200,000

$150,000

$105,000 note: Dividends are paid on shares outstanding. This is issued shares minus reacquired shares (40,000 - 5,000). This would be 35,000 shares times $3 or $105,000.

$105,000.

When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of a. $12,400 b. $1,240 c. $124 d. $12.40

$12.40

The following information is taken from the financial records of Gunner Manufacturing: Cost of materials used $45,000 Direct labor costs 48,000 Factory overhead 39,000 Work in process, beginning 18,000 Work in process, ending 28,00 What is the cost of goods manufactured? a. $178,000 b. $132,000 c. $122,000 d. $142,000

$122,000

Smith Company reports the following information: Cost of goods manufactured $68,250 Direct materials used 27,000 Direct labor incurred 25,000 Work in process inventory, January 1 11,000 Factory overhead is 75% of the cost of direct labor. Work in process inventory on December 31 is a. $16,250 b. $8,500 c. $18,750 d. $13,500

$13,500

Dawson company has the following data: Close the materials used = $40,000; direct labor costs = $55000; factory overhead = $32,000; beginning work in process = $28,000 ending work in process equals $18,000. What is the cost of goods manufactured

$137,000 40000 + 55000 + 32000 + (28000 - 18000) = 137000

Account receivable arising from trade transaction amounted to $75,000 and $80,000 at the beginning and end of year, respectively. Income reported on the income statement for the year was $150,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is:

$145,000

What is the total stockholders' based on the following account balances? Common Stock $100,000 Paid-in Capital in Excess of Par ---500,000 Retained Earnings --190,000 Treasury Stock ----40,000

$150,000 note: Total stockholders' equity would be common stock plus paid-in capital in excess of par plus retained earnings minus treasury stock ($100,000 + $500,000 + $190,000 - $40,000) = $750,000.

Given the following data: Cost of materials used $45,000 Direct labor costs 48,000 Factory overhead 39,000 Work in process, beginning 28,000 Work in process, ending 18,000 Finished goods, beginning 28,000 Finished goods, ending 18,000 What is cost of goods sold? a. $152,000 b. $142,000 c. $10,000 d. $128,000

$152,000

The following information is available from the current period financial statements: Net income $165,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 The net cash flow from operating activities using the indirect method is

$156,000

If the average cost method is used, the materials cost per unit (to the nearest cent) would be a. $2.04 b. $1.59 c. $1.91 d $2.00

$2.04

All direct materials are added at the beginning of the process, and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for April is a. $2.48 b. $2.08 c. $2.50 d. $5.25

$2.50

All direct materials are added at the beginning of the process, and the first-in, first-out method is used to cost inventories. The conversion cost per equivalent unit for April is a. $2.48 b. $2.75 c. $2.50 d. $5.25

$2.75

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance 100,000 What was the beginning cash balance?

$25,000 note:$100,000 - ($35,000 − $20,000 + $60,000) = $100,000 - $75,000 = $25,000

The net income reported on the income statement for the current year was $255,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventory 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method?

$261,000

The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000, and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? a. $271,000 b. $279,000 c. $327,000 d. $256,000

$271,000

he net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $5,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

$312,000

The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

$49,000

Financial Statement data for the year ending December 31,2014 for Langford Company is shown below: Net income -----$450,000 Preferred dividends ---50,000 Average number of common shares outstanding ----80,000 What is earnings per share for 2014?

$5.00 $450,000-$50,000/ 80,000 shares = $5.00 per share.

Mirah Inc. had 10,000 shares of 5%, 100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock? a)$0.50 per share b) $50,000 in total c) $50 per share d) $10,000 in total

$50,000 in total

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is a. $1,000,000 overapplied b. $1,000,000 underapplied c. $500,000 overapplied d. $500,000 underapplied

$500,000 overapplied

$520,000

Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is

$55,000

If a gain of $7,000 results from selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

$62,000

$62,000.

Land cost $57,000 was sold for $82,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported at an investing activity from the sale of land?

$82,000

What is the total stockholders' equity based on the following data? Common Stock $510,000 Excess of Issue Price Over Par 375,000 Retained Earnings (deficit) 50,000

$835,000 510,000 + 375,000 - 50,000

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

120,000 shares

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be:

120,000 shares. note: A stock split results in number of shares outstanding of current shares times the number of the split (40,000 X 3) = 120,000 shares.

Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $8,000, and the inventory balance increased by $21,000 over the year. Determine the amount of cash paid for merchandise.

155,000 + 21,000 - 8,000 = $168,000

If Eddie Industries issues $1,500,000 of 8% bonds at 105, the amount of cash received from the sale is

1575000

160,000

29,450

Tanner Corporation had net income of $235,000 and paid dividends to common stockholders of $50,000 in 2007. The weighted average number of shares outstanding in 2007 was 50,000 shares. Banner Corporation's common stock is selling for $50 per share on the NY Stock Exchange. Tanner Corporation's price-earnings ratio is:

If a company uses a process costing system to account for the costs in its five production departments, how many work in process accounts will it use? a. 6 b. 5 c. 4 d. 2

Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period? a. 7,300 units b. 5,640 units c. 6,700 units d. 5,850 units

5,850 units

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 50,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

50,000-10,000= 40,000 40,000 x 2= $80,000 is declared

Based on the following data for the current year, what is the number of days' sales of inventory?

50.1

92,000

109. A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? A. $0 B. $5,000 C. $2,500 D. $10,000

119. The Dayton Corporation began the current year with a retained earnings balance of $32,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. Compute the year end retained earnings balance. A. $34,000 B. $37,000 C. $41,000 D. $44,000

123. A corporation has 50,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be A. 150,000 shares B. 50,000 shares C. 100,000 shares D. 16,666 shares

128. A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to A. decrease retained earnings, increase common stock, and increase paid-in capital B. increase retained earnings, decrease common stock, and decrease paid-in capital C. increase retained earnings, decrease common stock, and increase paid-in capital D. decrease retained earnings, increase common stock, and decrease paid-in capital

The two main sources of stockholders' equity are a. investments by stockholders and net income retained in the business b. investments by stockholders and dividends paid c. net income retained in the business and dividends paid d. investments by stockholders and purchases of assets

Under the corporate form of business organization, a. ownership rights are easily transferred b. a stockholder is personally liable for the debts of the corporation c. corporations are not subject to the Sarbanes-Oxley Act d. stockholders wishing to sell their corporate shares must get the approval of other stockholders

A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 2-for-1 stock split, the market value of the stock is expected to a. remain the same. b. fall to approximately $25. c. fall to approximately $60. d. fall to approximately $5.

A corporation issues 2,000 shares of common stock for $32,000. The stock has a stated value of $12 per share. The journal entry to record the stock issuance would include a credit to Common Stock for a. $2,000. b. $32,000. c. $12,000. d. $24,000. Feedback: Correct. The common stock account is credited for the number of shares times the stated value per share (2,000 × $12 = $24,000).

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in accounts payable b. An increase in accounts receivable c. Common stock dividends declared and paid d. A decrease in inventory

A decrease in inventory

When the market rate of interest for bonds is higher than the contract rate, The bonds will sell at

A discount

Which of the following is not included in the Financing Activities section of the statement of cash flows? a. A stock split b. The retirement of bonds c. The purchase of treasury stock d. The payment of dividends

A stock split

*-All of these choices are correct* -Common shares -Issued shares -Treasury shares

A stock split applies to

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

A stock split results in number of shares outstanding of current shares times the number of the split (40,000 × 3 = 120,000 shares)

if it desires to make an investment in its own stock and is reported as an asset.

All of the following are reasons that a corporation may purchase treasury stock except: a. if it needs the stock for its employee stock bonus program. b. if it desires to make an investment in its own stock and is reported as an asset. c. to buy out the ownership of stockholders. d. to increase the reported amount of earnings per share.

Which of the following is used in calculating cash payments for merchandise using the direct method? a. An increase in accounts receivable b. A decrease in accounts receivable c. Net income d. An increase in accounts payable

An increase in accounts payable

The number of shares of stock that a corporation can issue as stated in its charter is referred to as

Authorized

The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called treasury stock outstanding stock issued stock authorized stock

Authorized Stock

maximum number of shares of stock that a company can legally issue.

Authorized shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares of stock that a company can legally issue.

Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and sold for $15 per share. At what amount should the building be recorded by Kansas Company? a. $60,000 b. $180,000 c. $210,000 d. $120,000

The numerator in the calculation of the ratio of fixed assets to long-term liabilities is a. Total Liabilities. b. Fixed Assets at Year-End. c. Average Fixed Assets. d. Fixed Assets + Inventory.

The primary purpose of a stock split is to a. increase paid-in capital b. reduce the market price of the stock per share c. increase the market price of the stock per share d. increase retained earnings

82. Merritt Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Merritt Company? A. $60,000 B. $216,000 C. $210,000 D. $156,000

B. $216,000

Dora Inc. reported the following on the company's cash flow statement: Net cash flow from operating activities $ 350,000 Net cash flow used for investing (100,000) activities Net cash flow used for financing (200,000) activities Sixty percent of the net cash flow used for investing activities was to maintain existing productive capacity. What is the company's free cash flow? A. $250,000 B. $290,000 C. $410,000 D. $150,000

B. $290,000 $100,000 × 0.60 = $60,000; $350,000 − $60,000 = $290,000

The ending figure on the statement of cash flows should match what figure on the balance sheet? A. Total assets B. Cash balance C. Total stockholders' equity D. Retained earnings balance

B. Cash balance

The ending figure on the statement of cash flows should match what figure on the balance sheet? A. Total stockholders' equity B. Cash balance C. Retained earnings balance D. Total assets

B. Cash balance

111. In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported? A. other expense on income statement B. intangible asset on balance sheet C. stockholders' equity on balance sheet D. other income on income statement

113. All of the following are normally found in a corporation's stockholders' equity section except A. Common Stock B. Paid-In Capital in Excess of Par C. Dividends in Arrears D. Retained Earnings

115. Significant changes in stockholders' equity are reported in A. income statement B. retained earnings statement C. statement of stockholders' equity D. statement of cash flows

116. Retained earnings A. is the same as contributed capital B. cannot have a debit balance C. changes are summarized in the retained earnings statement D. is equal to cash on hand

All of the following are normally found in a corporation's stockholders' equity section except a. Common Stock b. Excess of Issue Price Over Par c. Dividends in Arrears d. Retained Earnings

The journal entry to issue 1,000,000 shares of $5 par common stock for $9.00 per share on July 2nd would be:

Cash 9,000,000 / Common Stock 5,000,000 / Paid-in Capital in Excess of Par-Common Stock 4,000,000

The formula for earnings per share on common stock is a. Retained Earnings ÷ Average Number of Common Shares Outstanding. b. Net Income ÷ Average Number of Treasury Shares Outstanding. c. (Net Income − Preferred Dividends) ÷ Average Number of Common Shares Outstanding. d. Net Income ÷ Retained Earnings.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. An increase in accounts receivable b. Common stock dividends declared and paid c. A decrease in inventory d. A decrease in accounts payable

Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows? a. Decrease in dividends payable account b. Decrease in retained earnings account c. Increase in common stock account d. Increase in treasury stock account

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing (20,000) activities Net cash flow used for financing 60,000 activities Ending cash balance 45,000 What was the ending cash balance? A. $75,000 B. $160,000 C. $120,000 D. $30,000

C. $120,000 $45,000 + ($35,000 − $20,000 + $60,000) = $45,000 + $75,000 = $120,000

121. Treasury stock should be reported in the financial statements of a corporation as a(n) A. investment. B. liability. C. current asset. D. deduction from stockholders's equity.

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to NET LOSS would require an entry in the Transactions columns involving a: A. debit to Operating Activities—Net Loss. B. debit to Financing Activities—Net Loss. C. credit to Operating Activities—Net Loss. D. credit to Retained Earnings.

C. credit to Operating Activities—Net Loss.

Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? a. Retained earnings Cash b. Cash Dividends payable Cash c. Paid-in capital Cash Dividends payable d. Cash Dividends Cash Dividends Payable

Cash Dividends Cash Dividends Payable

When a cash dividend is declared, which of the following accounts is credited?

Cash Dividends Payable Note: Cash Dividends Payable is the liability account and is credited; the Cash Dividends account would be debited. It is a contra equity account.

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

Cash Dividends, Cash Dividends Payable

Cash dividends are paid on __________ stock. a. authorized b. treasury c. outstanding d. issued

Which of the following is not a characteristic of a corporation?

Cash dividends paid by a corporation are deductible as expenses by the corporation.

Alliance Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to: a. Common Stock $14,000. b. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000. c. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000. d. Common Stock $10,000 and Retained Earnings $4,000.

Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000

New Corp. issues 1,000 shares of $10 par value common stock at $15 per share. When the transaction is recorded, credits are made to: a. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $5,000. b. Common Stock $10,000 and Retained Earnings $5,000. c. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $5,000. d. Common Stock $15,000.

Common Stock $10,000 and Paid-in Capital in Excess of Par Value $5,000.

Alma Corp. issues 1,000 shares of $10 par 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 Par, $4,000

93. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? A. $ 60,000 B. $ 20,000 C. $120,000 D. $100,000

96. The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to A. decrease total liabilities and stockholders' equity. B. increase total expenses and total liabilities. C. increase total assets and stockholders' equity. D. decrease total assets and stockholders' equity.

97. Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? A. Retained earnings Cash B. Cash Dividends payable Cash C. Paid-in capital Cash Dividends payable D. Cash Dividends Cash Dividends Payable

A company with high earnings per share but a low price-earnings ratio likely indicates a company a. for which investors have high expectations for the future. b. that is focused on maintaining earnings for growth. c. for which none of these choices apply. d. for which investors have low expectations for the future

A company with low earnings per share but a high price-earnings ratio likely indicates a company a. for which investors have low expectations for the future. b. for which none of these choices apply. c. that is focused on liquidating assets for distribution to shareholders. d. for which investors have high expectations for the future.

Characteristics of a corporation include a. a limited lifespan b. direct management by the shareholders (owners) c. its inability to own property d. shareholders who have limited liability

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of units Labor hours per unit Machine hours per unit Blinks 1,000 4 5 Dinks 2,000 2 8 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000. The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks? a. $77.00 b. $19.50 c. $59.92 d. $39.00

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is a. $45 per machine hour b. $50 per machine hour c. $48 per machine hour d. $62 per machine hour

The ability of a corporation to obtain capital is a. less than the ability of a partnership b. about the same as the ability of a partnership c. restricted because of the limited life of the corporation d. enhanced because of limited liability and ease of share transferability

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? A. A decrease in accounts payable B. A decrease in accrued liabilities C. Dividends paid on common stock D. A loss on the sale of land

D. A loss on the sale of land

Which of the following is correct concerning the entries made on the spreadsheet used to prepare the statement of cash flows? A. The entries are not posted to the ledger. B. The entries are used in summarizing the data on the spreadsheet. C. The entries are used in preparing the data on the spreadsheet. D. All of these choices are correct.

D. All of these choices are correct.

D. Cash 120,000 Cr. Cash Dividends Payable 120,000

Which of the following would indicate a cash INFLOW to appear in the Financing Activities section of the statement of cash flows? A. Decrease in dividends payable account B. Decrease in retained earnings account C. Increase in treasury stock account D. Increase in common stock account

D. Increase in common stock account

In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which types of accounts are analyzed for changes? A. Long-term assets B. All liabilities and stockholders' equity C. Current liabilities and stockholders' equity D. Long-term liabilities and stockholders' equity

D. Long-term liabilities and stockholders' equity

Alma Corp. issues 1,000 shares of $12 par common stock at $17 per share. Prepare the journal entry.

DR. Cash 17,000 (1,000 x 17) CR. Common Stock 12,000 (1,000 x 12) CR. Paid In Capital 5,000 (17-12)x1,000

Identify journal entry to record DECLARATION of cash dividends

DR. Cash Dividends CR. Cash Dividends Payable

Identify journal entry to record DATE OF PAYMENT

DR. Cash Dividends Payable CR. Cash

Identify the entry for amortization on a discount of a bond.

DR. Interest Expense CR. Discount on Bonds Payable

Which of the following is true concerning stock splits?

Each shareholder will own the same total par amount of stock before and after the split. Note: Stock splits do not require journal entries since only the par value and total number of shares outstanding has changed. Each shareholder will own the same total par amount of stock before and after the split.

the company earned for each share of outstanding common stock.

Earnings per share is an indication of how much: a. the company has in cash for each share of outstanding common stock. b. the company earned for each share of outstanding common stock. c. the company paid as dividends for each share of common stock held by stockholders. d. the company earned for each share of outstanding common and preferred stock.

(Net Income -Preferred Dividends)/Average Number of Common Shares Outstanding

Earnings per share is calculated as

Which of the following would indicate a cash outflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in retained earnings account b. Increase in treasury stock account c. Increase in common stock account d. Increase in paid-in capital account

Increase in treasury stock account

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

Increases

On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. If Lisbon uses the straight-line method for amortizing the premium, the journal entry to record the first semiannual interest payment by Lisbon Co. would include a debit to

Interest Expense for $32,500

The journal entry to issue 1,000,000 shares of $5 par common stock for $9.00 per share on July 2nd would be:

July 2: Cash 9,000,000 debit Common Stock 5,000,000 credit Pain-in Capital in Excess of Par--C/S 4,000,000 credit.

Identify a bond sold at face value

Market rate=contract rate Selling price= face amount

depreciation expense

Operating

is the monetary value assigned per share in the corporate charter.

Par value is the monetary value assigned per share in the corporate charter. represents what a share of stock is worth. represents the original selling price for a share of stock. is established for a share of stock after it is issued.

changes are summarized in the retained earnings statement

Retained earnings is the same as contributed capital cannot have a debit balance changes are summarized in the retained earnings statement is equal to cash on hand

Define Authorized stock

Shares the corporation is authorize to sell (in Corporate state Charter)

Which of the following is not true of a corporation?

The acts of its owners bind the corporation.

The amount of annual interest paid to bondholders remains the same over the life of the bonds.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding? a. 60,000 b. 50,000 c. 70,000 d. 10,000

The row designations in the Stockholders' Equity section of the balance sheet

The column headings on a statement of stockholders' equity best represent

The column headings on a statement of stockholders' equity best represent a. the column headings on the retained earnings statement. b. the column designations in the Stockholders' Equity section of the balance sheet. c. the row designations in the Stockholders' Equity section of the balance sheet. d. None of these choices are correct.

