Accounting Final
Tucker and Titus are partners who share income in the ratio of 3:1 (3/4 to Tucker and 1/4 to Titus). Their capital balances are $38,700 and $68,200, respectively. The partnership generated net income of $48,400 for the year. What is Tucker's capital balance after closing the revenue and expense accounts to the capital accounts? -$60,000 -$90,000 -$45,000 -$75,000
$75,000 (Tucker's Capital Account Balance = Capital Balance + Tucker's Share of Income = $38,700 + ($48,400 × 3/4) = $38,700 + $36,300 = $75,000)
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? -35,000 -70,000 -25,000 -30,000
25,000 (Number of Shares Outstanding = Number of Shares Originally Issued - Number of Shares Reacquired = 30,000 - 5,000 = 25,000)
The formula for depreciable cost is -Initial Cost + Residual Value -Initial Cost - Residual Value -Initial Cost - Accumulated -Depreciation -Depreciable Cost = Initial Cost
Initial Cost - Residual Value
When a stock dividend is declared, which of the following accounts is credited? -Common Stock -Dividends Payable -Stock Dividends Distributable -Retained Earnings
Stock Dividends Distributable
A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? -$35,000 -$21,000 -$45,000 -$5,000
$35,000 (Depreciation per Operating Hour = (Cost - Residual Value) ÷ Total Units of Activity = ($120,000 - $15,000) ÷ 15,000 hours = $7 Depreciation Expense = Depreciation per Operating Hour × Total Units of Activity for the period = $7 × 5,000 hours = $35,000)
Martin Jackson receives an hourly wage rate of $30, with time-and-a-half pay for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to Jackson? -$1,470.00 -$1,009.75 -$1,097.95 -$460.25
$1,097.95 (Gross Pay = Earnings at Regular Rate + Earnings at Overtime Rate Gross Pay = [($30 × 40) + ($30 × 1.5 × 6)] = $1,470 Net Pay = Gross Pay - (Federal Income Tax + Social Security Tax + Medicare Tax) Net Pay = $1,470 - [$350 + ($1,470 × 6.0%) + ($1,470 × 1.5%)] = $1,009.75)
Sadie White receives an hourly wage rate of $30, with time-and-a-half pay for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $300; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to White? -$1,443 -$1,143 -$1,260 -$1,000
$1,143 (Gross Pay = Earnings at Regular Rate + Earnings at Overtime Rate = ($30 × 40) + ($30 × 1.5 × 8) = $1,560 Net Pay = Gross Pay - (Federal Income Tax + Social Security Tax + Medicare Tax) = $1,560 - [$300 + ($1,560 × 6.0%) + ($1,560 × 1.5%)] = $1,143)
If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is -$2,060,000 -$2,000,000 -$2,100,000 -$1,940,000
$1,940,000 (Amount of Cash Received from Sale of Bonds = Face Value of Bonds × Bond Quote = $2,000,000 × 0.97 = $1,940,000)
Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours? -$30,000 -$21,000 -$19,000 -$22,000
$19,000 (Annual Depreciation = (Cost - Residual Value) ÷ Useful Life = ($220,000 - $30,000) ÷ 10 = $19,000)
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 for the stock issuance would include a credit to Common Stock for -$30,000 -$45,000 -$15,000 -$3,000
$30,000 (Amount of Common Stock Issued = Number of Shares Issued × Par Value of Each Share = 3,000 × $10 = $30,000)
The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is -decrease total liabilities and stockholder's equity -increase total expenses and total liabilities -decrease total assets and stockholder's equity -No answer text provided.
