ACCT 210-24261 FINAL EXAM (S-2019)

One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

F

Which of the following accounts is not classified as a current liability?

Note payable, due in three years

When the owner of a sole proprietorship withdraws assets from the business for personal use,

a. it is recorded as a reduction of owner's equity.

When a company declares a 2-for-1 stock split,

a. there is no effect on total stockholders' equity.

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

b. a separate schedule.

How will the payee of the promissory note record the note on its books?a. The promissory note will be recorded as revenue. b. The promissory note will be recorded as a liability. c. The promissory note will be recorded as an asset. d. The promissory note will be recorded as an expense.

c. The promissory note will be recorded as an asset.

If a company's bonds are callable,

c. the issuing company is likely to retire the bonds before maturity if, for example, the bonds are paying 9% interest while the market rate of interest is 6%.

On January 1, 2017, Sharpsburg, Inc. issued $400,000, ten-year, 10% bonds for $354,200. The bonds pay interest on June 30 and December 31. The market rate is 12%. What is the carrying value of the bonds at the end of the ten years?

400,000

A: A receivable arising from the sale of goods or services with a verbal promise to pay. B: The general ledger account that is supported by a subsidiary ledger. C: The detail for a number of individual items that collectively make up a single general ledger account. D: The recognition of bad debts expense at the point an account is written off as uncollectible.

A: Account receivable B: Control account C: Subsidiary ledger D: Direct write-off method

A change in estimate of an asset's residual value involves restating the income statements of past periods for the estimate change.

F

Both stock and bond investments have maturity dates.

F

If a company accepts a major credit card such as VISA from a customer, then the company is responsible for the amount of the sale in case of nonpayment from a cardholder.

F

Interest is never a part of the cost of property, plant, and equipment or intangible assets.

F

Lewisburg Corp. had sales during the year of $15,000,000 and an average accounts receivable of $5,000,000. Its accounts receivable turnover ratio is 0.33 times.

F

Research and development costs should be presented as intangible assets.

F

The accounts receivable turnover ratio is computed by dividing net income by average accounts receivable.

F

The reason the allowance method of recognizing bad debts is used is primarily because it recognizes the maximum amount of write-off in each period.

F

Operating activity Not reported separately on the cash flow statement

OP: Decrease in accounts receivable OP: Increase in short-term notes receivable NRS: Write-off of a customer's account receivable under the allowance method

A subsidiary is a separate legal entity that is owned or controlled by another entity.

T

When land and building are acquired for a lump sum, the purchase amount should be allocated on the basis of the market values of the two assets.

True

Use the information below for Flora Inc. for 2017 and 2018 to answer the following question: Equipment, December 31, 2017 $65,000 Equipment, December 31, 2018 72,000 Accumulated depreciation, December 31, 2017 39,000 Accumulated depreciation, December 31, 2018 30,000 During 2018, Flora Inc. sold equipment with a cost of $30,000 and accumulated depreciation of $25,000. A gain of $3,000 was recognized on the sale of the equipment. This was the only equipment sale during the year. What was depreciation expense for 2018?

a. $16,000

The Stockholders' Equity section of Deer Lakes Manor's balance sheet on January 1, 2017, appeared as follows: Common stock, $30 par, 20,000 shares issued and outstanding $ 600,000 Additional paid-in capital—common 240,000 Retained earnings 700,000 Total stockholders' equity $1,540,000 On March 1, 2017, Deer Lakes reacquired 4,000 shares of common stock at $50 per share. All common shares were originally sold for $42 each. How much should be reported in the Treasury Stock account on the March 31, 2017, balance sheet?

a. $200,000

Cory and Ginger want to buy an airplane. They find one that will cost $200,000. They must pay 10% down and can get the balance financed with a ten year loan at 7% interest and annual payments. What is their annual payment?

a. $25,626

Darrin Brown bought a pub. The purchase price was $695,000. An appraiser provided the following appraisal values: land, $320,000; building, $370,000; and equipment, $60,000. What cost should be allocated to the building? a. $342,867 b. $370,000 c. $399,281 d. $695,000

a. $342,867

Bonds in the amount of $100,000 with a life of ten years were issued by Focus Company. If the face rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds?

a. $60,000

A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory. If current liabilities are $14,350, then the quick ratio would be

a. 1.2 to 1.