Additional Paid-In Capital

The excess of sales price of treasury stock over its cost should be credited to: a. Treasury Stock Receivable b. Premium on Capital Stock c. Additional Paid-In Capital d. Income from Sale of Treasury Stock

debit cash, credit Premium on Bonds Payable and bonds payable

The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be

debit interest expense, credit cash and discount on bonds payable

The journal entry a company records for the payment of interest, interest expense, and amortization on bond discount is

Debit to Paid-In Capital from Sale of Treasury Stock

The journal entry to record the sale of treasury stock might include

an arbitrary amount established in the articles of incorporation

The par value per share of common stock represents the minimum selling price of the stock established by the articles of incorporation. the minimum amount the stockholder will receive when the corporation is liquidated an arbitrary amount established in the articles of incorporation the amount of dividends per share to be received each year

reduce the market price of the stock per share

The primary purpose of a stock split is to increase paid-in capital reduce the market price of the stock per share increase the market price of the stock per share increase retained earnings

Total Stockholder's Equity Common Stock 900,000 Paid In Capital Excess of Par 375,000 Retained Earnings (50,000)

Total stockholders' equity is Common Stock plus xcess of Issue Price Over Par minus Retained Earnings because it is a deficit ($900,000 + $375,000 - $50,000 = $1,225,000)

error in the computation of depreciation expense in the preceding year

Which of the following would appear as a prior-period adjustment? loss resulting from the sale of fixed assets You Answered difference between the actual and estimated uncollectible accounts receivable error in the computation of depreciation expense in the preceding year loss from the restructuring of assets

Government regulation

to increase the shares outstanding

Which statement below is not a reason for a corporation to buy back its own stock. resale to employees bonus to employees for supporting the market price of the stock to increase the shares outstanding

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. In addition, factory overhead charged to production was $32,000. The entry to record the direct labor costs is a. Work in Process 150,000 Wages Payable 150,000 b. Work in Process 175,000 Wages Payable 175,000 c. Wages Payable 175,000 Work in Process 175,000 d. Wages Payable 150,000 Work in Process 150,000

Work in Process 150,000 Wages Payable 150,000

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. Factory overhead applied to production was $23,000. The entry to record the factory overhead applied to production is a. Work in Process 25,000 Factory Overhead 25,000 b. Factory Overhead 23,000 Work in Process 23,000 c. Work in Process 23,000 Factory Overhead 23,000 d. Factory Overhead 25,000 Accounts Payable 25,000

Work in Process 23,000 Factory Overhead 23,000

The journal entry to record the flow of costs into Department 1 during the period for direct materials is a. Work in Process—Department 1 100,000 Materials 100,000 b. Work in Process—Department 1 55,000 Materials 55,000 c. Materials 100,000 Work in Process—Department 1 100,000 d. Materials 55,000 Work in Process—Department 1 55,00

Work in Process—Department 1 100,000 Materials 100,000

a debit to Cash Dividends for $120,000.

a debit to Paid-In Capital from Sale of Treasury Stock for $200.

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? a. Cash paid for dividends, $(62,000) b. Cash paid for dividends, $(46,000) c. Dividends declared, $(54,000) d. Change in dividends payable, $(8,000)

a. Cash paid for dividends, $(62,000)

All of the following are normally found in a corporation's Stockholders' Equity section except a. Dividends Payable. b. Common Stock. c. Retained Earnings. d. Paid-In Capital in Excess of Par.

a. Dividends Payable.

How is treasury stock shown in the balance sheet? a) as an asset b) as a decrease in stockholders' equity c) treasury stock is not shown on the balance sheet d) as an increase in stockholders' equity

as a decrease in stockholders' equity

How is treasury stock shown on the balance sheet?

as a decrease in stockholders' equity

How is treasury stock shown on the balance sheet? a. as an asset b. as a decrease in stockholders' equity c. as an increase in stockholders' equity d. treasury stock is not shown on the balance sheet

as a decrease in stockholders' equity

How is treasury stock shown on the Balance Sheet?

as a reduction of stockholders' equity

Any unamortized premium is reported on the balance sheet

as an addition to the face amount of the bonds

If the market rate of interest is greater than the contractual rate of interest, bonds will sell

at a discount

The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called a) outstanding stock b) authorized stock c) issued stock d) treasury stock

authorized stock

he purchase and resale of treasury stock is normally recorded using the a. indirect method. b. cost method. c. direct method. d. equity method.

b. cost method.

Scoresby Co. uses 6 machine hours and 2 direct labor hours to produce Product X. It uses 8 machine hours and 16 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products? a. Product X = $3,200; Product Y = $9,600 b. Product X = $1,760; Product Y = $4,480 c. Product X = $1,440; Product Y = $2,560 d. Product X = $800; Product Y = $800

Which of the following describes the behavior of the fixed cost per unit? a. increases with increasing production b. decreases with increasing production c. remains constant with changes in production d. decreases with decreasing production

Which of the following is NOT a prerequisite to paying a cash dividend? a) formal action by the board of directors b) market value in excess of par value per share c) sufficient cash d) sufficient retained earnings

b) Market value in excess of par value per share

Which of the following is NOT included in the calculation of Earnings Per Share? a) Net Income b) Retained Earnings c) Average Number of Common Shares Outstanding d) Preferred Dividends

b) Retained Earnings

The journal entry to issue 1,000,000 shares of $5 par common stock for $9 per share on July 2 would be a. July 2 Cash 5,000,000 Paid-In Capital in Excess of Par—C/S 4,000,000 Common Stock 9,000,000 b. July 2 Cash 9,000,000 Common Stock 5,000,000 Paid-In Capital in Excess of Par 4,000,000 c. July 2 Cash 9,000,000 Common Stock 9,000,000 d. July 2 Cash 5,000,000 Common Stock 5,000,000

b. July 2 Cash 9,000,000 Common Stock 5,000,000 Paid-In Capital in Excess of Par 4,000,000

Jensen Company reports the following: Direct materials used $345,000 Direct labor incurred 250,000 Factory overhead incurred 400,000 Operating expenses 175,000 Jensen Company's period costs are a. $250,000 b. $175,000 c. $345,000 d. $400,000

b. $175,000

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the second year. a. $2.25 and $0.45 b. $2.25 and $0.00 c. $2.00 and $0.45 d. $0.00 and $0.45

b. $2.25 and $0.00

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry in the Transactions columns involving a a. credit to Operating Activities—Net Income. b. debit to Operating Activities—Net Income. c. debit to Financing Activities—Net Income. d. debit to Retained Earnings.

b. debit to Operating Activities—Net Income.

The effect of the declaration of a cash dividend on a company's financial statements is to a. increase total assets and stockholders' equity. b. decrease stockholders' equity and to increase total liabilities. c. decrease total assets and stockholders' equity. d. increase total expenses and total liabilities.

b. decrease stockholders' equity and to increase total liabilities.

If the free cash flow changed from $60,000 to $80,000, the change

b. indicates a favorable trend.

If the free cash flow changed from $50,000 to $40,000, the change a. is indicative of a favorable trend. b. is indicative of an unfavorable trend. c. is not indicative. d. could be considered favorable or unfavorable depending on other surrounding circumstances.

b. is indicative of an unfavorable trend.

The order of presentation of activities on the statement of cash flows is a. financing, investing, and operating. b. operating, investing, and financing. c. financing, operating, and investing. d. operating, financing, and investing.

b. operating, investing, and financing

The number of shares remaining in the hands of shareholders after some stock has been reacquired is referred to as the shares a. in arrears. b. outstanding. c. authorized. d. issued.

b. outstanding.

the numerator in calculating the accounts receivable turnover is A. total assets B. sales C. accounts receivable at year-end D. average accounts receivable

b. sales

An analysis in which all the components of an income statement are expressed as a percentage of sales is a a. solvency analysis. b. vertical analysis. c. liquidity analysis. d. horizontal analysis.

b. vertical analysis

Finished goods inventory is reported on the a. income statement as a period cost b. balance sheet as a long-term asset c. balance sheet as a current asset d. income statement as revenue

balance sheet as a current asset

Which of the following increases cash?

borrowing money by issuing a six- month note

Which of the following increases cash?

borrowing money by issuing a six-month note

Which of the following increases cash? a. depreciation expense b. acquisition of treasury stock c. borrowing money by issuing a six-month note d. the declaration of a cash dividend

borrowing money by issuing a six-month note

When a corporation completes a 2-for-1 stock split,

both market price per share and par value per share are decreased.

86. If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account A. Common Stock will be credited for $75,000. B. Paid-in Capital in excess of Par Value will be credited for $5,000. C. Paid-in Capital in excess of Par Value will be credited for $70,000. D. Cash will be debited for $70,000.

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries? a. debit Work in Process—Dept. B; credit Finished Goods—Dept. A b. debit Finished Goods—Dept. A; credit Work in Process—Dept. B c. debit Work in Process—Dept. B; credit Work in Process—Dept. A d. debit Work in Process—Dept. B; credit Cost of Goods Sold—Dept. A

Which of the following is a product cost? a. advertising for a particular product b. salary of the company receptionist c. drill bits for a drill press used in the plant assembly area d. salary of a sales manager

When a stock dividend is declared, which of the following accounts is credited? a) Common Stock b) Dividend Payable c) Stock Dividends Distributable d) Retained Earnings

c) Stock Dividends Distributable

Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a. Paid-In Capital Cash Dividends Payable b. Retained Earnings Cash c. Cash Dividends Cash Dividends Payable d. Cash Dividends Distributable Cash

c. Cash Dividends Cash Dividends Payable

c. $120,000

Harding Company Accounts payable $ 40,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 110,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 30,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Based on the data for Harding Company, what is the amount of quick assets? a.$66,000 b.$205,000 c.$131,000 d.$203,000

c. $131,000 Quick assets include: cash, account receivable, and marketable securities

c. $190,000.

A company manufactured 50,000 units of a product at a cost of $450,000. It sold 45,000 units at $15 each. The gross profit is a. $600,000 b. $240,000 c. $270,000 d. $750,000

c. $270,000

f Dakota Company issues 1,500 shares of $6 par common stock for $75,000, a. Cash will be debited for $66,000 b. Common Stock will be credited for $75,000 c. Paid-In Capital in Excess of Par will be credited for $66,000 d. Paid-In Capital in Excess of Par will be credited for $9,000

c. Paid-In Capital in Excess of Par will be credited for $66,000

Which of the following would be most likely to use process costing? a. a law firm b. a custom furniture manufacturer c. a lawn fertilizer manufacturer d. an auto body repair shop

c. a lawn fertilizer manufacturer

A mortgage incurred in the purchase of an office building would be reported on the statement of cash flows in a. the Cash Flows from Investing Activities section. b. the Cash Flows from Operating Activities section. c. a separate section that appears at the bottom of the statement. d. the Cash Flows from Financing Activities section.

c. a separate section that appears at the bottom of the statement.

Step 1 of reconciling net income to net cash flow from operating activities is to a. add gains or subtract losses from investing activities. b. subtract depreciation expense. c. add depreciation expense. d. subtract gains or add losses from investing activities. Feedback: Correct. The first step is to add back depreciation expense

c. add depreciation expense

The number of shares of stock that a corporation can issue as stated in its charter is referred to as a. arrears. b. outstanding. c. authorized. d. issued.

c. authorized.

Bonds that are subject to retirement prior to maturity at the option of the issuer are called

callable bonds

When the corporation issuing the bonds has the right to redeem the bonds prior to maturity, the bonds are

callable bonds

On January 1, the first day of the fiscal year, a company issues a $800,000, 4%, 10-year bond that pays semiannual interest of $16,000 ($800,000 × 4% × ½ year), receiving cash of $800,000.

cash 800,000 bonds payable 800000 interest expense 16000 cash bonds payable 800,000 cash

Which of the following can be found on the statement of cash flows?

cash flows from operating activities

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a

cash inflow in the Investing Activities section

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. cash inflow in the Financing Activities section. b. separate schedule. c. cash inflow in the Investing Activities section. d. cash inflow in the Operating Activities section.

cash inflow in the Investing Activities section.

The following information is available from the land account Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. increase in notes payable, $20,000. b. loss from land transactions, $(50,000). c. cash paid for purchase of land, $(100,000). d. cash paid for purchase of land, $(120,000). Feedback: Incorrect. This represents the change in the l

cash paid for purchase of land, $(100,000)

cash paid for purchase of land, $(100,000).

On the statement of cash flows, the Cash Flows from Operating Activities section would include a. receipts from the issuance of capital stock. b. receipts from the sale of investments. c. payments for the acquisition of investments. d. cash payments for salaries.

cash payments for salaries.

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to

common stock

The interest rate specified in the bond indenture is called the

contract rate

The interest rate to be paid on the face amount of the bond is called the

contrat rate

The source document for the data for debiting Work in Process for direct materials is a a. purchase order b. purchase requisition c. receiving report d. materials requisition

The effect of the declaration of a cash dividend on a company's financial statements is to

decrease stockholders equity and increases total liability

The effect of the declaration of a cash dividend on a company's financial statements is to

decrease stockholders' equity and to increase total liabilities

Treasury stock shares are... a) shares held by the U.S. Treasury Department b) part of the total outstanding shares but not part of the total issued shares of a corporation c) unissued shares that are held by the treasurer of the corporation d) issued shares that have been reacquired by a corporation

d) issued shares that have been reacquired by a corporation

The Darwin Company reports the following information: Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Product costs are a. $30,300 b. $29,200 c. $24,500 d. $35,000

d. $35,000

d. $62,000.

Income statement information for Sadie Company is below: Sales $175,000 Cost of goods sold 115,000 Gross profit $60,000 Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin. a.100% b.29% c.66% d.34%

d. 34%

A statement of stockholders' equity is normally prepared when a. there is a purchase of treasury stock. b. there is a change in stock accounts. c. there is a change in paid-in capital accounts. d. All of these choices are correct.

d. All of these choices are correct.

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

d. a separate section that appears at the bottom of the statement.

The data on which a cash dividends are paid is on the:

date of payment. The three important dates are the date of declaration, the date of record, and the date of payment. The date of payment is the date the corporation will pay the dividend to the stockholders who owned the stock on the date of record.

Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be

debit Cash, $105,000; credit Investments—Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

deducted from net income

The journal entry a company records for the payment of interest, interest expense, and amortization of bond premium is

debit Interest Expense and Premium on Bonds Payable, credit Cash

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

debit cash, credit bonds payable

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be

deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

Indirect labor and indirect materials are classified as a. factory overhead and product costs b. factory overhead and period costs c. operating costs and period costs d. operating costs and product cost

factory overhead and product costs

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as a. factory overhead cost b. miscellaneous expense c. product costs d. period cost

factory overhead cost

Period costs include a. current assets on the balance sheet b. current liabilities on the balance sheet c. operating costs that are shown on the income statement when products are sold d. operating costs that are shown on the income statement in the period in which they are incurred

operating costs that are shown on the income statement in the period in which they are incurred

The order of presentation of activities on the statement of cash flows is

operating, investing, and financing

If selling and administrative expenses are allocated to different products, they should be reported as a a. cost of goods manufactured b. factory overhead cost c. period cost d. cost of goods sold

period cost

Brower Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $4,000,000 $2,500,000 Issue preferred $2.50 stock, $25 par — 3,000,000 Issue common stock, $10 par 4,000,000 2,500,000 Income tax is estimated at 40% of incom

plan 1: 2.4 plan 2: 3

Which of the following is not a prime cost? a. plant janitor's wages b. direct labor wages c. machine operator wages d. assembly line wages

plant janitor's wages

Under the corporate form of business organization,

stockholders wishing to sell their corporate shares need not get the approval of other stockholders, thus making easy to transfer ownership rights.

Under the corporate form of business organization...

stockholders wishing to sell their corporation shares need not get the approval of other stockholders, thus making it easier to transfer ownership rights.

Cash dividends paid on capital stock would be reported in the statement of cash flows as:

the cash flows from financing activities section

Cash dividends paid on capital stock would be reported in the statement of cash flows in

the cash flows from financing activities section

the declaration of dividends reduces the amount of the corporations taxable income

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 corporations taxable income b. interest accrues; whereas, divided do not accrue c. the payment of bond interest is a contractual requirement d. the declaration of dividends is at the discretion of the board of directors

$156,000

$158,000

Disadvantages of corporation

Double taxation of dividends More government regulations and costs Owner is separate from mgmt

Selected accounts with amounts omitted are as follows Work in Process Aug. 1 Balance 275,000 Aug. 31 Goods finished 1,030,000 31 Direct materials X 31 Direct labor 450,000 31 Factory overhead X Factory Overhead Aug. 1- 31 Costs incurred 145,000 Aug. 1 Balance 15,000 31 Applied (30% of direct labor cost) X If the balance of Work in Process on August 31 is $220,000, what was the amount debited to Work in Process for direct materials in August? a. $390,000 b. $170,000 c. $525,000 d. $580,000

$390,000

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is a. $50,000 b. $40,000 c. $55,000 d. $35,000

$40,000

The cost of goods sold during the year was $45,000. Inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable (all owed to merchandise suppliers) were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total a. $46,000 b. $44,000 c. $50,000 d. $40,000

$44,000

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

$44,000

Given the following data: Beginning raw materials inventory $30,000 Materials purchased 65,000 Ending raw materials inventory 40,000 What is the amount of raw materials used? a. $5,000 b. $55,000 c. $75,000 d. $30,000

$55,000

What is the total stockholders' equity based on the following account balances? Common Stock $375,000 Paid-In Capital in Excess of Par 90,000 Retained Earnings 190,000 Treasury Stock 15,000 a) $670,000 b) $565,000 c) $655,000 d) $640,000

$640,000 (375,000 + 90,000 + 190,000) - 15,000

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is a. $44,000 b. $11,000 c. $55,000 d. $66,000

$66,000

The following selected account balances appeared on the financial statements of Sanchez Company: Sanchez Company uses the direct method to calculate net cash flow from operating activities. Cash collections from customers are

$66,000

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

$690,000 + $39,000 = $729,000

If the budget estimates that a table lamp will require 2 hours of finishing and 1 hours of production, how much factory overhead will the Kaumajet Factory allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours? a. $6.33 b. $4.91 c. $5.00 d. $7.20

$7.20

Department K had 3,000 units 45% completed in process at the beginning of the period; 17,000 units completed during the period; and 1,200 units 40% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost. a. 18,350 b. 16,310 c. 15,650 d. 16,130

16,130

The number of equivalent units of production for the period for conversion if the average cost method is used to cost inventories was a. 15,650 b. 14,850 c. 18,000 d. 17,250

17,250

If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

1940000

Based on the data above, what is the quick ratio, rounded to one decimal point?

2.2

If there is a 5:1 Stock split and I originally have 4 shares at $100 par how many will I have after?

20 shares at $20 Par

330,000

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $310,000 Net cash flow from operating activities 185,000 Net cash flow used for investing activities 43,000 Net cash flow used for financing activities 97,000 The cash balance at the end of the period is

355,000

If $482,000 of 9% bonds are issued at 94, the amount of cash received from the sale is

453080

94. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? A. $80,000 B. $10,000 C. $90,000 D. $100,000

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to a. debit Work in Process, credit Wages Payable b. debit Factory Overhead, credit Wages Payable c. debit Finished Goods, credit Wages Payable d. debit Factory Overhead, credit Work in Process

The formula used to calculate inventory turnover is a. Cost of Goods Sold ÷ Average Inventory. b. Total Sales ÷ Average Inventory. c. Cost of Goods Sold ÷ Inventory at Year-End. d. Sales ÷ Inventory at Year-End.