decrease total assets and stockholder's equity
The par value per share of common stock represents the -minimum selling price of the stock established by the articles of incorporation -minimum amount the stockholder will receive when the corporation is liquidated -dollar amount assigned to each share -amount of dividend per share to be received each year
dollar amount assigned to each share
One of the main disadvantages of the corporate form is the -professional management -double taxation of dividends -charter -requirement to stock
double taxation of dividends
The depreciation method that does not use residual value in computing the first year's depreciation expense is -straight-line -units-of-activity -double-declining-balance -sum-of-the-years-digits
double-declining-balance
The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the -straight-line method -units-of-production method -double-declining-balance method -time-valuation method
double-declining-balance method
An advantage of the proprietorship form of business organization is -unlimited liability -mutual agency -ease of formation -limited life
ease of formation
The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the -payroll register -payroll check -employee's earnings record -employer's earnings record
employee's earnings record
The ability of a corporation to obtain capital is -less than the ability of a partnership -about the same as the ability of a partnership -restricted because of the limited life of the corporation -enhanced because of limited liability and ease of share transferability
enhanced because of limited liability and ease of share transferability
Expected useful life is -computed when the asset is sold -estimated at the time that the asset is placed in service -determined each year that the depreciation computation is made -of no bearing on the depreciation computation
estimated at the time that the asset is placed in service
Most employers are levied a tax on payrolls for -sales tax -medical insurance premiums -federal unemployment compensation tax -union dues
federal unemployment compensation tax
Cash paid for preferred stock dividends should be shown on the statement of cash flows under -investing activities -financing activities -noncash investing and financing activities -operating activities
financing activities
The total earnings of an employee for a payroll period is referred to as -take-home pay -pay net of taxes -net pay -gross pay
gross pay
Stockholders' equity -is usually equal to cash on hand -includes paid-in capital and liabilities -includes retained earnings and paid-in capital -is shown on the income statement
includes retained earnings and paid-in capital
When comparing a merchandising business to a service business, the financial statement that changes the most is the -balance sheet -statement of owner's equity -income statement -statement of cash flows
income statement
Land acquired so it can be resold in the future is listed on the balance sheet as a(n) -fixed asset -current asset -investment -intangible asset
investment
Accumulated Depreciation -is used to show the amount of cost expiration of intangibles -is the same as Depreciation Expense -is a contra asset account -is used to show the amount of cost expiration of natural resources
is a contra asset account
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
is the monetary value assigned per share in the corporate charter
The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n) -payroll expense -contra account -asset -liability
liability
If bonds are issued at a discount, it means that the -bondholder will receive effectively less interest than the contractual rate of interest -market interest rate is lower than the contractual interest rate -market interest rate is higher than the contractual interest rate -financial strength of the issuer is suspect
market interest rate is higher than the contractual interest rate
When a partner dies, the capital account balances of the remaining partners -will increase -will decrease -will remain the same -may increase, decrease, or remain the same
may increase, decrease, or remain the same
Residual value is also known as all of the following except -scrap value -trade-in value -salvage value -net book value
net book value
The order of presentation of activities on the statement of cash flows is -operating, investing, and financing -operating, financing, and investing -financing, operating, and investing -financing, investing, and operating
operating, investing, and financing
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 corporate shares must get the approval of other stockholders
ownership rights are easily transferred
The excess of issue price over par of common stock is termed a(n) -discount -income -deficit -premium
premium
A fixed asset's estimated value at the time it is to be retired from service is called -residual value -market value -book value -carrying value
residual value
When a new partner is admitted to a partnership, there should be a(n) -revaluation of assets -realization of assets -allocation of assets -return of assets
revaluation of assets
Characteristics of a corporation include -shareholders who are mutual agents -direct management by the shareholders (owners) -its inability to own property -shareholders who have limited liability
shareholders who have limited liability
Which of the following is not one of the four basic financial statements? -balance sheet -statement of cash flows -statement of changes in financial position -income statement
statement of changes in financial position
Cash dividends paid on common stock would be reported on the statement of cash flows in -the Cash Flows from (used for) Financing Activities section -the Cash Flows from (used for) Investing Activities section -a separate section of noncash investing and financing activities -the Cash Flows from (used for) Operating Activities section
the Cash Flows from (used for) Financing Activities section
If there is no written agreement as to the way income will be divided among partners, -there really is no partnership -they will share income and losses according to their capital balances -they will share income and losses equally -they will share income and losses according to the time devoted to the business
they will share income and losses equally
All of the following are needed for the computation of straight-line depreciation except -cost -residual value -estimated life -units produced
units produced
A characteristic of a fixed asset is that it is -intangible -used in the operations of a business -held for sale in the ordinary course of business -a short-term investment
used in the operations of a business
Which of the following would be used to compute the federal income taxes to be withheld from an employee's earnings? -FICA tax rate -wage and tax statement -FUTA tax rate -wage bracket and withholding table
wage bracket and withholding table
Payroll taxes levied against employees become liabilities -the first of the following month -when the payroll is paid to employees -when data are entered in a payroll register -at the end of an accounting period
when the payroll is paid to employees
A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm. As a result of this transaction, the capital account balance of the other partners in the partnership -will increase -will decrease -will remain the same -may increase, decrease, or remain the same
will remain the same
Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms? -Employee's Withholding Allowance Certificate (Form W-4) -Wage and Tax Statement (Form W-2) -Employer's Quarterly Federal Tax Return (Form 941) -401k plans
Wage and Tax Statement (Form W-2)
When a limited liability company is formed, -the partnership activities are limited -all partners have limited liability -some of the partners have limited liability -none of the partners has limited liability
all partners have limited liability
How is treasury stock shown on the balance sheet? -as an asset -as a decrease in stockholders' equity -as an increase in stockholders' equity -Treasury stock is not shown on the balance sheet.