Dali Company has 15,000 shares of stock authorized at January 1. Dali issues 4,500 shares to the stockholders during the year and then the company repurchases 1,500 shares as treasury stock. Based on this information, how many shares are outstanding at December 31?

a. 18,000

When using the indirect method, how would the retirement of bonds payable at their maturity date be shown on the statement of cash flows?

a. As a financing activity

Which of the following is not an operating activity?

a. Cash payments for dividends to stockholders

Which of the following statements regarding contingencies is true?

a. Contingencies that are probable and estimable must be recorded before the outcome of future events.

When a company declares a stock dividend, which of the following occurs?

a. Retained earnings is reduced.

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long?a. The company may need to borrow to acquire operating cash. b. Cash flows from operations may be higher than expected for the company's sales. c. The company should expand operations with its excess cash. d. The company may offer trade discounts to lengthen the collection period.

a. The company may need to borrow to acquire operating cash.

Presented below is the Operating Activities section of the statement of cash flows for Feline Friends Corp. for 2017: Operating activities: Cash collected from customers $165,000 Cash payments for merchandise (83,000) Cash payments for operating expenses (58,000) Net cash inflow from operating activities $ 24,000 Which method of preparing the Operating Activities section has Feline used?

a. The direct method

A decreasing long-term liability account is presented on the statement of cash flows as

a. a decrease in cash in the Financing Activities category.

If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's books will

a. decrease as the bonds approach their maturity date.

Comfort Shoes received a promissory note from a customer on April 1, 2017. The face amount of the note is $2,000; the terms are 12 months and 8% annual interest. At the maturity date, the customer pays for the note and interest. Comfort Shoes made the proper adjustment at the end of December for interest. The effect of recognizing the transaction on the maturity date is a(n)a. decrease to Notes Receivable. b. increase to Discount on Notes Receivable. c. increase to Notes Receivable. d. decrease to Cash.

a. decrease to Notes Receivable.

Carson City Saloon purchased a $25,000 truck for catering from its restaurant. It made a down payment of one-fourth of the price. What combination of amounts would affect the income statement and statement of cash flows for the purchase of the truck?

b. $0 $(6,250)

Utah Co. sold merchandise to Big Sky Corp. on December 1, 2017, for $9,000 and accepted a promissory note for payment in the same amount. The note has a term of 90 days and a stated interest rate of 8%. Utah's accounting period ends on December 31. What amount should Utah recognize as interest revenue on the maturity date of the note?a. $60 b. $120 c. $180 d. $0

b. $120

Pilot Company reported the following information for 2017 and 2018: Prepaid insurance, December 31, 2017 $ 2,400 Prepaid insurance, December 31, 2018 1,500 Insurance expense—2018 14,200 How much cash was paid for insurance during 2018?

b. $13,300

Royal Company purchased a dump truck at the beginning of 2015 at a cost of $60,000. The truck had an estimated life of six years and an estimated residual value of $24,000. On January 1, 2016, the company made major repairs of $20,000 to the truck that extended the life one year. Thus, starting with 2017, the truck has a remaining life of five years and a new salvage value of $8,000. Royal uses the straight-line depreciation method. What is the book value of the truck to be reported on the balance sheet at December 31, 2017? ------------------a. $44,000 b. $56,000 c. $62,000 d. $50,000

b. $56,000

Washington Corp. reported the following information for 2017 and 2018: 2017 2018 Accounts receivable $101,000 $93,000 Prepaid expenses 5,000 6,000 Accounts payable 71,000 76,000 Salaries payable 5,000 4,000 Net income 80,000 Depreciation expense 9,000 Gain on sale of equipment 5,000 If Washington uses the indirect method to prepare the Operating Activities section of the statement of cash flows, what amount will be reported as net cash inflow from operating activities for 2018?

b. $95,000

If you must calculate the present value of an amount at 12% compounded quarterly for two years, then the interest factor used in the calculation is

b. 3% for eight periods.

A new company issues 2,000 shares of $5 par common stock in exchange for the services of a lawyer during its first month of business. The lawyer's normal fee is $15,000 for similar work. Which of the following would be the impact on the accounting equation if the stock is not currently trading?

b. An increase to Additional Paid-In Capital—Common Stock of $5,000

When using the direct method, how is the purchase of equipment for cash shown on the statement of cash flows?

b. As an investing activity

Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.) How much depreciation expense did the company report during the year? a. Balance sheet b. Income statement c. Statement of retained earnings d. Statement of cash flows

b. Income statement d. Statement of cash flows

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA where: CL = Current liabilities LTL = Long-term liabilities CS = Common stock RE = Retained earnings NCCA = Noncash current assets LTA = Long-term assets Which of the following activities results in a cash inflow?

b. Increases in common stock (CS)

The comparative balance sheets of Midnite Corp. for 2018 and 2017 indicate that short-term trade notes receivable increased from $5,000 in 2016 to $75,000 in 2018. How will this change be reported on Midnite's statement of cash flows, if Midnite uses the indirect method?a. It will be included in the amount of cash and cash equivalents at the end of 2018. b. It will be reported as a deduction from net income in the Operating Activities section. c. It will be reported as a cash outflow in the Investing Activities section. d. It will be added to net income in the Operating Activities section.

b. It will be reported as a deduction from net income in the Operating Activities section.