The formula used to calculate the accounts receivable turnover is a. Sales ÷ Average Accounts Receivable. b. Average Accounts Receivable ÷ Sales. c. Accounts Receivable at the Beginning of the Period ÷ Sales. d. Average Accounts Receivable ÷ Average Daily Sales.

which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method

a gain on a sale of a building

What type of analysis is indicated by the following? Increase (Decrease) Year 2 Year 1 Amount Percent Current assets $ 380,000 $ 400,000 $(20,000) (5%) Fixed assets 1,680,000 1,500,000 180,000 12% a. Horizontal analysis b. Common-size analysis c. Liquidity analysis d. Vertical analysis

Where is a gain from the sale of discontinued operations reported in the financial statements? a. Immediately following income from continuing operations on the income statement. b. In the report on internal control. c. Immediately following income tax expense on the income statement. d. Immediately following retained earnings on the balance sheet.

the unamortized discount decreases from its balance at issuance date to a zero balance at maturity

A corporation issues for cash $1,000,000 of 10%, 20-year bonds interest payable annually, at a time when the market rate is 12%. The straight-line method is adopted for the amortization of bond discount or premium. What is true?

The amount of annual interest paid to bondholders remains the same over the life of the bonds.

A corporation issues for cash $15,000,000 of 8%, 30-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted from the amortization of bond discount of premium. What is true?

present value of 50 semiannual payments of $320,000, plus present value of $8,000,000 to be repaid in 25 years

A corporation issues for cash $8,000,000 of 8%, 25-year bonds, interest payable semiannually. The amount received for the bonds will be

A corporation may reacquire (purchase) its own stock for the following reasons except a. to provide shares for resale to employees. b. to reissue as bonuses to employees. c. to support the market price of the stock. d. None of these choices are correct

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

A gain on a sale of a building

Which of the following is used in calculating cash received from customers using the direct method? A. A decrease in accounts receivable B. A decrease in inventory C. An increase in inventory D. An increase in accounts payable

A. A decrease in accounts receivable

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? A. A decrease in inventory B. A decrease in accounts payable C. Common stock dividends declared and paid D. An increase in accounts receivable

A. A decrease in inventory

In horizontal analysis, each item is expressed as a percentage of the A. base year figure B. retained earnings figure C. total assets figure D. net income figure

A. base year figure

If $20,000 in cash dividends was declared during the year and there was no change in the dividends payable account, the presentation in the Financing Activities section of the statement of cash flows would be: A. cash paid for dividends, $(20,000). B. cash paid for dividends, $0. C. cash paid for dividends, $20,000. D. cash dividends declared, $20,000.

A. cash paid for dividends, $(20,000).

when callable bonds are redeemed below carrying value A. gain on redemption of bonds is credited B.loss on redemption of bonds is debited C. retained earnings is credited D. retained earnings is debited

A. gain on redemption of bonds is credited

84. Par value A. is the monetary value assigned per share in the corporate charter. B. represents what a share of stock is worth. C. represents the original selling price for a share of stock. D. is established for a share of stock after it is issued.

A. is the monetary value assigned per share in the corporate charter.

An analysis is which all the components of an income statement are expresses as a percentage of sales is a A. vertical analysis B. horizontal analysis C. liquidity analysis D. solvency analysis

A. vertical analysis

Steak Company acquired a building valued at a $170,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $16 per share.

An asset exchange for stock is value at the verifiable market value. A property tax evaluation would not really be considered a market value. A widely traded stock value would be a market value would be a market value and should be used to record the asset. $160,000

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

An increase in accounts receivable

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. An increase in income taxes payable b. Depreciation expense for the period c. An increase in accounts payable d. An increase in accounts receivable

An increase in accounts receivable

If the straight-line method of amortization of bond premium or discount is used, which of the following statements is true?

Annual interest expense will remain the same over the life of the bonds with the amortization of bond discount.

66. Those most responsible for the major policy decisions of a corporation are the A. management. B. board of directors. C. employees. D. stockholders.

B. board of directors.

The formula for the dividend yield is a. Market Price per Share of Common Stock ÷ Dividends per Share of Common Stock. b. Dividends per Share of Common Stock ÷ Market Price per Share of Common Stock. c. Dividends on Common Stock ÷ Shares of Common Stock Outstanding. d. None of these choices are correct.

The formula to calculate the asset turnover is a. Total Assets at the Beginning of the Year ÷ Sales. b. Sales ÷ Average Total Assets. c. Average Total Assets ÷ Sales. d. (Total Assets at the Beginning of the Year + Total Assets at the End of the Year) ÷ Sales.

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 102,000 108,000 Inventory 88,000 93,000 Prepaid expenses 8,500 6,500 Accounts payable (merchandise creditors) 95,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $328,000 b. $324,000 c. $306,000 d. $256,000

Those most responsible for the major policy decisions of a corporation are the a. management b. board of directors c. employees d. stockholders

Which of the following is not a cash flow element that would be found on the statement of cash flows? a. Ending cash balance b. Free cash flow c. Net cash flow from operating activities d. Change in cash

Which of the following is not a characteristic of a corporation? a. The financial loss that a stockholder may suffer from owning stock in a public company is limited. b. Cash dividends paid by a corporation are deductible as expenses by the corporation. c. A corporation can own property in its name. d. Corporations are required to file federal income tax returns.

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 102,000 108,000 Inventory 88,000 93,000 Prepaid expenses 8,500 6,500 Accounts payable 95,000 89,000 (merchandise creditors) What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? A. $256,000 B. $324,000 C. $328,000 D. $306,000

B. $324,000

B. $330,000. Cash paid for operating expenses would be operating expenses on the income statement, other than depreciation, plus any decrease in current liabilities or minus an increase in current liabilities. Here, the current liabilities decreased so the change is added. This equals $300,000 + $30,000 = $330,000.

61. Which of the following is not characteristic of a corporation? A. The financial loss that a stockholder may suffer from owning stock in a public company is limited. B. Cash dividends paid by a corporation are deductible as expenses by the corporation. C. A corporation can own property in its name. D. Corporations are required to file federal income tax returns.

B. Cash dividends paid by a corporation are deductible as expenses by the corporation.

Which of the following cash flow elements should be presented first on the statement of cash flows? A. Ending cash balance B. Cash flows from operating activities C. Beginning cash balance D. Cash flows from financing activities

B. Cash flows from operating activities

if bonds payable are not callable the issuing corporation A. can exchange them for common stock B. can repurchase them in the open market C. must get special permission from the SEC to repurchase them D. is more likely to repurchase them if the interest rates increase

B. can repurchase them in the open market

bonds with a face amount $1,000,000 are sold at 106. the journal entry to record the issuance is A. cash $1,000,000 premium on bonds $60,000 payable bonds $1,060,000 B. cash $1,060,000 premium on bonds payable $60,000 bonds payable $1,000,000 C. cash $1,060,000 discount on bonds payable $60,000 bonds payable $1,000,0000 D. cash $1,060,000 bonds payable $1,060,000

B. cash $1,060,000 premium on bonds payable $60,000 bonds payable $1,000,000

the adjusting entry to record the amortization of a discount on bonds payable is A. debit discount on bonds payable, credit interest expense B. debit interest expense, credit discount on bonds payable C. debit interest expense, credit cash D. debit bonds payable, credit interest expense

B. debit interest expense, credit discount on bonds payable

107. Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined A. income will be increased by $500 B. stockholders' equity will be increased by $3,500 C. stockholders' equity will be increased by $500 D. stockholders' equity will not change

If Dakota Company issues 1,500 shares of $6 par common stock for $75,000, a. Common Stock will be credited for $75,000 b. Paid-In Capital in Excess of Par will be credited for $9,000 c. Paid-In Capital in Excess of Par will be credited for $66,000 d. Cash will be debited for $66,000

The balance sheets at the end of each of the first two years of a company's operations indicate the following: Year 2 Year 1 Total current assets $600,000 $580,000 Total investments 80,000 40,000 Total property, plant, and equipment 935,000 755,000 Total current liabilities 175,000 155,000 Total long-term liabilities 350,000 250,000 Preferred 9% stock, $100 par 100,000 100,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—common stock 60,000 60,000 Retained earnings 330,000 210,000 If net income is $145,000 and interest expense is $30,000 for Year 2, what is the return on total assets for Year 2? a. 19.3% b. 10.8% c. 11.7% d. 29.7%

The balance sheets at the end of each of the first two years of operations indicate the following: Year 2 Year 1 Total current assets $530,000 $460,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 150,000 80,000 Total long-term liabilities 350,000 250,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—common stock 60,000 60,000 Retained earnings 330,000 210,000 If net income is $158,100 and interest expense is $30,000 for Year 2, what is the return on stockholders' equity for Year 2? a. 24.0% b. 20.2% c. 17.0% d. 16.0%

If a corporation has only one class of stock, the account is entitled Common Stock or

Capital Stock

The net income reported on the income statement for the current year was $255,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventory 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable 75,000 89,000 (merchandise creditors) What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? A. $317,000 B. $251,000 C. $261,000 D. $289,000

C. $261,000

Sanchez Inc. reported the following on the company's cash flow statement: Net cash flow from operating activities $ 500,000 Net cash flow used for investing activities (200,000) Net cash flow used for financing activities 150,000 Thirty percent of the net cash flow used for investing activities was to maintain existing productive capacity. What is the company's free cash flow? A. $300,000 B. $500,000 C. $440,000 D. $650,000

C. $440,000 $200,000 × 0.30 = $60,000; $500,000 − $60,000 = $440,000

C. $62,000

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing (20,000) activities Net cash flow used for financing 60,000 activities Ending cash balance 50,000 What is the net change in cash for the period? A. $(75,000) B. $115,000 C. $75,000 D. $125,000

C. $75,000 $35,000 − $20,000 + $60,000 = $75,000

83. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? A. 35,000 B. 70,000 C. 25,000 D. 30,000

C. 25,000

The entry to record the amortization of a premium on bonds payable on an interest payment date would A. a debit to premium on bonds payable and a credit to interest revenue B. a debit to interest expense and a credit to premium on bond payable C. a debit to interest expense and premium on bonds payable and a credit to cash D.a debit to bonds payable and a credit to interest expense

C. a debit to interest expense and premium on bonds payable and a credit to cash

Analysts often use free cash flow, rather than cash flows from _________ activities, to measure the financial strength of a business. A. financing B. investing C. operating D. noncash investing and financing

C. operating

Which of the following is not a characteristic of a corporation? A. The financial loss that a stockholder may suffer from owning stock in a public company is limited. B. Corporations are required to file federal income tax returns. C. A corporation can own property in its name. D. Cash dividends paid by a corporation are deductible as expenses by the corporation.

Cash dividends paid by a corporation are deductible as expenses by the corporation.

the cash flows from financing activities section.

Cash dividends paid on common stock would be reported in the statement of cash flows in: a. the cash flows from financing activities section. b. the cash flows from investing activities section. c. a separate schedule. d. the cash flows from operating activities section.

Which of the following would NOT be on the statement of cash flows?

Cash flows from contingent activities

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from operating activities?

Cash flows from investing activities

Which of the following below generally is the most useful in analyzing companies of different sizes?

Common-sized financial statements

Recording jobs shipped and customers billed would include a debit to a. Accounts Payable b. Cash c. Finished Goods d. Cost of Goods Sold

Cost of Goods Sold

Which of the following is an example of direct materials cost for an automobile manufacturer

Cost of the automobile air conditioner

Dividends in arrears before common stockholders are paid any dividends

Cumulative preferred stockholders have the right to receive

Cumulative preferred stockholders have the right to receive a. a greater share of dividends than common stockholders. b. dividends in arrears after common stockholders are paid dividends. c. dividends in arrears before common stockholders are paid any dividends. d. None of these choices are correct.

Which of the following is a measure of the liquid position of a corporation?

Current ratio

100. The liability for a dividend is recorded on which of the following dates? A. the date of record B. the date of payment C. the last day of the fiscal year D. the date of declaration

102. Treasury stock shares are A. shares held by the U.S. Treasury Department B. part of the total outstanding shares but not part of the total issued shares of a corporation C. unissued shares that are held by the treasurer of the corporation D. issued shares that have been reacquired by a corporation

103. Which statement below is not a reason for a corporation to buy back its own stock. A. resale to employees B. bonus to employees C. for supporting the market price of the stock D. to increase the shares outstanding

The net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $5,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable 75,000 89,000 (merchandise creditors) What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? A. $368,000 B. $302,000 C. $208,000 D. $312,000

D. $312,000

Dora Inc. reported the following on the company's cash flow statement: Sales $ 3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales? A. 12.0% B. 10.0% C. 1.4% D. 8.3%

D. 8.3%

Bonds with a face amount $1,000,000 are sold at 104. The journal entry to record the issuance is

DR. Cash $1,040,000 (1,000,000 x 1.04) CR. Premium on Bonds Payable 40,000 CR. Bonds Payable 1,000,000

The market interest rate related to a bond is also called the

Effective interest rate

Paid-in Capital in excess of Par Value will be credited for $70,000.

If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account Common Stock will be credited for $75,000. Paid-in Capital in excess of Par Value will be credited for $5,000. Paid-in Capital in excess of Par Value will be credited for $70,000. Cash will be debited for $70,000.

net income

Operating

$2 per share is presented on the balance sheet in the common stock account.

Porter Hardware, Inc. issues $2 par common stock. Which of the following is true? a. $2 per share is presented on the balance sheet in the common stock account. b. $2 per share is the maximum selling price for these shares of stock. c. Liabilities will increase as a result of this transaction. d. $2 in dividends will be paid to the stockholders as a result of this transaction.

Total stockholders' equity remained the same.

Prady, Inc. began operations on October 1, 2011, with 3,000 shares of $2 par common stock authorized. Prady issued all of its common stock during 2011 and 2012. On December 31, 2012, Prady repurchased 1,000 shares of its outstanding shares, then reissued 500 of these shares on March 1, 2013. On June 1, 2013, Prady declared a 2-for-1 stock split. As a result of this stock split, which of the following is true? a. Assets decreased. b. Stockholders' equity decreased. c. Stockholders' equity increased. d. Total stockholders' equity remained the same.

The Snow Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $600,000 and a credit or credits to a. Preferred Stock for $600,000. b. Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $100,000. c. Preferred Stock for $500,000 and Retained Earnings for $100,000. d. Paid-in Capital from Preferred Stock for $600,000.

Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $100,000.

Scoresby Co. uses 6 machine hours and 2 direct labor hours to produce Product X. It uses 8 machine hours and 16 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products? a. Product X = $3,200; Product Y = $9,600 b. Product X = $800; Product Y = $800 c. Product X = $1,760; Product Y = $4,480 d. Product X = $1,440; Product Y = $2,56

Product X = $1,760; Product Y = $4,480

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

Purchase of noncurrent assets

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

Retained Earnings

The journal entry to record the sale of treasury stock might include a. a credit to Paid-In Capital from Sale of Treasury Stock. b. a credit to Treasury Stock. c. a debit to Paid-In Capital from Sale of Treasury Stock. d. All of these choices are correct.

The journal entry to record the sale of treasury stock might include

The journal entry to record the sale of treasury stock might include a debit to Paid-in Capital from Sale of Treasury Stock, if the sales price is less than the purchase price or a credit to Paid-in Capital from Sale of Treasury Stock if the sales price is greater than the purchase price. However, the journal entry to record the sale of treasury stock would always include a credit to Treasury Stock

Define treasury stock

The number of shares bought back by the original issuing corporation

The number of shares of stock that a corporation can issue as stated in its charter is referred to as a. authorized. b. issued. c. arrears. d. outstanding.

Issued Shares

The number of shares remaining in the hands of shareholders after some stock has been reacquired is referred to as the shares

Represents only those earnings available to common stockholders

The numerator in the earnings per share calculation

Which of the following is not true of a corporation?

The owners are personally liable for corporate actions.

An objective in purchasing temporary investments is to

all of these choices are correct

Which of the following is an example of direct materials cost for an automobile manufacturer? a. cost of oil lubricants for factory machinery b. cost of wages of assembly worker c. salary of production supervisor d. cost of interior upholstery

cost of interior upholstery

The ending figure on the statement of cash flows should match what figure on the balance sheet? a. Total assets b. Total stockholders' equity c. Retained earnings balance d. Cash balance

d. Cash balance

If the cost of a direct material is a small portion of total production cost, it may be classified as part of a. direct labor cost b. selling and administrative costs c. miscellaneous costs d. factory overhead cost

factory overhead cost

Par Value a) represents what a share of stock is worth b) is established for a share of stock after it is issued c) represents the original selling price for a share of stock d) is the monetary value assigned per share in the corporate charter

is the monetary value assigned per share in the corporate charter

Which of the following is a non-cash investing and financing activity?

issuance of common stock to acquire land

Which of the following is a noncash investing and financing activity?

issuance of common stock to acquire land

Which of the following is a noncash investing and financing activity? a. payment of a cash dividend b. payment of a six-month note payable c. purchase of inventory on account d. issuance of common stock to acquire land

issuance of common stock to acquire land

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

issuance of long-term debt

What is the main source of paid in capital?

issuing common stock and preferred stock

Which of the following is not a prerequisite to paying a cash dividend?

market value in excess of par value per share

Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

ratio of fixed assets to long-term liabilities

Which of the following is the correct flow of manufacturing costs? a. raw materials, work in process, finished goods, cost of goods sold b. raw materials, finished goods, cost of goods sold, work in process c. work in process, finished goods, raw materials, cost of goods sold d. cost of goods sold, raw materials, work in process, finished good

raw materials, work in process, finished goods, cost of goods sold

Which statement below is not a reason for a corporation to buy back its own stock. a. resale to employees b. bonus to employees c. for supporting the market price of the stock d. to increase the shares outstanding

to increase the shares outstanding

Steak company acquired a building valued at $170,000 for property tax in exchange for 10,000 shares of its $5 par common stock. the stock is widely traded and selling for $16 per share. At what amount should the building be recorded by Steak Co?

$160,000

At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. Assume that the company uses the FIFO process cost method. Round cost per unit figures to two cents, i.e., $2.22, when calculating total costs. The total costs that will be transferred into Finished Goods for units started and completed were a. $161,775 b. $156,960 c. $162,855 d. $161,505

$161,775

Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is

$165,000

Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $173,000 b. $140,000 c. $313,000 d. $33,000

$173,000

Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Kansas Company?

$180,000

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 118,000? a. $118,000 b. $200,000 c. $188,800 d. $125,000

$188,800

$190,000.

Given the following data: Work in process, beginning $14,000 Work in process, ending 20,000 Direct labor costs 4,000 Cost of goods manufactured 8,000 Factory overhead 8,000 Direct materials used is a. $2,000 b. $4,000 c. $8,000 d. $14,000

$2,000

A corporation issues 2,000 shares of common stock for $ 32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for a. $20,000 b. $32,000 c. $12,000 d. $2,000

$20,000

Sanchez Inc. reported the following on the company's cash flow statement in 2012: Thirty percent of the cash flow used for investing activities was used to replace existing capacity. What is the free cash flow for 2012?

$200,000 X .30 = $60,000 $500,000 - $60,000 = $440,000.

Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps a. $314,000 b. $209,333 c. $202,000 d. $104,000

$202,000

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was a. $218,000 b. $226,000 c. $190,000 d. $222,000

$218,000

$22,000

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 5% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

$22,000.