as an increase in stockholders' equity
Fixed assets are ordinarily presented on the balance sheet -at current market values -at replacement costs -at cost less accumulated depreciation -in a separate section along with intangible assets
at cost less accumulated depreciation
Those most responsible for the major policy decisions of a corporation are the -management -board of directors -employees -stockholders
board of directors
A disadvantage of the corporate form of business entity is -the ease of transfer of ownership -corporations are subject to more governmental regulations -unlimited liability for stockholders -mutual agency for stockholders
corporations are subject to more governmental regulations
Which of the following is included in the cost of constructing a building? -insurance costs during construction -cost of paving the parking lot -cost of repairing vandalism damage during construction -cost of removing the demolished building existing on the land when it was purchased
cost of paving the parking lot
A ratio of 4:2:1 is the same as -40%:20%:10% -4/7:2/7:1/7 -4/10:2/10:1/20 -7/4:7/2:7/1
4/7:2/7:1/7 (A ratio of 4:2:1 = 4/(4 + 2 + 1):2/(4 + 2 + 1):1/(4 + 2 + 1) = 4/7:2/7:1/7)
The formula for annual depreciation using the straight-line depreciation method is -Initial Cost ÷ Estimated Useful Life -Depreciable Cost ÷ Estimated Useful Life -Depreciable Cost × Estimated Useful Life -Initial Cost × Estimated Useful Life
Depreciable Cost ÷ Estimated Useful Life
If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is -Depreciation Expense 100 Accumulated Depreciation 100 -Depreciation Expense 1,200 Accumulated Depreciation 1,200 -Accumulated Depreciation 1,200 Depreciation Expense 1,200 -Accumulated Depreciation 100 Depreciation Expense 100
Depreciation Expense 100 Accumulated Depreciation 100 (Monthly Depreciation Expense = (Cost - Residual Value) ÷ Useful Life = [($3,750 - $150) ÷ 3] ÷ 12 = $100 Depreciation Expense 100 Accumulated Depreciation 100)
Which of the following taxes would be deducted in determining an employee's net pay? -FUTA taxes -SUTA taxes -FICA taxes -All of these choices
FICA taxes
Luke and John share income and losses in a 2:1 ratio (2/3 to Luke and 1/3 to John) after allowing for salaries of $48,000 to Luke and $60,000 to John. Net income for the partnership is $93,000. Income should be divided as -Luke, $46,500; John, $46,500 -Luke, $55,000; John, $38,000 -Luke, $65,000; John, $28,000 -Luke, $38,000; John, $55,000
Luke, $38,000; John, $55,000 (Net Loss after Salary Allowance = Total Salary Paid to Luke and John - Net Income of Partnership = ($48,000 + $60,000) - $93,000 = $15,000 Luke's Share of Loss = $15,000 × 2/3 = $10,000 Luke's Net Income = Luke's Salary - Luke's Share of Loss = $48,000 - $10,000 = $38,000 John's Share of Loss = $15,000 × 1/3 = $5,000 John's Net Income = John's Salary - John's Share of Loss = $60,000 - $5,000 = $55,000 Income should be divided as: Luke, $38,000; John, $55,000)
When the corporation issuing the bonds has the right to redeem the bonds prior to maturity, the bonds are -convertible bonds -unsecured bonds -debenture bonds -callable bonds
callable bonds
On the statement of cash flows, the Cash Flows from (used for) Operating Activities section would include -cash received from the issuance of capital stock -cash received from the sale of investments -cash paid for the acquisition of investments -cash received from customers
cash received from customers
Selling the bonds at a premium has the effect of -raising the effective interest rate above the stated interest rate -attracting investors that are willing to pay a lower rate of interest than on similar bonds -causing the interest expense to be higher than the bond interest paid -causing the interest expense to be lower than the bond interest paid
causing the interest expense to be lower than the bond interest paid