Yellow Dog Transit sold an old truck on December 31, 2017, for $18,400 cash. The following data were available when the truck sold: Acquisition cost $75,000 Estimated residual value at time of acquisition 8,000 Accumulated depreciation on December 31, 2017, after adjustment 53,600 When this transaction is recorded, it should include a(n) -------------------a. decrease of $21,400 to the Truck account. b. Loss on Disposal account for $3,000. c. Gain on Disposal account for $3,000. d. Gain on Disposal account for $5,000. Feedback

b. Loss on Disposal account for $3,000.

Which of the following is an example of a contingent liability?

b. The liability for future warranty repairs on computers sold during the current period

During 2017, the accounts payable balance of Andreas Corp. decreased. Which of the following statements is true?

b. This decrease is deducted from net income in the Operating Activities section of a statement of cash flows prepared under the indirect method.

Weather Corp. issued ten-year, 8%, $100,000 bonds paying interest on an annual basis, at a $5,200 premium. Which one of the following statements is true?

b. Weather's annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year.

If bonds are issued at 101.25, this means that

b. a $1,000 bond sold for $1,012.50.

You are interested in accumulating $10,000 so that you can take a cruise in three years. If you try to solve for the amount that you need to invest each year, earning 6% interest compounded annually, the $10,000 represents

b. a future value.

The Premium on Bonds Payable account is shown on the balance sheet as a(n)

b. addition to a long-term liability.

The book value per share for a corporation is

b. based on the excess of total assets over total liabilities.

With regard to preferred stock,

b. its stockholders may have the right to participate, along with common stockholders, if an extra dividend is declared.

Depreciation is a process by which ------------------a. replacement funds are accumulated for plant and equipment. b. the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset. c. the decline in market value of plant and equipment is determined and recorded. d. the difference between current market value and historical cost of plant and equipment is determined.

b. the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset.

All of the following statements are true except

b. the criteria to determine whether a lease contract should be considered a capital lease are applied in a more rigid way under IFRS than U.S. GAAP.

The accounting life of intangible assets is determined by ----------------a. their legal lives. b. their legal lives or useful lives, whichever is shorter. c. the tax life mandated by the IRS. d. their useful lives.

b. their legal lives or useful lives, whichever is shorter.

All of the following are reasons for a company to repurchase its previously issued stock, except

b. to increase the shares outstanding.

The data presented below for Lynx Corp. are for the year ended December 31, 2017: Sales (100% on credit) $1,000,000 Sales returns 30,000 Accounts receivable (December 31, 2017) 170,000 Allowance for doubtful accounts (credit balance) (before adjustment at December 31, 2017) 1,300 Estimated amount of uncollectible accounts based on aging analysis 14,000 See the data for Lynx Corp. If Lynx Corp. uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debts expense for 2017?a. $15,300 b. $14,000 c. $12,700 d. $13,700

c. $12,700

Sweetson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31, 2017, and $200,900 at December 31, 2018. Sales reported on Sweetson's 2018 income statement amounted to $2,350,000. What is the amount of cash collections that Sweetson will report in the Operating Activities category of its 2018 statement of cash flows assuming that the direct method is used?a. $2,330,600 b. $2,771,200 c. $2,369,400 d. $2,350,000

c. $2,369,400

If Rope Inc. receives $23,825 from credit card collections and has an average rate of 4.7% charged by the credit card company, its credit card sales during the period were If Rope Inc. receives $23,825 from credit card collections and has an average rate of 4.7% charged by the credit card company, its credit card sales during the period were

c. $25,000.

Gaulle Company began the year with a balance of $6,000 in Accounts Receivable and ended the year with $9,000 in the account. Revenues for the period amounted to $38,000. Under the direct method, Gaulle will report cash collected from customers of

c. $35,000.