Calculate the overhead rate per unit for Product A in the painting department of Adirondack Marketing Inc. a. $236.32 per unit b. $325.00 per unit c. $147.70 per unit d. $161.00 per unit

$236.32 per unit

On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1, would include a

$24 x 3,750= 90,000 DR. Treasury Stock 90,000 CR. Cash 90,000

At the beginning of the current year, the Grant Company's work in process inventory account had a balance of $30,000. During the year, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Factory overhead for the year amounted to $90,000. Cost of goods manufactured is $230,000. The balance in work in process inventory on December 31 is a. $24,000 b. $44,000 c. $66,000 d. $36,000

$24,000

$24,000 The common stock account is recorded for the number of shares times the stated value per share (2,000 X $12) = $24,000.

The Darwin Company reports the following information: Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Period costs are a. $24,500 b. $30,300 c. $29,200 d. $35,000

$24,500

All direct materials are placed in process at the beginning of production and the first-in, first-out method of inventory costing is used. What is the total cost of the departmental work in process inventory at the end of the period (round unit cost calculations to four decimal places)? a. $16,163 b. $21,432 c. $35,670 d. $28,935

$28,935

The Dayton Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $5,000. Compute the year end retained earnings balance.

$29,000 12,000 - 5,000= 7,000 25,000 + 7,000= 32,000 32,000- 3,000= 29,000

Work in process inventory on December 31 of the current year is $44,000. Work in process inventory increased by 60% during the year. Cost of goods manufactured amounts to $275,000. What are the total manufacturing costs incurred in the current year? a. $291,500 b. $302,000 c. $275,750 d. $233,750

$291,500

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $50,000 $60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? a. $198,000 b. $324,000 c. $352,000 d. $296,000

$296,000

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of parents for the year was $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows... What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

$296,000p

If the average cost method is used, the conversion cost per unit (to the nearest cent) would be a. $3.71 b. $2.84 c. $2.97 d. $3.23

$3.23

Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. Also, during the current year the company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance.

$30,000.

The net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $5,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $368,000 b. $208,000 c. $302,000 d. $312,000

$312,000

$324,000

The following selected account balances appeared on the financial statements of the Washington Company: Accounts receivable, Jan. 1 $13,000 Accounts receivable, Dec. 31 9,000 Accounts payable, Jan. 1 4,000 Accounts payable, Dec. 31 7,000 Merchandise inventory, Jan. 1 10,000 Merchandise inventory, Dec. 31 15,000 Sales 56,000 Cost of merchandise sold 31,000 The Washington Company uses the direct method to calculate net cash flow from operating activities. Cash payments for merchandise were

$33,000

$35,000

$355,000

The cost of goods sold during the year was $45,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

$44,000.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 50,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared? a. $50,000 b. $5,000 c. $100,000 d. $45,000

$45,000

The Botosan Factory has determined that its budgeted factory overhead budget for the year is $13,500,000 and budgeted direct labor hours are 10,000,000. If the actual direct labor hours for the period are 350,000, how much overhead would be allocated to the period? a. $675,000 b. $470,630 c. $472,500 d. $236,250

$472,500

$60,000

Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the statement of cash flows using the direct method is a. $700,000 b. $600,000 c. $580,000 d. $620,000

$620,000

The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The machine hours for the month of April for all of the jobs were 4,780. If the actual factory overhead totaled $141,800, determine the over- or underapplied amount for the month. a. $7,575 underapplied b. $35,220 underapplied c. $7,575 overapplied d. $35,220 overapplied

$7,575 overapplied

Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for the current year is: a. $8.13 per machine hour b. $7.00 per machine hour c. $6.50 per machine hour d. $8.75 per machine hour

$7.00 per machine hour

What is the total stockholders' equity based on the following account balances? common stock $500,000 Paid-In Capital in Excess of Par --C/S ----- 50,000 Retained Earnings ---- 190,000 Treasury Stock ---- 40,000

$700,000

Total Stockholder's Equity Common Stock 500,000 Paid In Capital Excess of Par 500,00 Retained Earnings 190,000 Treasury Stock 40,000

$700,000 Treasury Stock is not an addition to total stockholders' equity

$75,000

Total Stockholder's Equity Common Stock 100,000 Paid In Capital Excess of Par 500,000 Retained Earnings 190,000 Treasury Stock 40,000

$750,000 Treasury Stock is not an addition to total stockholders' equity

$8,000

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

$8,800

Determine the activity rate for materials handling per move. a. $58.82 b. $50.00 c. $20.83 d. $80.65

$80.65

The following budget data are available for Sharp Company: Estimated direct labor hours 12,000 Estimated direct labor dollars $90,000 Estimated factory overhead costs $179,000 Actual direct labor hours 11,500 Actual direct labor dollars $92,000 Actual factory overhead costs $180,000 If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is a. 199% b. 196% c. $14.92 d. $15.65

199%

Jacob Company's accounting period ends on December 31. The amount of an adjusting entry to accrue interest for $20,000, 4%, US Treasury bills, purchased on October 1 would be

200

Franklin Corporation issues $50,000, 10%, five-year bonds on January 1 for $52,100. Interest is paid semiannually on January 1 and July 1. If Franklin uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1 is

2290

A corporation issues 2000 shares of common stock for $32000. The stock has a stated value of $12 per share. The journal entry to record the stock issueance would include a credit to common stock for....

24000

Based on the following data for the current year, what is the number of days' sales in accounts receivable. Sales on account during year $584,000 Cost of merchandise sold during year 300,000 Accounts Receivable, beginning of year 45,000 Accounts Receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000

25 Avg inventory 100000/Avg daily cost of goods sold 822 Number of days sales in inventory 40000

Assume the following sales data for a company Current year $1,025,000 Preceding year 820,000 What is the percentage increase in sales from the preceding year to the current year

25% (1025000 - 820000) = 205000 205000/820000 = 0.25 x 100 -> 25

Based on the following data for the current year. what is the number of days' sales in account receivable?

25.0

The semiannual interest payment on a $10,000, 5% bond is _____.

250

Cash Dividends Payable

When a cash dividend is declared, which of the following accounts is credited?

261,000

261000

Nebraska Inc. issues 3,000 shares of common stock for $48,000. The stock has a stated value of $12 per share. The journal entry to record the stock issuance would include:

3,000 x 12= 36,000 DR. Cash 48,000 CR. Common Stock 36,000 CR. Paid In Capital 2,000 (48-36)

Based on the data above, what is the current ratio, rounded to one decimal point?

3.0

Based on the following data for the current year, what is the inventory turnover?

3.0

300,000 shares × 3% = 9,000 shares; 9,000 × $28 = $252,000; 9,000 shares × $20 = $180,000 D. Dividends 252,000 Cr. Dividends Distributable 180,000 Cr. Paid-In Capital in Excess of Par—C/S 72,000

324,000

Assume the following sales data for a company: Current year $325,000 Preceding year 250,000 What is the percentage increase in sales from the preceding year to the current year?

325000-250000=75000/250000*100 =30%

On June 1, $40,000 of treasury bonds were purchased between interest dates. The brokerage commission was $600. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. How much interest revenue will be recorded on July 1?

400

Franklin Corporation issues $88,000, 10%, five-year bonds on January 1 for $92,000. Interest is paid semiannually on January 1 and July 1. If Franklin uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1 is

4000

On January 1, $2,000,000, five-year, 10% bonds, were issued for $1,960,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize the discount on bonds payable, the semiannual amortization amount is

4000

44,000

50,000-10,000= 40,000 shares outstanding

50,000.

Net income for the year was $45,500. Accounts receivable increased $5,500, and account payable increased by $11,200. Under the indirect method, the cash flow from operations is

51200

Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12,500 and the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $5,300. The value of this transaction in the investing section of the statement of cash flows is

5300

A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? $0 $5,000 $2,500 $10,000

On January 1, Elias Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

5400

The following production data were taken from the records of the finishing department for June: Inventory in process, June 1, 25% completed 1,500 units Transferred to finished goods during June 5,000 units Equivalent units of production during June 5,200 units Determine the number of equivalent units of production in the June 30, finishing department inventory, assuming that the first-in, first-out method is used to cost inventories. The completion percentage of 25% applies to both direct materials and conversion costs. a. 575 units b. 200 units c. 1,000 units d. 300 units

575 units

66,000

The following selected account balances appeared on the financial statements of Sanchez Company: Accounts Receivable, Jan. 1 $13,000 Accounts Receivable, Dec. 31 9,000 Accounts Payable, Jan 1 4,000 Accounts Payable, Dec. 31 7,000 Merchandise Inventory, Jan 1 10,000 Merchandise Inventory, Dec 31 15,000 Sales 62,000 Cost of Goods Sold 31,000 Sanchez Company uses the direct method to calculate net cash flow from operating activities. Cash received from customers is

66,000

132. A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be: A. $5 B. $60 C. $25 D. $24

Debit to Paid-In Capital from Sale of Treasury Stock for $200

A corporation purchases 1,000 shares of its own common stock for $4,000 on February 13. On April 13, half of the treasury stock was sold for $3,000. On April 26, the other half of the treasury stock was sold for $1,800. The entry to record the April 26 sale would include a a. debit to Paid-In Capital from Sale of Treasury Stock for $200. b. credit to Paid-In Capital from Sale of Treasury Stock for $1,200. c. credit to Cash for $1,800. d. debit to Treasury Stock for $2,000.

corporations are subject to more governmental regulations.

A disadvantage of the corporate form of business entity is: a. mutual agency for stockholders. b. unlimited liability for stockholders. c. corporations are subject to more governmental regulations. d. the ease of transfer of ownership.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a.

A loss on the sale of land

Reduce the market price per share of the stock

A major objective of a stock split is to

Does not change the balance of Retained Earnings

A restriction/appropriation of retained earnings

A restriction/appropriation of retained earnings a. does not change the balance of Retained Earnings. b. increases total retained earnings. c. decreases total retained earnings. d. decreases total assets.

has no effect on total retained earnings

A restriction/appropriation of retained earnings decreases total assets increases total retained earnings decreases total retained earnings has no effect on total retained earnings

Which of the following is not included in the Financing Activities section of the statement of cash flows?

A stock split

77. A corporation issues 2,500 shares of common stock for $ 45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for A. $25,000 B. $45,000 C. $20,000 D. $ 5,000

A. $25,000

A. $520,000. Using the direct method, cash receipts from sales is calculated by sales plus a decrease in accounts receivable or minus an increase in accounts receivable. Here, it is sales of $500,000 + decrease in accounts receivable of $20,000 ($100,000 − $80,000) = $520,000.

The cost of goods sold during the year was $54,000. Inventories were $10,500 and $12,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $9,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total: A. $53,000. B. $54,000. C. $60,000. D. $55,000.

A. $53,000. Using the direct method, cash payments for merchandise are calculated by taking the cost of goods sold plus an increase in inventory or minus a decrease in inventory, and plus a decrease in accounts payable or minus an increase in accounts payable. Here, it is $54,000 + $2,000 ($12,500 − $10,500) − $3,000 ($9,000 − $6,000) = $53,000.

The following selected account balances appeared on the financial statements of Sanchez Company: Accounts Receivable, January 1 $13,000 Accounts Receivable, December 31 9,000 Accounts Payable, January 1 4,000 Accounts Payable, December 31 7,000 Inventory, January 1 10,000 Inventory, December 31 15,000 Sales 62,000 Cost of Goods Sold 31,000 Sanchez Company uses the direct method to calculate net cash flow from operating activities. Cash received from customers is: A. $66,000. B. $58,000. C. $62,000. D. $75,000.

A. $66,000. Using the direct method, cash received from customers is calculated by sales plus a decrease in accounts receivable or minus an increase in accounts receivable. Here, it is sales of $62,000 + decrease in accounts receivable of $4,000 ($13,000 − $9,000) = $66,000.

Which of the following is NOT included in the Financing Activities section of the statement of cash flows? A. A stock split B. The payment of dividends C. The retirement of bonds D. The purchase of treasury stock

A. A stock split

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from operating activities? A. Cash flows from investing activities B. Ending cash balance C. Cash flows from financing activities D. Beginning cash balance

A. Cash flows from investing activities

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

financing activities

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? A. Cash paid for dividends, $(62,000) B. Cash paid for dividends, $(46,000) C. Change in dividends payable, $(8,000) D. Dividends declared, $(54,000)

A. Cash paid for dividends, $(62,000)

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? A. Cash paid for equipment B. Cash received from bonds payable C. Depreciation expense on equipment D. Cash received from stock issued

A. Cash paid for equipment

67. Which one of the following would not be considered an advantage of the corporate form of organization? A. Government regulation B. Separate legal existence C. Continuous life D. Limited liability of stockholders

A. Government regulation

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? A. Purchase of land for cash B. Discard of fully depreciated equipment with no salvage value C. Payment of bond interest D. Purchase of inventory

A. Purchase of land for cash

71. The term deficit is used to refer to a debit balance in which of the following accounts of a corporation? A. Retained Earnings B. Treasury Stock C. Organizational Expenses D. Common Stock

A. Retained Earnings

Dylan Corporation issues for cash $2,000,000 of 8% 15-year bonds interest payable annually at a time when the market of interest is 9% the straight line method is adopted for the amortization of bond discount or premium. which of the following statements is true? A. The amount of annual interest paid to bondholders remains the same over the life of the bonds B. The amount of annual interest expense decreases as the bonds approach maturity C. The amount of annual interest paid to bondholders increases over the 15-year life of the bonds D. The carrying amount decreases from its amount at issuance date to $2,000,000 at maturity

A. The amount of annual interest paid to bondholders remains the same over the life of the bonds

Step 1 of preparing a spreadsheet for the statement of cash flows is to: A. list the title of each balance sheet account in the Accounts column. B. add the column totals. C. analyze the change during the year in each noncash account and classify the change. D. enter the balance of each balance sheet account.

A. list the title of each balance sheet account in the Accounts column.

65. Under the corporate form of business organization A. ownership rights are easily transferred. B. a stockholder is personally liable for the debts of the corporation. C. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. D. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

A. ownership rights are easily transferred.

which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis? A. ratio of fixed assets to long-term liabilities B. ratio of net sales to assets C. number of days' sales in receivables D. rate earned on stockholders equity

A. ratio of fixed assets to long-term liabilities

the current ratio is A. used to evaluate a company's liquidity and short term debt paying ability B. a solvency measure that indicates the margin of of safety of a bondholder C. calculated by dividing current liabilities by current assets D. calculated by subtracting current liabilities from current assets

A. used to evaluate a company's liquidity and short term debt paying ability

The percent of fixed assets to total assets is an example of A. vertical analysis B. solvency analysis C. profitability analysis D. horizontal analysis

A. vertical analysis

if bonds are issued at a premium, the stated interest rate is A.higher than the market rate of interest B. lower than the market rate of interest C.too low to attract investors D.adjusted to a higher rate of interes

A.higher than the market rate of interest

$96,000

Accounts receivable from sales transactions were $44,000 at the beginning of the year and $53,000 at the end of the year. Net Income reported on the income statement for the tear was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is:

*-EPS cannot be calculated if a company has no preferred stock* -Corporations whose stock is publicly traded must report EPS on their income statements -EPS is sometimes called basic earnings per share -EPS is calculated as (Net Income − Preferred Dividends)/Average Number of Common Shares Outstanding

All of the following statements are true regarding earnings per share (EPS) except

All of the following statements are true regarding earnings per share (EPS) except a. EPS is calculated as (Net Income − Preferred Dividends)/Average Number of Common Shares Outstanding. b. corporations whose stock is publicly traded must report EPS on their income statements. c. EPS cannot be calculated if a company has no preferred stock. d. EPS is sometimes called basic earnings per share.

All of the following statements are true regarding earnings per share (EPS) except a. corporations whose stock is publicly traded must report EPS on their income statements. b. EPS is sometimes called basic earnings per share. c. EPS is calculated as (Net Income − Preferred Dividends)/Average Number of Common Shares Outstanding. d. EPS cannot be calculated if a company has no preferred stock.

Which of the following is correct concerning the entries made on the spreadsheet used to prepare the statement of cash flows? a. The entries are used in summarizing the data on the spreadsheet. b. The entries are not posted to the ledger. c. The entries are used in preparing the data on the spreadsheet. d. All of these choices are correct.

All of these choices are correct.

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. An increase in inventory b. An increase in accrued expenses payable c. A decrease in prepaid expenses d. A decrease in inventory

An increase in inventory

Texas Inc. has 15,000 shares of 8%, $90 par value cumulative preferred stock and 55,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?

Annual Dividend on PS: 8% x $90= $7.20 7.20 x 15,000 shares = 108,000

104. How is treasury stock shown on the balance sheet? A. as an asset B. as a decrease in stockholders' equity C. as an increase in stockholders' equity D. treasury stock is not shown on the balance sheet

122. The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a A. liquidating dividend B. stock split C. stock option D. preferred dividend

126. The primary purpose of a stock split is to A. increase paid-in capital B. reduce the market price of the stock per share C. increase the market price of the stock per share D. increase retained earnings

129. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a result of the stock dividend? A. $12,800 B. $19,200 C. $32,000 D. $48,800

130. Which of the following statements is not true about a 2-for-1 split? A. Par value per share is reduced to half of what it was before the split. B. Total contributed capital increases. C. The market price will probably decrease. D. A stockholder with ten shares before the split owns twenty shares after the split.

138. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the third year. A. $4.50 and $0.25 B. $3.25 and $0.25 C. $4.50 and $0.90 D. $2.00 and $0.25

88. The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to A. Preferred Stock for $750,000. B. Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $250,000. C. Preferred Stock for $500,000 and Retained Earnings for $250,000. D. Paid-in Capital from Preferred Stock for $750,000.

89. Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to: A. Common Stock $14,000. B. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000. C. Common Stock $4,000 and Paid-in Capital in Excess of Stated Value $10,000. D. Common Stock $10,000 and Retained Earnings $4,000.

92. On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a A. credit to Treasury Stock for $96,000. B. debit to Treasury Stock for $96,000. C. debit to a loss account for $120,000 D. credit to a gain account for $120,000.

98. Miriah Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock? A. $50 per share B. $50,000 in total C. $10,000 in total D. $0.50 per share

A change from straight-line depreciation to double-declining-balance depreciation would be reported as a. a restatement of the prior period statements only. b. a prospective change in estimate. c. a line item adjustment immediately following income from operations. d. None of these choices are correct.

A company with a high earnings per share but a low dividend yield likely indicates a company that a. is high in debt. b. is focused on maintaining earnings for growth. c. distributes most earnings as dividends. d. has no preferred stock.

Given the following framework for the statement of cash flows, what is missing? Cash flows from operating activities $XXX Cash flows from investing activities XXX Change in cash $XXX Beginning cash balance XXX Ending cash balance $XXX A. Free cash flow B. Cash flows from financing activities C. Beginning retained earnings balance D. Total stockholders' equity

B. Cash flows from financing activities

70. Which of the following statements concerning taxation is accurate? A. Corporations pay federal income taxes but not state income taxes. B. Corporations pay federal and state income taxes. C. Only the owners must pay taxes on corporate income. D. Corporations pay income taxes but their owners do not.

B. Corporations pay federal and state income taxes

Step 1 of reconciling net income to net cash flow from operating activities is to: A. add gains or subtract losses from investing activities. B. add depreciation expense. C. subtract gains or add losses from investing activities. D. subtract depreciation expense.

B. add depreciation expense.

If the straight line method of amortization of bond premium or discount is used, which of the following statement is true? A. Annual interest expense will increase over the life of the bonds with the amortization of bond premium B. annual interest expense will remain the same over the life of the bonds with the amortization of bond discount C.annual interest expense will decrease over the life of the bonds with the amortization of bond discount D. annual interest expense will increase over the life of the bonds with the amortization of bond discount

B. annual interest expense will remain the same over the life of the bonds with the amortization of bond discount

The following information is available from the land account: Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include: A. increase in notes payable, $20,000. B. cash paid for purchase of land, $(100,000). C. loss from land transactions, $(50,000). D. cash paid for purchase of land, $(120,000).

B. cash paid for purchase of land, $(100,000).

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry in the Transactions columns involving a: A. credit to Operating Activities—Net Income. B. debit to Operating Activities—Net Income. C. debit to Financing Activities—Net Income. D. debit to Retained Earnings.

B. debit to Operating Activities—Net Income.

63. One of the main disadvantages of the corporate form is the A. professional management B. double taxation of dividends C. charter D. corporation must issue stock

B. double taxation of dividends

If the free cash flow changed from $50,000 to $40,000, the change: A. is not indicative. B. is indicative of an unfavorable trend. C. is indicative of a favorable trend. D. could be considered favorable or unfavorable depending on other surrounding circumstances.

B. is indicative of an unfavorable trend.

Horizontal analysis is a technique for evaluating financial statement data A. for one period of time B. over a period of time C. on a certain date D. as it may appear in the future

B. over a period of time

In a vertical analysis the base for cost of goods sold is A. total selling expenses B. sales C. total expenses D. gross profit

B. sales

The ability of a business pay its debts as they come due and to earn a reasonable net income is A. solvency and leverage B. solvency and profitability C. solvency and liquidity D. solvency and equity

B. solvency and profitability

Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at time when the market rate of interest is 7% the straight line method is adopted for the amortization of bond discount or premium. Which of the following statement is true? A. the carrying amount increases from its amount an issuance date to $1,000,000 at maturity B. the carrying amount decreases from its amount at issuance date to $1,000,000 at maturity C. The amount of annual interest paid to bondholders increases over the 10-year life of the bonds D. The amount of annual interest expense decreases as the bonds approach maturity

B. the carrying amount decreases from its amount at issuance date to $1,000,000 at maturity

74. Which of the following is not a right possessed by common stockholders of a corporation? A. the right to vote in the election of the board of directors B. the right to receive a minimum amount of dividends C. the right to sell their stock to anyone they choose D. the right to share in assets upon liquidation

B. the right to receive a minimum amount of dividends

Which statement below is not a reason for a corporation to buy back its own stock? A. bonus to employees B. to increase the shares outstanding C. for supporting the market price of the stock D. resale to employees

B. to increase the shares outstanding

Percentage analysis, ratios, turnovers, and other measures of financial position and operating results are A. a substitute for sound judgement B. useful analytical measures C. enough information for analysis; industry information is not needed D. unnecessary for analysis, but reaction is better

B. useful analytical measures

Which of the following is reported on the statement of cash flows? a. Changes in retained earnings b. Total changes in stockholders' equity c. Cash flows from investing activities d. Total assets

Journal Corporation organizational expenses

D. Organizational expenses Cr. Cash

105. The excess of sales price of treasury stock over its cost should be credited to A. Treasury Stock Receivable B. Premium on Capital Stock C. Paid-In Capital from Sale of Treasury Stock D. Income from Sale of Treasury Stock

106. What is the total stockholders' equity based on the following account balances? Common Stock $375,000 Paid-In Capital in Excess of Par 90,000 Retained Earnings 190,000 Treasury Stock 15,000 A. $670,000 B. $655,000 C. $640,000 D. $565,000

Which of the following is not true of a corporation? a. It may enter into binding legal contracts in its own name. b. It may sue and be sued. c. The acts of its owners bind the corporation. d. It may buy, own, and sell property.

75. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding? A. 10,000 B. 40,000 C. 30,000 D. 50,000

C. 30,000

Which of the following is used in calculating cash payments for merchandise using the direct method? A. A decrease in accounts receivable B. Net income C. An increase in accounts payable D. An increase in accounts receivable

C. An increase in accounts payable

81. The entry to record the issuance of common stock at a price above par includes a debit to A. Organizational Expenses B. Common Stock C. Cash D. Paid-In Capital in Excess of Par-Common Stock

C. Cash

Which of the following is the starting point in calculating net cash flow from operating activities using the direct method? A. Net income B. Cash at the beginning of the year C. Cash received from customers D. Cash payments for merchandise

C. Cash received from customers

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from financing activities? A. Cash flows from investing activities B. Ending cash balance C. Change in cash D. Beginning cash balance

C. Change in cash

79. The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to A. Organizational Expenses B. Goodwill C. Common Stock D. Cash

C. Common Stock

In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account is analyzed for changes? A. Current liabilities B. Stockholders' equity C. Long-term assets D. Current assets

C. Long-term assets

68. Which of the following is not true of a corporation? A. It may enter into binding legal contracts in its own name. B. It may sue and be sued. C. The acts of its owners bind the corporation. D. It may buy, own, and sell property.

C. The acts of its owners bind the corporation.

76. The par value per share of common stock represents A. the minimum selling price of the stock established by the articles of incorporation. B. the minimum amount the stockholder will receive when the corporation is liquidated C. an arbitrary amount established in the articles of incorporation D. the amount of dividends per share to be received each year

C. an arbitrary amount established in the articles of incorporation

64. A disadvantage of the corporate form of business entity is A. mutual agency for stockholders B. unlimited liability for stockholders C. corporations are subject to more governmental regulations D. the ease of transfer of ownership

C. corporations are subject to more governmental regulations

The hayden corporation issues 1,000 10 year 8% $2,000 bonds dated january 1 at 92. the journal entry to record the issuance will show a A. credit to discount on bonds payable for $160,000 B. debit to cash of $2,000,000 C. credit to bonds payable for $2,000,000 D. credit to cash for $1,840,000

C. credit to bonds payable for $2,000,000

the journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be A. debit bonds payable, credit cash B. debit cash and discount on bonds payable, credit bonds payable C. debit cash, credit premium on bonds payable and bonds payable D. debit cash, credit bonds payable

C. debit cash, credit premium on bonds payable and bonds payable

the journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is A. debit interest expense, credit cash and discount on bonds payable B. debit interest expense, credit cash C. debit interest expense and premium on bonds payable, credit cash D. debit interest expense, credit interest payable and premium on bonds payable

C. debit interest expense and premium on bonds payable, credit cash

the journal entry a company records for the payment of interest, interest expense, and amortization of bond premium is A. debit interest expense, credit cash and premium on bonds payable B. debit interest expense, credit cash C. debit interest expense and premium on bonds payable, credit cash D. debit interest expense, credit interest payable and premium on bonds payable

C. debit interest expense and premium on bonds payable, credit cash

80. The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors? A. the financial condition, earnings record, and dividend record of the corporation B. investor expectations of the corporation's earning power C. how high the par value is D. general business and economic conditions and prospects

C. how high the par value is

72. Stockholders' equity A. is usually equal to cash on hand B. includes paid-in capital and liabilities C. includes retained earnings and paid-in capital D. is shown on the income statement

C. includes retained earnings and paid-in capital

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability as a result of this transaction the current ration and working capital will A. both decrease B. both increase C. increase and remain the same, respectively D.remain the same and decrease, respectively

C. increase and remain the same, respectively

If the free cash flow changed from $60,000 to $80,000, the change: A. is indicative of an unfavorable trend. B. is not indicative. C. is indicative of a favorable trend. D. could be considered favorable or unfavorable depending on other surrounding circumstances.

C. is indicative of a favorable trend.

If the market rate of interest is 10% a $10,000 12% 10-year bond that pays interest semiannually would sell at an amount A.less than face value B.equal to the face value C.greater than face value D.that cannot be determined

C.greater than face value

10. Sabas Company has 40,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the first year

Calculate preferred stock: 40,000 x 100 x 2%= 80,000 Yr 1= $10,000/40,000 shares= $0.25 per share

If a corporation has only one class of stock, the account is entitled common stock or

Capital stock. note: Common stock and capital stock are the two terms that can be used if there is only one class of stock.

Cash flows from financing activities

Which of the following cash flow elements should be presented first on the statement of cash flows?

Cash flows from operating activities

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Cash flows from operating activities b. Ending cash balance c. Cash flows from financing activities d. Beginning cash balance

Cash flows from operating activities

Cash paid for dividends, $(44,000)

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? a. Change in dividends payable, $(8,000) b. Cash paid for dividends, $(62,000) c. Cash paid for dividends, $(46,000) d. Dividends declared, $(54,000)

Cash paid for dividends, $(62,000)

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Cash paid for equipment b. Cash received from stock issued c. Depreciation expense on equipment d. Cash received from bonds payable

Cash paid for equipment

Cash paid for operating expenses would be operating expenses on the income statement, other than depreciation, plus any decrease in current liabilities or minus an increase in current liabilities. Here, the current liabilities decreased so the change is added. This equals $300,000 + $30,000 = $330,000

financing activities.

Cash paid for preferred stock dividends should be shown on the statement of cash flows under: a. investing activities. b. financing activities. c. both investing and financing activities. d. operating activities

Which of the following is the starting point in calculating net cash flow from operating activities using the direct method?

Cash received from customers

shareholders who have limited liability.

Characteristics of a corporation include: a. shareholders who are mutual agents. b. direct management by the shareholders (owners). c. its inability to own property. d. shareholders who have limited liability.

Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded, credits are made to:

Common Stock, $15,000, and Paid-In Capital in Excess of Par, $7,000

108. Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to A. Treasury Stock for $8,500 B. Paid-In Capital from Treasury Stock for $8,500 C. Paid-In Capital in Excess of Par/Common for $2,900 D. Paid-In Capital from Treasury Stock for $2,900

110. A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? A. increase, $100,000 B. increase, $350,000 C. decrease, $100,000 D. decrease, $350,000

112. Which of the following is not classified as paid-in capital on the balance sheet? A. common stock B. common stock distributable C. donated capital D. treasury stock

114. Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet? A. the number of shares of common stock outstanding B. the number of shares of common stock issued C. the number of shares of common stock authorized D. all of the above

118. A restriction/appropriation of retained earnings A. decreases total assets B. increases total retained earnings C. decreases total retained earnings D. has no effect on total retained earnings

124. When a corporation completes a 3-for-1 stock split A. the ownership interest of current stockholders is decreased B. the market price per share of the stock is decreased C. the par value per share is decreased D. b and c

Which of the following should be SUBTRACTED from net income in calculating net cash flow from operating activities using the indirect method? A. An increase in income taxes payable B. An increase in accounts payable C. Depreciation expense for the period D. An increase in accounts receivable

D. An increase in accounts receivable

A company that has positive free cash flow struggles with: A. funding internal growth. B. retiring debt. C. having financial flexibility. D. None of these choices are correct.

D. None of these choices are correct.

73. The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called A. treasury stock B. issued stock C. outstanding stock D. authorized stock

D. authorized stock;

a balance sheet that displays only component percentages is a A. trend balance sheet B. comparative balance sheet C. condensed balance sheet D. common-sized balance sheet

D. common-sized balance sheet

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to CASH DIVIDENDS declared would require an entry in the Transactions columns involving a: A. debit to Financing Activities—Declared Cash Dividends. B. debit to Operating Activities—Declared Cash Dividends. C. credit to Operating Activities—Declared Cash dividends. D. debit to Retained Earnings.

D. debit to Retained Earnings.

the freeman corporation issues 2,000 10 year 8% $1,000 bonds dated january 1 at 96. the journal entry to record the issuance will show a A. debit to cash of $2,000,000 B. credit to discount on bonds payable for $80,000 C. credit to bonds payable for $1,920,000 D. debit to cash for $1,920,000

D. debit to cash for $1,920,000

69. The ability of a corporation to obtain capital is A. less than a partnership. B. about the same as a partnership. C. restricted because of the limited life of the corporation. D. enhanced because of limited liability and ease of share transferability.

D. enhanced because of limited liability and ease of share transferability.;

an acceleration in the collection of receivables will tend to cause the accounts receivable turnover to A. decrease B. remain the same C. either increase or decrease D. increase

D. increase

85. The authorized stock of a corporation A. must be recorded in a formal accounting entry. B. only reflects the initial capital needs of the company. C. is indicated in its by-laws. D. is indicated in its charter.

D. is indicated in its charter.;

One reason that a common sized statement is a useful tool in financial analysis is that it enables that user to A. judge the relative potential of two companies of similar size in different industries B. determine which companies in a single industry are of the same value C. determine which companies in a single industry are of the same size D. make a better comparison of two companies of different sizes in the same industry

D. make a better comparison of two companies of different sizes in the same

78. The excess of issue price over par of common stock is termed a(n) A. discount B. income C. deficit D. premium

D. premium;

In a common sized income statement ,100% is the A. net cost of goods sold B. net income C. gross profit D. sales

D. sales

62. Characteristics of a corporation include A. shareholders who are mutual agents B. direct management by the shareholders (owners) C. its inability to own property D. shareholders who have limited liability

D. shareholders who have limited liability;

On a common sized balance sheet, 100% is A. total property, plant, equipment B. total current assets C. total liabilities D. total assets

D. total assets

eddie industries issues $1,500,000 of 8% bonds at 105, the amount of cash received from the sale is A.$1,425,000 B.$1,080,000 C.$1,000,000 D.$1,575,000

D.$1,575,000

on january 1, the elias corporation issues 10% bonds with a face value of 50,000. the bonds are sold for $46,000 the bonds pay interest semi annually on june 30 and december 31 and the maturity date is december 31, ten years from now. elias records straigh-line amortization of the bond discount. the bond interest expense for the year ended december 31 of the first year is A. $5,000 B.$5,200 C.$5,800 D.$5,400

D.$5,400

the journal entry a company records for issuance of bonds when the contract rate and the market rate are the same is to A. debit bonds payable, credit cash B. debit cash and discount on bonds payable, credit bonds payable C. debit cash, credit premium on bonds payable and bonds payable D.debit cash, credit bonds payable

D.debit cash, credit bonds payable

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $12,000. If the issuing corporation redeems the bonds at 96.5, what is the amount of gain or loss on redemption?

DR. Bonds Payable 1,000,000 CR. Discount on Bonds Payable 12,000 CR. Cash 965,000 (1,000,000 x .965) CR. Gain on Bonds Payable 23,000 (1,000,000-965,000-12,000)

A $300,000 bond was redeemed at 95 when the carrying value of the bond was $285,000. The entry to record the redemption would include a

DR. Bonds Payable 300,000 CR. Cash 270,750 (285,000 x .95) CR. Discount on Bonds Payable 15,000 (285,000-270,750)

Bonds Payable has a balance of $800,000 and Premium on Bonds Payable has a balance of $12,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

DR. Bonds Payable 800,000 DR. Premium on Bonds 12,000 DR. Loss on Redemption (824,000-800,000-12,000) CR. Cash 824,000 (800,000 x 1.03)

Identify journal entry for bond issuance when contract rate equals market rate

DR. Cash (face value) CR. Bonds Payable (face value)

The Freeman Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1 at 95. The journal entry to record the issuance will show a

DR. Cash 1,900,000 (2,000 x 1,000=2,000,000 x .95) CR. Discount on Bonds Payable 100,000 CR. Bonds Payable 2,000,000

On the first day of the fiscal year, Hawthorne Company obtained a $92,000, 7-year, 5% installment note from Sea Side Bank. The note requires annual payments of $17,420, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,800 and principal repayment of $12,620. The journal entry to record the issuance of the installment note for cash on January 1 would include a

DR. Cash 92,000 CR. Notes Payable 92,000

On the first day of the fiscal year, Hawthorne Company obtained a $92,000, 7-year, 5% installment note from Sea Side Bank. The note requires annual payments of $17,420, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,800 and principal repayment of $12,620. The journal entry Hawthorne would record to make the first annual payment due on the note would include a

DR. Notes Payable 12,620 DR. Interest Expense 4,800 (17,420-12,620) CR. Cash 17,420

The date on which cash dividends are paid is on the

Date of payment

The adjusting entry to record the amortization of a discount on bonds payable is

Debit interest expense, credit discount on bonds payable

What does the journal entry for no par stock include?

Debit to Cash Credit to Common Stock

What is the journal entry for Stock issued at a Premium?

Debit to Cash Credit to Common or Preferred Stock and Paid in Capital in Excess of Par

What does the journal entry for the Sale of Treasury Stock include?

Debit to Cash Credit to Treasury Stock and Paid in Capital from the Sale of Treasury Stock

What does the journal entry for Treasury Stock sold less than the Purchase Cost include?

Debit to Cash and Paid in Capital from Sale of Treasury Stock Credit to Treasury Stock

What does the journal entry for the issuance of stock when land or equipment is involved?

Debit to Land or Equipment Credit to Common stock and Paid in Capital in Excess of Par

What does the journal entry for Stock Distribution include?

Debit to Stock Dividends Distributable Credit to Common Stock

What does the journal entry for Stock Dividend include?

Debit to Stock Dividends Payable Credit to Stock Dividends Distributed and Paid in Capital in Excess of Par

What does the journal entry for the Purchase of Treasury Stock include?

Debit to Treasury Stock Credit to Cash

What does the journal entry for Date of Declaration include?

Debit to cash Dividends Credit to cash dividends payable

What does the journal entry for Net Loss include?

Debit to retained earnings Credit to Income Summary

What does the journal entry for the paying of dividends?

Debit to retained earnings Credit to Dividends

What does the journal entry for Net Income include?

Debit- to income summary Credit- retained earnings

Which of the following is not included in the Investing Activities section of the statement of cash flows? a. Depreciation on equipment b. The purchase of land for cash c. The sale of a building for cash d. The purchase of equipment for cash

Depreciation on equipment

Cash received for preferred stock dividends should be shown on the statement of cash flows under __________ activities.

Dividends received on preferred stock is dividend income. This cash income is reported in the operating section of the statement of cash flows.

One of the main disadvantages of the corporate form of business is

Double taxation

One of the main disadvantages of the corporate form is the charter double taxation of dividends professional management requirement to stock

Double taxation of dividends

Earnings per share is calculated as a. Retained Earnings/Net Income. b. (Net Income -Preferred Dividends)/Average Number of Common Shares Outstanding. c. Net Income/Retained Earnings. d. Retained Earnings/Average Number of Common Shares Outstanding.

Advantages of corporation

Ease transfer of ownership May acquire, own,and dispose of property in it name Raise money/capital by selling stock Limited liability for stockholders Can sue and be sued Enter into legal contacts in its own name

$24,000

Equipment with a cost of $130,000 had an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

The recording of the factory labor incurred for general factory use would include a debit to a. Factory Overhead b. Wages Payable c. Wages Expense d. Cost of Goods Sold

Factory Overhead

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as

Factory overhead cost

A major disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is emphasized.

False

A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the Paid-In-Capital from Sale of Treasury account.

False

Cash flows from investing activities, as part of the statement of cash flows, would include any payments for the purchase of treasury stock.