A company's weekly payroll amounts to $50,000 and payday for the week is every Friday. Employees work five days per week, Monday through Friday. The appropriate journal entry was recorded at the end of the accounting period, Monday, March 31, 2017. What amount is wages expense in April for the payday, Friday, April, 4, 2017?

c. $40,000

Mayflower Company had a machine with a cost of $123,000 and accumulated depreciation of $87,000 that was sold at for a gain of $5,000. What amount of cash was received from the sale? ----------------a. $128,000 b. $36,000 c. $41,000 d. $30,000 Feedback

c. $41,000

Kingston inherited $140,000 from an aunt. If Kingston decides not to spend his inheritance but to leave the money in his savings account until he retires in 15 years, how much money will he have assuming an annual interest rate of 8%, compounded semiannually?

c. $454,076

Anole Company was incorporated as a new business on January 1, 2017. The company is authorized to issue 20,000 shares of $5 par value common stock and 10,000 shares of 6%, $10 par value, cumulative, participating preferred stock. On January 1, 2017, the company issued 8,000 shares of common stock for $15 per share and 2,000 shares of preferred stock for $30 per share. Net income for the year ended December 31, 2017, was $375,000. Refer to the information about Anole Company.Anole's total stockholders' equity reported on the balance sheet at December 31, 2017, is

c. $555,000.

On January 15, 2017, the accounts receivable balance was $7,000 and the balance in Allowance for Doubtful Accounts was $700. On January 16, 2017, a $200 uncollectible account was written off. The net realizable value of accounts receivable on January 16 immediately after the write-off isa. $7,900. b. $6,800. c. $6,300. d. $6,500.

c. $6,300.

Mendes Charters reported the following information at December 31, 2017: Preferred stock, $100 par, 500 shares authorized, and outstanding; cumulative; nonparticipating; callable at par value $ 50,000 Common stock, $12 par, 50,000 shares authorized and outstanding 600,000 Additional paid-in capital—common 25,000 Retained earnings 825,000 Mendes' total contributed capital is

c. $675,000.

Pocono Co. purchased a patent at the beginning of 2017 for $490,000. Economic benefits were expected for seven years, but the patent's legal life was 20 years. Also, during 2017, the company incurred research and development costs of $150,000. Patent amortization expense for 2017 is ------------------a. $72,143. b. $24,500. c. $70,000. d. $150,000. Feedback

c. $70,000.

Marsh Corporation borrowed $90,000 by issuing a 12%, six-month note payable, all due at the maturity date. After one month, the company's total liability for this loan amounts to

c. $90,900.

The following information is for Chambersburg Corp. for 2018 and 2017. Chambersburg uses the straight-line depreciation method. 2018 2017 Property, plant, and equipment $ 250,000 $190,000 Accumulated depreciation 100,000 85,000 Depreciation expense 62,500 47,500 Net sales 1,000,000 900,000 Average total assets 625,000 475,000 Refer to the information for Chambersburg Corp. Using the 2018 data, what is the average age of Chambersburg's property, plant, and equipment (rounded to two decimal places)? -----------------a. 4.00 years b. 10.00 years c. 1.60 years d. 2.50 years

c. 1.60 years

A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If current liabilities are $400, then the quick ratio would be

c. 1.75 to 1.

When using the direct method, how is the sale of long-term investments for cash reported on the statement of cash flows?

c. As an investing activity

Wexford Co. purchased a new delivery truck at the beginning of 2017. The truck has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2017. The truck was driven 20,000 miles during 2017 and 24,000 miles during 2018. The number of expected miles over five years is 100,000. Refer to the information about Wexford Co. Wexford Co. wants to use the depreciation method that will result in the highest depreciation expense for 2017. Which method should be used? ----------------a. Units-of-production b. Straight-line c. Double-declining-balance d. All methods create the same income in 2017.

c. Double-declining-balance

Which statement is true concerning operating assets?a. Operating assets have no physical properties. b. A company's operating assets are important to its short-term liquidity. c. Operating assets are used over two or more periods to generate revenues. d. All operating assets are reported on the balance sheet.

c. Operating assets are used over two or more periods to generate revenues.

Cash interest is computed annually when a bond is issued for other than its face value. For a bond issued at a premium, how will this component change under the effective interest method as the bond approaches maturity?

c. Remain constant

Which of the following statements about bonds is correct?

c. The cash interest paid is calculated as the bond face value × the face rate of interest.

For a given single sum invested at 8% for four years, how will the future value be affected if the compounding period is changed from quarterly to annually?

c. The future value will decrease.

When using the allowance method, what are the effects on the accounting equation when a company writes off a bad debt?a. Assets increase and stockholders' equity decreases. b. Assets and stockholders' equity decrease. c. There is no effect on overall assets or equity. d. Assets and stockholders' equity increase.

c. There is no effect on overall assets or equity.