False

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

False

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financiang activities as $165,000.

False

If land costing $145,000 was sold for $205,000, the $60,000 gain on the sale would be added to net income in the operating activities section of the statement of cash flows (prepared by the indirect method).

False

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

False

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the amortization of bond discount for the period is deducted from the net income for the period

False

In preparing the statement of cash flows, the correct order of reporting cash activities is financing, operating, and investing

False

Purchasing equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section

False

T/F Corporations have less regulatory costs than other business forms.

False

Each year there is a ceiling for the amount that is subject to all of the following except a. Social security tax b. Federal income tax c. federal unemployment tax d. state unemployment tax

Federal income tax

Financial statement data for the year ending December 31 for Langford Company are as follows: Net income $450,000 Preferred dividends $50,000 Average number of common shares outstanding 80,000 shares Compute the earnings per share for the year. a. $5.00 b. $5.63 c. $6.25 d. None of these choices are correct.

Financial statement data for the year ending December 31 for the Power Company are as follows: Net income $680,000 Preferred dividends $20,000 Average number of common shares outstanding 120,000 shares Compute the earnings per share for the year. a. $5.67 b. $5.83 c. $5.50 d. None of these choices are correct.

The recording of the jobs completed would include a debit to a. Factory Overhead b. Finished Goods c. Work in Process d. Cost of Goods Sold

Finished Goods

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The entry to record the transfer of costs from work in process to finished goods is a. Finished Goods 375,000 Work in Process 375,000 b. Finished Goods 540,000 Work in Process 540,000 c. Work in Process 540,000 Finished Goods 540,000 d. Work in Process 375,000 Finished Goods 375,000

Finished Goods 540,000 Work in Process 540,000

If $475,000 of bonds payable are sold at 101, $475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

Flase

The independent auditor's report does which of the following?

Give the auditor's opinion regarding the fairness of the financial statements

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

Horizontal analysis

What type of analysis is in the table by the following? Current assets $430000 $500000 $70000 14% Fixed assets. $1740000 1500000 240000 16%

Horizontal analysis

If Smart Company issues 1,000 shares of $5 par value common stock for $90,000, the account a. Paid-In Capital in Excess of Par will be credited for $85,000. b. Cash will be debited for $95,000. c. Common Stock will be credited for $90,000. d. Paid-In Capital in Excess of Par will be credited for $5,000.

The par value will be reduced to half of the pre-split par value

If a corporation declares a 2-for-1 stock split, which of the following is true? a. A journal entry is required to show the effect on the stockholders' equity accounts. b. The stockholders will have a higher proportionate ownership share after the split. c. The par value will be reduced to half of the pre-split par value. d. The market price of the stock is expected to increase after the split.

The number of outstanding shares is twice the number that was outstanding before the split.

If a corporation declares a 2-for-1 stock split, which of the following is true? a. A new class of stock must be authorized with twice the number of issued shares. b. The number of outstanding shares is half the number that was outstanding before the split. c. The number of outstanding shares is twice the number that was outstanding before the split. d. The number of authorized shares is doubled, while the par value is reduced to half of the pre-split par value.

They have the right to receive current-year dividends and all unpaid dividends from prior years.

If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders? a. They must forgo dividends for any periods when no dividends are declared. b. They have the right to receive current-year dividends and all unpaid dividends from prior years. c. They will receive a fixed dividend each year regardless of the amount of dividends declared. d. They will have an option to convert their shares to common stock at a specified date.

If earnings per share changes from $3.30 to $2.60, what does this indicate about the company's profitability? a. An unfavorable change in the company's profitability is indicated. b. Profitability cannot be determined from the information given. c. A favorable change in the company's profitability is indicated. d. None of these choices are correct.

If earnings per share for a company changes from $4.50 to $5.20, what does this indicate about the company's profitability? a. A neutral change in the company's profitability is indicated. b. A favorable change in the company's profitability is indicated. c. An unfavorable change in the company's profitability is indicated. d. None of these choices are correct.

If the free cash flow changed from $50,000 to $40,000, the change

If the free cash flow decreases, the change indicates an unfavorable trend.

greater than its face value

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount

In the calculation of earnings per share, preferred stock dividends are a. subtracted in the denominator. b. added to net income. c. not used in the calculation. d. subtracted from net income.

Luke Enterprises has 300,000 shares of $20 par common stock outstanding. On January 19, Luke Enterprises declared a 3% stock dividend. The market price of the stock on January 19 was $28 per share. The journal entry to record the stock dividend would include a. a debit to Stock Dividends Distributable for $252,000. b. a credit to Stock Dividends for $180,000. c. a debit to Cash for $252,000. d. None of these choices are correct. Feedback: Correct. 300,000 shares × 3% = 9,000 shares; 9,000 × $28 = $252,000; 9,000 shares × $20 = $180,000 Stock Dividends 252,000 Stock Dividends Distributable 180,000 Paid-In Capital in Excess of Par—C S 72,000

dividends are distributed to preferred stockholders before common stockholders

Many stockholders choose to invest in preferred stock because: a. preferred stock can always be converted into common stock at the stockholder's option. b. the preferred dividend distributions are generally increased each year. c. dividends are distributed to preferred stockholders before common stockholders. d. preferred stockholders includes the right to participate in management decisions through voting privileges.

Materials purchased on account during the month totaled $190,000. Materials requisitioned and placed in production totaled $165,000. The journal entry to record the material purchase on account is a. Materials 165,000 Accounts Payable 165,000 b. Materials 190,000 Accounts Payable 190,000 c. Materials 190,000 Cash 190,000 d. Accounts Payable 190,000 Materials 190,000

Materials 190,000 Accounts Payable 190,000

Direct materials

Materials that are an integral part of the finished product

Which of the following is not a term used to refer to owners' equity in a corporation?

Members equity

Which of the following is not a term used to refer to owners' equity in a corporation?

Members' equity

A company that has positive free cash flow struggles with a. retiring debt. b. funding internal growth. c. having financial flexibility. d. None of these choices are correct.

None of these choices are correct.

Which of the following statements is true regarding free cash flow? a. Free cash flow measures the operating cash flow of a company after the purchase of inventory. b. Free cash flow is a valuable tool for evaluating net income. c. Free cash flow ignores productive capacity. d. None of these choices are correct.

None of these choices are correct.

Dividends Payable and a credit to Cash.

On January 15, 2011, Rockney Systems, Inc. paid a cash dividend that had been declared prior to the end of its 2010 fiscal year. The entry to pay the dividends includes a debit to: a. Cash and a credit to Dividends Payable. b. Dividends Payable and a credit to Cash. c. Retained Earnings and a credit to Dividends Payable. d. Dividends Payable and a credit to Retained Earnings.

$50,000 debit to retained earnings.

On June 1, 2011, Donner Technologies declared a $50,000 cash dividend to be distributed to its common stockholders of record on June 15, 2011. The dividend will be paid on July 1, 2011. The required journal entry on June 1 includes a: a. $50,000 debit to retained earnings. b. $50,000 debit to dividends payable. c. $50,000 credit to cash. d. $50,000 credit to common stock.

$5,800

On january 1, 2010 the Baker Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is Decemeber 31, 2014. Baker records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2010 is

Double taxation

One of the main disadvantages of the corporate form is

One of the main disadvantages of the corporate form is a. that a corporation must issue stock. b. double taxation. c. the charter. d. professional management.

double taxation of dividends.

One of the main disadvantages of the corporate form is the: a. professional management. b. double taxation of dividends. c. charter. d. corporation must issue stock.

number of shares that are currently held by stockholders.

Outstanding shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation.

Horizontal analysis is a technique for evaluating financial statement data

Over a period of time

disadvantage of corporation

Owner is separate from management, double taxation, regulatory costs

Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the re-issuance would include a credit to

Paid-In Capital from Treasury Stock for $1,000.

Treasury stock that had been purchased for $5,400 last month was reissued this month for $7,500. The journal entry to record the reissuance would include a credit to a. Treasury Stock for $7,500 b. Paid-In Capital from Treasury Stock for $7,500 c. Paid-In Capital in Excess of Par/Common for $2,100 d. Paid-In Capital from Treasury Stock for $2,100

Paid-In Capital from Treasury Stock for $2,100

Treasury stock that had been purchased for $6,400 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to

Paid-In Capital from Treasury Stock for $2,100 8,500 - 6,400

If Dakota Company issues 1,500 shares of $6 par common stock for $75,000,

Paid-In Capital in Excess of Par will be credited for $66,000

What does stockholders equity include?

Paid-in Capital (investments by stockholders) Earned Capital (net income retained in the business/retained earnings) Bought back Capital (Treasury Stock)

Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the re-issuance would include a credit to:

Paid-in Capital form Treasury Stock $1,000.

If Smart Company issues 1,000 shares of $5 par value common stock for $90,000, the account

Paid-in Capital in Excess of Par Value will be credited for $85,000.

The a) Paid-in Capital in excess of Par Value will be credited for $5,000 b) Common Stock will be credited for $75,000 c) Cash will be debited for $70,000 d) Pad-in Capital in excess of Par Value will be credited for $70,000

Paid-in Capital in excess of Par Vale will be credited for $70,000

If Larger Company issues 1,000 shares of $5 par value common stock for $70,000, the account a. Common Stock will be credited for $70,000. b. Paid-in Capital in excess of Par Value will be credited for $5,000. c. Paid-in Capital in excess of Par Value will be credited for $65,000. d. Cash will be debited for $65,000.

Paid-in Capital in excess of Par Value will be credited for $65,000

The entry to record the issuance of common stock at a price above par includes a credit to:

Pain-in Capital in Excess of Par--Common Stock

Which of the following is not true in regards to direct materials for a bakery? a. Flour and sugar would probably be direct materials. b. Eggs would probably be a direct material. c. Oil to lubricate factory machines would not be a direct material. d. Paper cupcake liners, that become part of the product, must be accounted for as direct material

Paper cupcake liners, that become part of the product, must be accounted for as direct material

arbitrary amount that establishes a minimum price for the stock when it is first issued.

Par value represents the: a. arbitrary amount that establishes a minimum price for the stock when it is first issued. b. current market price of the stock. c. amount for which any treasury shares have been acquired by the corporation. d. amount for which treasury shares may be reissued.

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

Retained Earnings note: Retained earnings is the only category listed that can have a debit balance. When it has a debit balance, it is referred to as a deficit.

number of previously issued shares that have been repurchased by the corporation.

Treasury shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation

Treasury stock shares are a. issued shares that are held by the treasurer of the corporation. b. part of the total outstanding shares but not part of the total issued shares of a corporation. c. issued shares held by stockholders in the treasury. d. shares held by the U.S. Treasury Department.

deduction from stockholders's equity.

Treasury stock should be reported in the financial statements of a corporation as a(n) investment. liability. current asset. deduction from stockholders's equity.

Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the reissuance would include a credit to a. Paid-In Capital in Excess of Par—Common Stock for $1,000. b. Paid-In Capital from Sale of Treasury Stock for $1,000. c. Treasury Stock for $6,500. d. Paid-In Capital from Sale of Treasury Stock for $6,500.

Paid-In Capital from Treasury Stock for $2,900

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to Treasury Stock for $8,500 Paid-In Capital from Treasury Stock for $8,500 Paid-In Capital in Excess of Par/Common for $2,900 Paid-In Capital from Treasury Stock for $2,900

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions combined, a. stockholders' equity will be increased by $500. b. stockholders' equity will not change, because the amount of authorized stock has not changed. c. income will be increased by $500. d. stockholders' equity will be increased by $3,000.

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions combined, a. stockholders' equity will not change, because the amount of authorized stock has not changed. b. stockholders' equity will be increased by $3,000. c. stockholders' equity will be increased by $500. d. income will be increased by $500.

The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

True

ownership rights are easily transferred.

Under the corporate form of business organization ownership rights are easily transferred. a stockholder is personally liable for the debts of the corporation. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

Under the corporate form of business organization, a. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. b. stockholders wishing to sell their corporation shares must get the approval of other stockholders. c. stockholders wishing to sell their corporation shares need not get the approval of other stockholders, thus making it easy to transfer ownership rights. d. a stockholder is personally liable for the debts of the corporation.

ownership rights are easily transferred.

Under the corporate form of business organization: a. ownership rights are easily transferred. b. a stockholder is personally liable for the debts of the corporation. c. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. d. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

when they are incurred, whether or not cash is paid

Using accrual accounting, expenses are recorded and reported only

The cost of merchandise sold during the year was $54,000. Merchandise inventories were $10,500 and $12,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $9,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

Using the direct method, cash payments for merchandise is calculated by taking the cost of goods sold plus an increase in merchandise inventory or minus a decrease in merchandise inventory, and plus a decrease in accounts payable or minus an increase in accounts payable. Here, it is $54,000 + $2,000 ($12,500 - $10,500) - $3,000 ($9,000 - $6,000) = $53,000.

An analysis in which all components of an income statement are expressed as a percentage of sales is a

Vertical analysis

The percent of fixed assets to total assets is an example of

Vertical analysis

Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. Also, during the current year, the company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance. a. $40,000 b. $35,000 c. $25,000 d. $30,000

depreciation expense

What is deducted from net income when calculating net cash flow from operating activities using the indirect method?

debit Insurance expense 10000; credit prepaid insurance 10000

What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000

What is the total stockholders' equity based on the following account balances? Common Stock $500,000 Paid-In Capital in Excess of Par—C/S 50,000 Retained Earnings 190,000 Treasury Stock 40,000 a. $700,000 b. $630,000 c. $780,000 d. $740,000

$940,000

What is the total stockholders' equity based on the following data? Common Stock $630,000 Excess of Issue Price Over Par 375,000 Retained Earnings (deficit) $1,070,000 $1,005,000 $940,000 $565,000

What is the total stockholders' equity based on the following data? Common Stock $900,000 Excess of Issue Price Over Par—Common Stock 375,000 Retained Earnings 50,000 a. $1,325,000 b. $1,275,000 c. $1,225,000 d. $900,000

Treasury Stock

When a corporation buys its own stock, the cost method of accounting is normally used. Treasury Stock is debited for its cost, and Cash is credited. If the stock is resold, Treasury Stock is credited for its cost and any difference between the cost and the selling price is normally debited or credited to Paid-In Capital from Sale of Treasury Stock.

The balances in the corporation's cash account to determine cash available for dividends.

When a corporation decides whether to pay a cash dividend, which of the following is an important consideration? a. The balances in the corporation's cash account to determine cash available for dividends. b. The number of authorized shares of the corporation's stock. c. The book value of the treasury stock. d. The balance of paid-in capital in excess of par on the corporation's stock accounts.

Equity decreases.

When a corporation declares a cash dividend, which of the following is true? a. Cash decreases. b. Liabilities decrease. c. Equity decreases. d. No entry is necessary.

Equity remains the same.

When a corporation declares a stock dividend, which of the following is true? a. Cash decreases. b. Equity remains the same. c. Equity decreases. d. Retained earnings increases.

Liabilities decrease.

When a corporation pays a previously declared cash dividend, which of the following is true? a. Cash increases. b. Liabilities decrease. c. Equity decreases. d. No entry is necessary.

explain stock split

When a corporation reduces the par or stated value of its common stock and issues a proportionate number of additional shares, a stock split has occurred. There are no changes in the balances of any accounts, and no entry is required for a stock split.

declaration on stock dividends

When a stock dividend is declared, Stock Dividends is debited for the fair value of the stock to be issued. Stock Dividends Distributable is credited for the par or stated value of the common stock to be issued. The difference between the fair value of the stock and its par or stated value is credited to Paid-In Capital in Excess of Par—Common Stock. When the stock is issued on the date of payment, Stock Dividends Distributable is debited and Common Stock is credited for the par or stated value of the stock issued.

Stock Dividends Distributable

When a stock dividend is declared, which of the following accounts is credited? Common Sock Dividend Payable Stock Dividends Distributable Retained Earnings

At the date of declaration.

When is a liability for cash dividends created? a. At the end of each fiscal year. b. At the date of declaration. c. At the date of record. d. At the date of payment.

When no-par stock is issued, a. Paid-In Capital in Excess of Par is credited for the full amount of the proceeds. b. Common Stock is credited for an assumed par value. c. Common Stock is credited for a standard $10 value. d. Common Stock is credited for the full amount of the proceeds.

When treasury stock is purchased, Treasury Stock is a. credited for the purchase price of the stock. b. credited for the par value of the stock. c. debited for the purchase price of the stock. d. debited for the par value of the stock.

the right to receive a minimum amount of dividends

Which of the following is not a right possessed by common stockholders of a corporation? the right to vote in the election of the board of directors the right to receive a minimum amount of dividends the right to sell their stock to anyone they choose the right to share in assets upon liquidation

Cash dividends paid by a corporation are deductible as expenses by the corporation.

Which of the following is not characteristic of a corporation? a. The financial loss that a stockholder may suffer from owning stock in a public company is limited. b. Cash dividends paid by a corporation are deductible as expenses by the corporation. c. A corporation can own property in its name. d. Corporations are required to file federal income tax returns.

Which of the following is not characteristic of a corporation? a. A corporation can own property in its name. b. Corporations are required to file federal income tax returns. c. The financial loss that a stockholder may suffer from owning stock in a public company is limited to the amount invested. d. Corporations have less regulatory costs than other business forms.

Which of the following is not recorded with a journal entry? a. Dividend on the date of declaration b. Stock split c. Dividend on the date of payment d. All of these choices require journal entries.

Which of the following is not true of a corporation? a. It may buy, own, and sell property. b. It may sue and be sued. c. The owners are personally liable for corporate actions. d. It may enter into binding legal contracts in its own name.

Retained Earnings Dividends Payable

Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? a. Retained Earnings Cash b. Dividends Payable Cash c. Additional Paid-in Capital Dividends Payable d. Retained Earnings Dividends Payable

Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a. Cash Dividends Cash Dividends Payable b. Cash Dividends Distributable Cash c. Paid-In Capital Cash Dividends Payable d. Retained Earnings Cash

Which of the following statements concerning taxation is accurate? a. Corporations pay income taxes but their stockholders do not. b. Corporations pay federal and state income taxes. c. Only the stockholders must pay taxes on corporate income. d. Corporations pay federal income taxes but not state income taxes.

Which of the following statements is not correct with regard to prior period adjustments? a. Prior period adjustments arise from mathematical mistakes in a previous period. b. Prior period adjustments are errors found in a period after the error occurred. c. Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period. d. All of these choices are correct.

Which of the following statements is not true about a 4-for-1 split? a. A stockholder with 10 shares before the split owns 40 shares after the split. b. Total contributed capital increases. c. The market price will probably decrease. d. Par value per share is reduced to one-fourth of what it was before the split.

Each shareholder will own the same total par amount of stock before and after the split

Which of the following statements is true concerning stock splits?

Which of the following statements is true concerning stock splits? a. Stock splits require journal entries to be recorded. b. The total number of shares outstanding has not changed after the stock split. c. Each shareholder will own the same total par amount of stock before and after the split. d. None of these choices are correct.

The cost of treasury stock is a reduction in stockholders' equity.

Which of the following statements is true regarding a corporation's purchase of treasury stock? a. The cost of treasury stock is a reduction in stockholders' equity. b. Dividends must still be paid on treasury stock because it is still issued. c. Treasury stock is reported as an asset because it is considered an investment in the corporation's own stock. d. Treasury stock is no longer considered issued once it is back in the hands of the issuer.

The number of shares actually in the hands of stockholders are called outstanding shares.

Which of the following statements is true with regard to equity capital? a. The number of shares actually in the hands of stockholders are called outstanding shares. b. It is unusual for corporations to have more than one class of stock outstanding at any point in time. c. Preferred stock represents the shares of stock that have been permanently retired. d. Issued shares represent the maximum number of shares that can be issued by a corporation.

The journal entry to record the flow of costs into Department 1 for direct labor is a. Work in Process—Department 1 65,000 Wages Payable 65,000 b. Wages Payable 125,000 Work in Process—Department 1 125,000 c. Work in Process—Department 1 125,000 Wages Payable 125,000 d. Wages Payable 65,000 Work in Process—Department 1 65,00

Work in Process—Department 1 125,000 Wages Payable 125,000

The journal entry to record the flow of costs into Department 1 during the period for applied overhead is a. Factory Overhead—Department 1 150,000 Work in Process—Department 1 150,000 b. Work in Process—Department 1 125,000 Factory Overhead—Department 1 125,000 c. Work in Process—Department 1 80,000 Factory Overhead—Department 1 80,000 d. Work in Process—Department 1 150,000 Factory Overhead—Department 1 150,00

Work in Process—Department 1 150,000 Factory Overhead—Department 1 150,00

The journal entry to record the flow of costs from Department 1 into Department 2 is a. Work in Process—Department 2 390,000 Work in Process—Department 1 390,000 b. Work in Process—Department 2 330,000 Work in Process—Department 1 330,000 c. Work in Process—Department 2 215,000 Work in Process—Department 1 215,000 d. Work in Process—Department 2 375,000 Work in Process—Department 1 375,00

Work in Process—Department 2 390,000 Work in Process—Department 1 390,000

Sabas Company has 40,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the second year.

Yr 1. 40,000 x 2= 80,000 We have a payout of only 10,000 therefore we owe $70,000 (80-10) Preferred stock Yr 1 = $10,000 Preferred Stock Yr 2= $45,000 45,000/40,000= $1.125 Common Stock Yr 1 & 2= 0

A corporation purchases 1,000 shares of its own common stock for $4,000 on Feb. 13. On April 13, half the shares of treasury stock was sold for $3,000. On April 26, the other half of shares of the treasury stock was sold for $1,800. The entry to record the April 26 sale would include:

a debit to Paid-in Capital from the Sale of Treasury Stock for $200.

The entry to record the amortization of a premium on bonds payable on an interest payment date would be

a debit to interest expense and premium on bonds payable and credit to cash

The entry to amortize a bond premium would include a _____.

a debit to premium on bonds payable

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. a decrease in inventory b. a decrease in accounts payable c. preferred dividends declared and paid d. a decrease in accounts receivable

a decrease in accounts payable

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

a decrease in accounts payable

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. an increase in inventory b. a decrease in accounts payable c. preferred dividends declared and paid d. a decrease in accounts receivable

a decrease in accounts receivable

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

a decrease in accounts receivable

When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at

a discount

If earnings per share for a company changes from $4.50 to $5.20, what does this indicate about the company's profitability?

a favorable trend in the companies profitability

If earnings per share for a company changes from $4.50 to $5.20, What does this indicate about the company's profitability?

a favorable trend in the company's profitability is indicated. note: An increase in earnings per share indicates a favorable trend in the company's profitability.

A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the statement of cash flows in a. a separate schedule b. the cash flows from financing activities section c. the cash flows from investing activities section d. the cash flows from operating activities section

a separate schedule

A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the statement of cash flows in

a separate schedule

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

a separate schedule

Preferred stock issued in exchange for land would be reported in the statement of cash flows in a. the cash flows from financing activities section b. the cash flows from investing activities section c. a separate schedule d. the cash flows from operating activities section

a separate schedule

Preferred stock issued in exchange for land would be reported in the statement of cash flows in:

a separate schedule

A mortgage incurred in the purchase of an office building would be reported on the statement of cash flows in

a separate section that appears at the bottom of the statement

a mortgage incurred in the purchase of an office building would be reported on the statement of cash flows in

a separate section that appears at the bottom of the statement

a separate section that appears at the bottom of the statement.

The date on which a cash dividend becomes a binding legal obligation is on the... a) Declaration date b) Date of Record c) Payment Date d) Last Day of the Fiscal Year

a) Declaration date

Harding Company Accounts payable $ 40,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 110,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 30,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Based on the data for Harding Company, what is the amount of working capital? a.$128,000 b.$203,000 c.$168,000 d.$238,000

a. $128,000

a. $190,000.

a. $25,000

a. $440,000

a. $520,000.

Sales for the year were $500,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the cash flow statement using the direct method is a. $520,000. b. $500,000. c. $480,000. d. $600,000. Feedback: Correct. Using the direct method, cash receipts from sales is calculated by sales plus a decrease in accounts receivable or minus an increase in accounts receivable. Here, it is sales of $500,000 + decrease in accounts receivable of $20,000 ($100,000 − $80,000) = $520,000.

a. $520,000.

a. $55,000

a. $8,000

Harding Company Accounts payable $ 40,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 110,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 30,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Based on the data for Harding Company, what is the quick ratio, rounded to one decimal point? a.1.7 b.0.9 c.2.7 d.2.6

a. 1.7

Assume the following sales data for a company: Current year $849,737 Preceding year $575,564 What is the percentage increase in sales from the preceding year to the current year? Select the correct answer. a. 47.64% b. 147.64% c. 32.27% d. 67.73%

a. 47.64%

Dora Inc. reported the following on the company's cash flow statement: Sales $3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales? a. 8.3% b. 1.4% c. 10.0% d. 12.0% Feedback: Correct. $290,000 ÷ $3,500,000 = 8.3%

a. 8.3%

Dora Inc. reported the following on the company's cash flow statement: Sales $3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales? a. 8.3% b. 12.0% c. 1.4% d. 10.0%

a. 8.3%

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

a. A decrease in inventory

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

a. A loss on the sale of land

Which of the following is not included in the Financing Activities section of the statement of cash flows? a. A stock split b. The payment of dividends c. The purchase of treasury stock d. The retirement of bonds

a. A stock split

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. An increase in inventory b. A decrease in inventory c. A decrease in prepaid expenses d. An increase in accrued expenses payable Feedback: Correct. An increase in a current asset is shown as a decrease to net income.

a. An increase in inventory

Which of the following is reported on the statement of cash flows? a. Cash flows from investing activities b. Total changes in stockholders' equity c. Changes in retained earnings d. Total assets

a. Cash flows from investing activities

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Cash flows from operating activities b. Beginning cash balance c. Cash flows from financing activities d. Ending cash balance Feedback: Correct. Cash flows from operating activities are always presented first.

a. Cash flows from operating activities

Which of the following is not included in the investing activities section of the statement of cash flows? a. Depreciation on equipment b. The purchase of equipment for cash c. The sale of a building for cash d. The purchase of land for cash Feedback: Correct. Depreciation is an addition to net income in the operating activities section

a. Depreciation on equipment

Which of the following statements is true concerning stock splits? a. Each shareholder will own the same total par amount of stock before and after the split. b. Stock splits require journal entries to be recorded. c. The total number of shares outstanding has not changed after the stock split. d. None of these choices are correct.

a. Each shareholder will own the same total par amount of stock before and after the split.

Which of the following would indicate a cash outflow to appear in the financing activities section of the statement of cash flows? a. Increase in treasury stock account b. Increase in common stock account c. Increase in paid-in capital account d. Increase in retained earnings account Feedback: Correct. The purchase of treasury stock indicates a cash outflow.

a. Increase in treasury stock account

Which of the following would appear in the cash flows from investing activities section of the statement of cash flows? a. Purchase of land for cash b. Purchase of inventory c. Discard of fully depreciated equipment with no salvage value d. Payment of bond interest Feedback: Correct. Investing in land would appear in the investing activities section.

a. Purchase of land for cash

a. The issuance of bonds

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to net loss would require an entry in the transactions columns involving a a. credit to operating activities—net loss. b. debit to financing activities—net loss. c. credit to retained earnings. d. debit to operating activities—net loss. Feedback: Correct. A decrease in retained earnings due to net loss would require an entry involving a credit to operating activities—net loss.

a. credit to operating activities—net loss.

a. debit to Treasury Stock for $90,000

Cumulative preferred stockholders have the right to receive a. dividends in arrears before common stockholders are paid any dividends. b. a greater share of dividends than common stockholders. c. dividends in arrears after common stockholders are paid dividends. d. None of these choices are correct.

a. dividends in arrears before common stockholders are paid any dividends.

Cash dividends paid would be shown on the statement of cash flows under __________ activities. a. financing b. investing c. directing d. operating Feedback: Correct. Dividends are related to financing activities.

a. financing

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. gain on sale of land b. a loss on the sale of equipment c. depreciation expense d. dividends declared and paid

a. gain on sale of land

Which of the following is not included in the computation of the quick ratio A. inventory B. marketable securities C. accounts receivable D. cash

a. inventory

A major objective of a stock split is to a. reduce the market price per share of the stock. b. increase the par value of the stock. c. increase the market price per share of the stock. d. reduce the number of shares of the stock.

a. reduce the market price per share of the stock.

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions combined, a. stockholders' equity will be increased by $500. b. income will be increased by $500. c. stockholders' equity will not change, because the amount of authorized stock has not changed. d. stockholders' equity will be increased by $3,000.

a. stockholders' equity will be increased by $500.

Goods that are partially completed by a manufacturer are a. work in process inventory b. finished goods inventory c. merchandise inventory d. materials inventory

a. work in process inventory

Changes in valuation for available-for-sale securities are reported as _____.

accumulated unrealized gain or loss in the stockholders' equity section of the balance sheet

Step 1 of reconciling net income to net cash flow from operating activities is to

add depreciation expense.

Corporations finance their operations through which of the following sources?

all of these choices are correct

The decision to issue debt or equity is influenced by the effect that various financing alternatives will have on _____.

all of these choices are correct

The journal entry to record the amortization of a bond discount includes a _____.

all of these choices are correct

When a corporation issues bonds, the proceeds received for the bonds will depend on

all of these choices are correct

Which of the following is part of the primary objective of investing in temporary investments?

all of these choices are correct

On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include

amortization of premium on bonds payable

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

an increase in accrued liabilities

The primary goal of managerial accounting is to provide information to a. investors b. creditors c. management d. external auditors

creditors

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows: a. an increase of $54,000 from investing activities b. an increase of $63,000 from investing activities and a deduction from net income of $9,000 c. an increase of $9,000 from investing activities d. an increase of $54,000 from investing activities and an addition to net income of $9,00

an increase of $63,000 from investing activities and a deduction from net income of $9,000

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

an increase of $63,000 from investing activities and a deduction from net income of $9,000

A building with a value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

an increase of $63,000 from investing activities and a deduction from net income of $9,000

Which of the following would result in a credit to retained earnings?

an understatement of a revenue in the prior period

If earnings per share changes from $3.30 to $2.60, what does this indicate about the company's profitability?

an unfavorable trend in the companies profitability

Step 4 of preparing a spreadsheet for the statement of cash flows is to

analyze the change during the year in each noncash account and classify the change.

If the straight-line method of amortization of bond premium or discount is used, which of the following statements is true?

anual interst expense iill remain the sam over the life of the bonds with the amortization of bond scout

Product costs a. appear only on the balance sheet b. appear only on the income statement c. are expensed as costs are incurred for direct labor, direct material, and factory overhead d. appear on both the income statement and balance sheet

appear on both the income statement and balance sheet

b. $218,000

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 5% stock dividend on a date when the market price was $11 per share. What is the amount transferred from the retained earnings account to the paid-in capital accounts as a result of the stock dividend? a. $8,000 b. $22,000 c. $16,000 d. None of these choices are correct.

b. $22,000

b. $75,000 $35,000 − $20,000 + $60,000 = $75,000

b. $750,000 Treasury Stock is subtracted.

Based on the following data for the current year, what is the inventory turnover? Sales on account during year $700,000 Cost of goods sold during year 270,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000 a.2.5 b.2.7 c.9.7 d.3.0

b. 2.7

The following information is available from the land account: Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. cash received from sale of land, $170,000. b. cash received from sale of land, $200,000. c. loss from land transactions, $(50,000). d. gain on sale of land, $30,000.

b. cash received from sale of land, $200,000.

Which of the following is used in calculating cash received from customers using the direct method? a. An increase in accounts payable b. A decrease in accounts receivable c. An increase in inventory d. A decrease in inventory

b. A decrease in accounts receivable

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. An increase in accounts payable b. A gain on a sale of a building c. A decrease in accounts receivable d. A loss on a sale of equipment

b. A gain on a sale of a building

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

b. An increase in inventory

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from financing activities? a. Cash flows from investing activities b. Change in cash c. Beginning cash balance d. Ending cash balance

b. Change in cash

When no-par stock is issued, a. Common Stock is credited for a standard $10 value. b. Common Stock is credited for the full amount of the proceeds. c. Paid-In Capital in Excess of Par is credited for the full amount of the proceeds. d. Common Stock is credited for an assumed par value.

b. Common Stock is credited for the full amount of the proceeds.

Which of the following accounts will be found on the income statement? a. Inventory b. Cost of Goods Sold c. Finished Goods d. Work in Process

b. Cost of Goods Sold

Which of the following is not included in the Investing Activities section of the statement of cash flows? a. The purchase of equipment for cash b. Depreciation on equipment c. The sale of a building for cash d. The purchase of land for cash

b. Depreciation on equipment

Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows? a. Decrease in retained earnings account b. Increase in common stock account c. Increase in treasury stock account d. Decrease in dividends payable account

b. Increase in common stock account

In preparing the cash flows from financing activities section of the statement of cash flows, which types of accounts are analyzed for changes? a. Current liabilities and stockholders' equity b. Long-term liabilities and stockholders' equity c. All liabilities and stockholders' equity d. Long-term assets Feedback: Correct. The cash flows from financing activities section reports the cash inflows and outflows related to changes in a company's long-term liabilities and stockholders' equity.

b. Long-term liabilities and stockholders' equity

Which of the following should be shown on a statement of cash flows under the financing activity section?

b. Payment of cash dividends on common stock

Which of the following would most likely use a job order costing system? a. a paper mill b. a swimming pool installer c. an oil refinery d. a company that manufactures chlorine for swimming pools

b. a swimming pool installer

The formula to calculate free cash flow is a. cash flows from financing activities + cash used to purchase property, plant, and equipment to maintain current production. b. cash flows from operating activities − cash used to purchase property, plant, and equipment to maintain current production. c. cash flows from operating activities + cash used to purchase property, plant, and equipment to maintain current production. d. cash flows from financing activities − cash used to purchase property, plant, and equipment to maintain current production.

b. cash flows from operating activities − cash used to purchase property, plant, and equipment to maintain current production.

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. cash inflow in the Operating Activities section. b. cash inflow in the Investing Activities section. c. separate schedule. d. cash inflow in the Financing Activities section.

b. cash inflow in the Investing Activities section.

On the statement of cash flows, the cash flows from operating activities section would include

b. cash payments for salaries.

c. Free cash flow

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $50,000 $60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable 75,000 89,000 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? a. $324,000 b. $352,000 c. $296,000 d. $198,000

c. $296,000

The net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $5,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $368,000 b. $208,000 c. $312,000 d. $302,000

c. $312,000

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $50,000 $60,000 Accounts receivable 102,000 108,000 Inventory 88,000 93,000 Prepaid expenses 8,500 6,500 Accounts payable (merchandise creditors) 95,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $256,000 b. $306,000 c. $324,000 d. $328,000 Feedback: Correct. First, calculate the amount of change of the balance sheet items.

c. $324,000

Which of the following is not a cash flow element that would be found on the statement of cash flows? a. Change in cash b. Net cash flow from operating activities c. Free cash flow d. Ending cash balance Feedback: Correct. Free cash flow is not presented on the statement.

c. Free cash flow

a decrease in a _______ ______ is shown as an increase to net income

current asset

an increase in a ______ ______ is shown as a decrease to net income

current asset

c. $66,000.

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $35,000 Net cash flow used for investing activities (20,000) Net cash flow from financing activities 60,000 Ending cash balance 50,000 What is the net change in cash for the period? a. $(75,000) b. $125,000 c. $75,000 d. $115,000 Feedback: Correct. $35,000 − $20,000 + $60,000 = $75,000

c. $75,000

Based on the following data, what is the accounts receivable turnover? Sales on account during year $700,000 Cost of goods sold during year 270,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000 a.2.6 b.15.5 c.17.5 d.20.0

c. 17.5

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in accounts payable b. An increase in accounts receivable c. A decrease in inventory d. Common stock dividends declared and paid Feedback

c. A decrease in inventory

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in accounts payable b. Dividends paid on common stock c. A loss on the sale of land d. A decrease in accrued liabilities

c. A loss on the sale of land

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

c. A loss on the sale of land

Which of the following is correct regarding the spreadsheet (worksheet) used to prepare the statement of cash flows? a. The debit and credit Transactions columns do not have to equal. b. The entries made on the worksheet are posted to the ledger. c. A spreadsheet is not required to be used to prepare the statement of cash flows. d. The entries made on the spreadsheet are used to prepare the income statement. Feedback: Incorrect. The entries made on the spreadsheet are not posted to the ledger.

c. A spreadsheet is not required to be used to prepare the statement of cash flows.

Which of the following is used in calculating cash payments for merchandise using the direct method? a. A decrease in accounts receivable b. Net income c. An increase in accounts payable d. An increase in accounts receivable Feedback: Correct. Using the direct method, cash payments for merchandise are calculated by taking the cost of goods sold plus an increase in inventory or minus a decrease in inventory, and plus a decrease in accounts payable or minus an increase in accounts payable.

c. An increase in accounts payable

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Beginning cash balance b. Cash flows from financing activities c. Cash flows from operating activities d. Ending cash balance

c. Cash flows from operating activities

Which of the following would not appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Purchase of land for $70,000 cash b. Sale of fully depreciated equipment with $5,000 salvage value for $5,000 cash c. Cash paid to retire bonds, $2,000 d. Purchase of building for $20,000 cash and a $160,000 note payable

c. Cash paid to retire bonds, $2,000

Which of the following is the starting point in calculating net cash flow from operating activities using the direct method? a. Net income b. Cash at the beginning of the year c. Cash received from customers d. Cash payments for merchandise Feedback: Correct. Cash received from customers is the starting point in calculating net cash flow from operating activities using the direct method.

c. Cash received from customers

Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. When the transaction is recorded, credits are made to a. Common Stock, $4,000, and Paid-In Capital in Excess of Stated Value, $10,000 b. Common Stock, $14,000 c. Common Stock, $10,000, and Paid-In Capital in Excess of Par, $4,000 d. Common Stock, $10,000, and Retained Earnings, $4,000

c. Common Stock, $10,000, and Paid-In Capital in Excess of Par, $4,000

an increase in a ___________ ______ is shown as an increase in net income

current liability

In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account is analyzed for changes? a. Current assets b. Stockholders' equity c. Long-term assets d. Current liabilities

c. Long-term assets

c. Long-term liabilities and stockholders' equity

Which of the following should be shown on a statement of cash flows under the financing activity section?

c. Payment of cash dividends on common stock

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. cash inflow in the financing activities section. b. cash inflow in the operating activities section. c. cash inflow in the investing activities section. d. separate schedule. Feedback: Correct. A sale of a long-term investment would be reported in the Investing section of the statement of cash flows, and it would be an inflow.

c. cash inflow in the investing activities section.

The following information is available from the land account Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. cash paid for purchase of land, $(120,000). b. increase in notes payable, $20,000. c. cash paid for purchase of land, $(100,000). d. loss from land transactions, $(50,000).

c. cash paid for purchase of land, $(100,000).

The following information is available from the land account: Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $100,000 cash and $20,000 note payable 120,000 debit entry Ending balance 220,000 Items in the investing activities section of the statement of cash flows should include a. increase in notes payable, $20,000. b. cash paid for purchase of land, $(120,000). c. cash paid for purchase of land, $(100,000). d. loss from land transactions, $(50,000). Feedback: Correct. The amount of cash paid is reported here regardless of land purchase price.

c. cash paid for purchase of land, $(100,000).

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to net loss would require an entry in the Transactions columns involving a a. debit to Operating Activities—Net Loss. b. credit to Retained Earnings. c. credit to Operating Activities—Net Loss. d. debit to Financing Activities—Net Loss.

c. credit to Operating Activities—Net Loss.

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to net loss would require an entry involving a

c. credit to Operating Activities—Net Loss.

which of the following measures a company's ability to pay its current liabilities A. earnings per share B. inventory turnover C. current ratio D. number of times interest charges earned

c. current ratio

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry involving a

c. debit to Operating Activities—Net Income.

A restriction/appropriation of retained earnings a. decreases total retained earnings. b. decreases total assets. c. does not change the balance of Retained Earnings. d. increases total retained earnings.

c. does not change the balance of Retained Earnings.

Step 1 of preparing a spreadsheet for the statement of cash flows is to a. analyze the change during the year in each noncash account and classify the change. b. add the column totals. c. list the title of each balance sheet account in the accounts column. d. enter the balance of each balance sheet account. Feedback: Correct. This is Step 1.

c. list the title of each balance sheet account in the accounts column.

What is the primary criterion for the preparation of managerial accounting reports? a. cost of the reports b. timing of the reports c. manager needs d. relevance of the reports

c. manager needs

Analysts often use free cash flow, rather than cash flows from _________ activities, to measure the financial strength of a business. a. noncash investing and financing b. investing c. operating d. financing

c. operating

An advantage of the corporate form of business entity is a. that corporations are subject to more governmental regulations. b. double taxation. c. the ease of transfer of ownership. d. unlimited liability for stockholders.

c. the ease of transfer of ownership.

On the statement of cash flows, the cash flows from operating activities section would include

cash receipts from sales activities

On the statement of cash flows, the cash flows from operating activities section would include a. receipts from the issuance of capital stock b. receipts from the sale of investments c. payments for the acquisition of investments d. cash receipts from sales activities

cash receipts from sales activities

Selling the bonds at a premium has the effect of

causing the interest expense to be lower than the bond interest paid

Retained earnings

changes are summarized in the retained earnings statement

Lean manufacturing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and nonmanufacturing processes by a. moving a product from process to process as each function is completed b. combining processing functions into work centers and cross-training workers to perform more than one function c. having production supervisors attempt to enter enough materials into manufacturing to keep all manufacturing departments operating d. having workers typically perform one function on a continuous basis

combining processing functions into work centers and cross-training workers to perform more than one function

Which of the following statements concerning taxation is accurate?

corporations pay federal and state incomes taxes.

Which of the following is an example of direct labor cost for a cell phone manufacturer? a. cost of oil lubricants for factory machinery b. cost of wages of assembly worker c. salary of plant supervisor d. cost of phone components

cost of wages of assembly worker

The Hayden Corporation issues 1,000, 10-year, 8%, $2,000 bonds dated January 1 at 92. The journal entry to record the issuance will show a

credit to Bonds Payable for $2,000,000

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. The entry to apply the factory overhead costs for the year would include a a. debit to Factory Overhead for $360,000 b. credit to Factory Overhead for $432,000 c. debit to Factory Overhead for $377,200 d. credit to Factory Overhead for $360,000

credit to Factory Overhead for $432,000

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to net loss would require an entry involving a

credit to Operating Activities-Net Loss.

On May 1, Pierce Company purchased $60,000 of Stanton Company's 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its first semiannual interest. On February 1, Pierce sold $50,000 of the bonds at 103 plus accrued interest.

credit to gain on said of investments for 1500

d. All of these choices are correct.

The journal entry to record the sale of treasury stock might include a. a credit to Treasury Stock. b. a debit to Paid-In Capital from Sale of Treasury Stock. c. a credit to Paid-In Capital from Sale of Treasury Stock. d. All of these choices are correct.

d. All of these choices are correct.

Which of the following is correct concerning the entries made on the spreadsheet used to prepare the statement of cash flows? a. The entries are not posted to the ledger. b. The entries are used in summarizing the data on the spreadsheet. c. The entries are used in preparing the data on the spreadsheet. d. All of these choices are correct.

d. All of these choices are correct.

Which of the following is used in calculating cash payments for merchandise using the direct method? a. Net income b. An increase in accounts receivable c. A decrease in accounts receivable d. An increase in accounts payable

d. An increase in accounts payable

Given the following framework for the statement of cash flows, what is missing? Cash flows from operating activities $XXX Cash flows from investing activities XXX Change in cash $XXX Beginning cash balance XXX Ending cash balance $XXX a. Total stockholders' equity b. Free cash flow c. Beginning retained earnings balance d. Cash flows from financing activities

d. Cash flows from financing activities

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from operating activities? a. Ending cash balance b. Cash flows from financing activities c. Beginning cash balance d. Cash flows from investing activities

d. Cash flows from investing activities

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the financing activities section of the statement of cash flows? a. Change in dividends payable, $(8,000) b. Dividends declared, $(54,000) c. Cash paid for dividends, $(46,000) d. Cash paid for dividends, $(62,000) Feedback: Incorrect. The decrease in dividends payable should be added to dividends declared.

d. Cash paid for dividends, $(62,000)

Which of the following statements concerning taxation is accurate? a. Only the stockholders must pay taxes on corporate income. b. Corporations pay federal income taxes but not state income taxes. c. Corporations pay income taxes but their stockholders do not. d. Corporations pay federal and state income taxes.

d. Corporations pay federal and state income taxes.

Which of the following statements is true regarding free cash flow? a. Free cash flow is a valuable tool for evaluating net income. b. Free cash flow measures the operating cash flow of a company after the purchase of inventory. c. Free cash flow ignores productive capacity. d. Free cash flow is a valuable tool for evaluating cash flows. Feedback: Correct. Free cash flow measures the operating cash flow available to a company to use after purchasing the PP&E necessary to maintain current productive capacity. Free cash flow is a valuable tool for evaluating cash flows.

d. Free cash flow is a valuable tool for evaluating cash flows.

d. Increase in treasury stock account

A corporation may reacquire (purchase) its own stock for the following reasons except a. to reissue as bonuses to employees. b. to support the market price of the stock. c. to provide shares for resale to employees. d. None of these choices are correct.

d. None of these choices are correct.

Which of the following statements is true regarding free cash flow? a. Free cash flow measures the operating cash flow of a company after the purchase of inventory. b. Free cash flow ignores productive capacity. c. Free cash flow is a valuable tool for evaluating net income. d. None of these choices are correct.

d. None of these choices are correct.

Step 1 of reconciling net income to net cash flow from operating activities is to a. add gains or subtract losses from investing activities. b. subtract gains or add losses from investing activities. c. subtract depreciation expense. d. add depreciation expense.

d. add depreciation expense.

An example of a period cost is a. indirect materials b. depreciation on factory equipment c. property taxes on plant facilities d. advertising expense

d. advertising expense

Finished goods inventory is reported on the a. income statement as a period cost b. income statement as revenue c. balance sheet as a long-term asset d. balance sheet as a current asset

d. balance sheet as a current asset

When a corporation completes a 2-for-1 stock split, a. only the par value per share is decreased. b. only the ownership interest of current stockholders is decreased. c. only the market price per share of the stock is decreased. d. both market price per share and par value per share are decreased.

d. both market price per share and par value per share are decreased.

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a

d. cash inflow in the investing activities section.

On the statement of cash flows, the Cash Flows from Operating Activities section would include a. receipts from the sale of investments. b. receipts from the issuance of capital stock. c. payments for the acquisition of investments. d. cash payments for salaries. Feedback

d. cash payments for salaries.

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to cash dividends declared would require an entry in the Transactions columns involving a a. debit to Financing Activities—Declared Cash Dividends. b. debit to Operating Activities—Declared Cash Dividends. c. credit to Operating Activities—Declared Cash Dividends. d. debit to Retained Earnings.

d. debit to Retained Earnings.

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry in the transactions columns involving a a. credit to operating activities—net income. b. debit to financing activities—net income. c. debit to retained earnings. d. debit to operating activities—net income. Feedback: Incorrect. This would be part of the entry for a net loss.

d. debit to operating activities—net income

Prime costs are a. direct materials and factory overhead b. direct labor and factory overhead c. period costs and factory overhead d. direct materials and direct labor

d. direct materials and direct labor

One of the main disadvantages of the corporate form is a. the charter. b. professional management. c. that a corporation must issue stock. d. double taxation.

d. double taxation.

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as a. miscellaneous expense b. product costs c. period cost d. factory overhead cost

d. factory overhead cost

Step 1 of preparing a spreadsheet for the statement of cash flows is to a. add the column totals. b. enter the balance of each balance sheet account. c. analyze the change during the year in each noncash account and classify the change. d. list the title of each balance sheet account in the Accounts column.

d. list the title of each balance sheet account in the Accounts column.

What is the primary criterion for the preparation of managerial accounting reports? a. cost of the reports b. timing of the reports c. manager needs d. relevance of the reports

d. relevance of the reports

The entries to record cost and sale of a finished good on account is a. debit Cost of Goods Sold, credit Finished Goods b. debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales c. debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable d. debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit Sal

debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales

Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semiannually. The journal entry to record the purchase would be

debit Investments—Evans Company Bonds, $100,000, and Interest Receivable $1,500; credit Cash, $101,500

In a job order cost accounting system, the entry to record the flow of direct materials into production is to a. debit Work in Process, credit Materials b. debit Materials, credit Work in Process c. debit Factory Overhead, credit Materials d. debit Work in Process, credit Supplie

debit Work in Process, credit Materials

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries? a. debit Work in Process—Dept. B; credit Work in Process—Dept. A b. debit Work in Process—Dept. B; credit Finished Goods—Dept. A c. debit Work in Process—Dept. B; credit Cost of Goods Sold—Dept. A d. debit Finished Goods—Dept. A; credit Work in Process—Dept.

debit Work in Process—Dept. B; credit Work in Process—Dept. A

The journal entry a company records for the payment of interest, interest expense, and amortization of bond premium is

debit interest expense and premium ob bonds payable, credit cash

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to cash dividend declared would require an entry involving a

debit to Retained Earnings

On January 1, 20xx, Sunshine Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Sunshine purchased 2,000 shares of treasury stock for $23 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a a. credit to Treasury Stock for $46,000. b. debit to Treasury Stock for $46,000. c. debit to a loss account for $6,000 d. credit to a gain account for $6,000.

debit to Treasury Stock for $46,000.

On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Swenson purchased 2,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a

debit to Treasury Stock for $48,000. 2,000 x 24

On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Swenson purchased 3,000 shares of treasury stock for $21 per share and later sold the treasury shares for $24 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a

debit to Treasury Stock for $63,000. 3,000 x 21

debit to cash for 3600

The journal entry required to record the purchase of $20,000 of U.S. Treasury bonds at their face amount on May 17 plus accrued interest for 45 days would include a

debit to interest receivable

Jacks Corporation purchases $200,000 bonds plus accrued interest for two months of $2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include a

debit to interest receivable for 2000

Alan Company purchased $400,000 of ABC Co. 5% bonds at 100 plus accrued interest of $4,500. Alan later sold $250,000 of the bonds at 97. The journal entry for the purchase would include a

debit to interest reciebale for 45000

The entry to record a declaration of cash dividends

debits Dividends and credits Dividends Payable.

The date on which a cash dividend becomes a binding legal obligation is on the

declaration date

The date on which a cash dividend becomes a binding legal obligation is on the a) payment date b) date of record c) declaration date d) last day of the fiscal year

declaration date

The date on which a cash dividend becomes a binding legal obligation is on the a. declaration date. b. date of record. c. payment date. d. last day of the fiscal year end.

declaration date.

Which of the following is used in calculating cash received from customers using the direct method?

decrease in accounts receivable

The effect of the declaration of a cash dividend on a company's financial statements is to:

decrease stockholders' equity and to increase total liabilities.

what effect does a premium have on interest expense?

decreases the interest expense causing it to be lower than the bond interest paid

A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

financing activities

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities b. added to net income in converting the net income reported on the income statement to cash flows from operating activities c. added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends d. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

On the statement of cash flows, a $20,000 gain on the sale of fixed assets would be:

deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

Common allocation bases are a. direct labor dollars, direct labor hours, direct material dollars b. direct labor dollars, direct labor hours, machine hours c. direct labor dollars, direct labor hours, machine dollars d. machine dollars, direct labor dollars, direct labor hour

direct labor dollars, direct labor hours, machine hours

Which of the following items would not be classified as part of factory overhead? a. direct labor used b. amortization of manufacturing patents c. production supervisors' salaries d. factory supplies used

direct labor used

Prime costs are a. direct materials and factory overhead b. direct materials and direct labor c. direct labor and factory overhead d. period costs and factory overhead

direct materials and direct labor

Which types of inventories does a manufacturing business report on the balance sheet? a. finished goods inventory and work in process inventory only b. direct materials inventory and work in process inventory only c. direct materials inventory, work in process inventory, and finished goods inventory d. direct materials inventory and finished goods inventory only

direct materials inventory, work in process inventory, and finished goods inventory

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

discarding an asset that had been fully depreciated

Free cash flow is cash from operation, less cash for:

dividends and cash for fixed assets needed to maintain productivity

A restriction/ appropriation of retained earnings:

does not change the balance in retained earnings. Restricted required earnings are set aside so that they cannot be used for dividends, but do not change the balance of retained earnings.

The par value per share of common stock represents the

dollar amount assigned to each share

One of the main disadvantages of the corporate form in the a) professional management b) double taxation of dividends c) charter d) corporation must issue stock

double taxation of dividends

One of the main disadvantages of the corporate form is the

double taxation of dividends

One of the main disadvantages of the corporate form is the a. professional management b. double taxation of dividends c. charter d. corporation must issue stock

double taxation of dividends

One of the main disadvantages of the corporate form is the

double taxation.

Cash paid for preferred stock dividends should be shown on the statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

financing activities

Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)

financing activity

Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n) a. investing activity b. operating activity c. noncash investing and financing activity d. financing activity

financing activity

issuing bonds is a

financing activity

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. depreciation expense b. gain on sale of land c. a loss on the sale of equipment d. dividends declared and paid

gain on sale of land

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

gain on sale of land

All of the following could be considered a direct material except a. steel b. fabric c. glue d. lumber

glue

A restriction/appropriation of retained earnings

has no effect on total retained earnings

If bonds are issued at a premium, the stated interest rate is

higher than the market rate of interest

What type of analysis is indicated by the following?

horizontal analysis

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

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

can repurchase them in the open market

if bonds payable are not callable, the issuing corporation

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to a. increase by $1,700,000 b. decrease by $1,700,000 c. increase by $3,400,000 d. decrease by $3,400,000

increase by $1,700,000

Which of the following is not a reason to invest excess cash in temporary investments?

influence the operations of another company

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

investing activities

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

investing activities

Which of the following stock investments should be accounted for using the cost method?

investments of less than 20%

The company investing in another company's stock is called a(n)

investor

Retained earnings

is the cumulative total of net income, minus net loss, minus dividends

Retained earnings

is the cumulative total of net incomes, minus net losses, and minus dividends

Retained earnings:

is the cumulative total of net incomes, minus net losses, and minus dividends. note: Retained earnings is all net incomes, minus any net losses, minus dividends declared.

Financing activities include a. lending money b. acquiring investments c. issuing debt d. acquiring long-lived assets

issuing debt

If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

less than $500,000

Accounting designed to meet the needs of decision makers inside the business is a. general accounting b. financial accounting c. managerial accounting d. external accounting

managerial accounting

The document authorizing the issuance of materials from the storeroom is a a. materials requisition b. purchase requisition c. receiving report d. purchase order

materials requisition

The order of presentation of activities on the statement of cash flows is a. operating, investing, and financing b. operating, financing, and investing c. financing, operating, and investing d. financing, investing, and operating

operating, investing, and financing

Cash dividends are paid to ____________ stock.

outstanding Outstanding stock are issued stock minus treasury stock, and dividends are paid on them.

reasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the reissuance would include a credit to a. Paid-In Capital from Sale of Treasury Stock for $1,000. b. Paid-In Capital from Sale of Treasury Stock for $6,500. c. Paid-In Capital in Excess of Par—Common Stock for $1,000. d. Treasury Stock for $6,500.

On the statement of cash flows, the cash flows from investing activities section would include:

receipts from the sale of investments

Any portion of the bonds or notes that is due within one year is

reported as a current liability

Cash paid to purchase long-term investments would be reported in the statement of cash flows in

the cash flows from investing activities section

Cash paid to purchase long-term investments would be reported in the statement of cash flows in a. the cash flows from operating activities section b. the cash flows from financing activities section c. the cash flows from investing activities section d. a separate schedule

the cash flows from investing activities section

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in a. the cash flows from financing activities section b. the cash flows from investing activities section c. a separate schedule d. the cash flows from operating activities section

the cash flows from operating activities section

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

the cash flows from operating activities section

If the investor owns less than 20% of the outstanding stock of the investee, the accounting method utilized will be

the cost method

Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at a time when the market rate of interest is 7%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

the crying amount decreases form its amount at issuance date to 1000,000 at maturity

The liability for a dividend is recorded on which of the following dates? a. the date of record b. the date of payment c. the date of announcement d. the date of declaration

the date of declaration

An advantage of the corporate form of business entity is...

the ease of transfer of ownership.

An advantage of the corporate form of business entity is:

the ease of transfer of ownership. note: The ease of transfer of ownership is a definite advantage of the corporate form of business entity.

If an investor owns between 20% and 50% of the outstanding stock of the investee, the accounting method utilized will be

the equity method

One potential advantage of financing corporations through the use of bonds rather than common stock is

the interest expense is deductible for tax purposes by the corporation

The amount of time spent by an employee in the factory is usually recorded on a. time tickets b. job order cost sheets c. employees' earnings records d. statement of owners' equity

time tickets

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