If a company borrows money from its bank and the bank deducts the interest in advance, the company would record the amount of the interest deduction as

c. a discount.

Comprehensive income is

c. an all-inclusive approach to income that includes transactions that affect stockholders' equity with the exception of those transactions that affect owners.

Amortization of a bond discount results in a(n)

c. decrease in stockholders' equity.

Arco Corporation declared a cash dividend on June 2 of $6 per common share. The company has 2,000 shares of common stock authorized, 1,000 shares issued, and 200 in the treasury. The entry to record the declaration of the cash dividend increases a(n)

c. liability.

The data below are for Benton Corporation for 2017: Accounts Receivable—January 1, 2017 $334,000 Credit sales during 2017 850,000 Collections from credit customers during 2017 725,000 Customer accounts written off as uncollectible during 2017 12,000 Allowance for doubtful accounts (credit balance) (after write-off of uncollectible accounts) 1,700 Estimated uncollectible accounts based on an aging analysis 13,200 Refer to the data for Benton Corporation. If the aging approach is used to estimate bad debts, what should the balance in Allowance for Doubtful Accounts be after the bad debts adjustment?a. $11,500 b. $14,900 c. $26,900 d. $13,200

d. $13,200

Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of eight years, or 12,500 hours of operation. The crane was purchased on January 1, 2017, and was used 2,700 hours in 2017 and 2,600 hours in 2018. Refer to the information for Norwood, Inc. If Norwood uses the double-declining-balance depreciation method, what amount is the depreciation expense for 2018? -----------------a. $14,063 b. $18,750 c. $20,000 d. $15,000

d. $15,000

Greer Company purchased land for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence, and a legal fee of $8,500. What is the cost of the land?a. $281,000 b. $256,000 c. $284,600 d. $282,200

d. $282,200

Below are several transactions for Louisville Company: Proceeds from issuance of bonds payable $635,000 Payment to purchase equipment 275,000 Payment of wages 115,000 Payment of dividends 155,000 Payment to pay off notes payable 195,000 Based on these transactions, what is the net cash flow from financing activities?

d. $285,000 net cash provided by financing activities

On January 1, 2017, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method. What was the depreciation expense for Grove City Corp. for the year ended December 31, 2017? ----------------a. $195,000 b. $390,000 c. $0 d. $400,000

d. $400,000

Frank Crawford Corporation's balance sheet showed the following amounts: Current Liabilities, $15,000; Bonds Payable, $8,000; Lease Obligations, $9,000; and Notes Payable, $5,600. Total stockholders' equity was $17,000. The debt-to-equity ratio is

d. 2.21.

Which of the following items is not a cash equivalent?

d. A corporate bond investment that has five years until maturity when it is purchased

Where can the amounts needed to compute the accounts receivable turnover ratio be found?a. The statement of cash flows b. The income statement c. The balance sheet d. Both the income statement and balance sheet

d. Both the income statement and balance sheet

Rent owed to the landlord is a balance sheet item for Generic Products Company. How would it most likely be classified on the balance sheet?

d. Current liability

Which of the following statements is true?

d. If a company uses the accrual basis of accounting, its cash balance can increase even if it reports a net loss.

When are consolidated financial statements prepared? a. At the option of an investor company b. At the option of an investee company c. Only if one company owns 100% of another company d. If one company owns more than 50% of another company

d. If one company owns more than 50% of another company

Deferred income taxes is a balance sheet item for Iowa Products Company. How would it most likely be classified on the balance sheet?

d. Liability

How should intangible assets be disclosed on the balance sheet?-----------a. At the estimated market value at the balance sheet date b. At cost in the Current Assets section c. As a reduction of stockholders' equity d. Net of the costs already amortized

d. Net of the costs already amortized

Which of the following would appear on the balance sheet as a current liability?

d. Premium offers in cereal boxes

Shuttle Master Airlines has leased an aircraft from Streamline Aircraft Company. The annual payments are $1,000,000, and the life of the lease is 18 years. It is estimated that the useful life of the aircraft is 20 years. How would Shuttle Master Airlines record the acquisition of the aircraft? The effective rate of interest is 9%.

d. The aircraft would be recorded as an asset with a cost of $8,756,000.

Capitalizing an expenditure rather than recording it as a revenue expenditure ------------------a. affects the total book value of plant assets on the balance sheet, but has no effect on the amount of net income reported during an accounting period. b. affects the amount of net income reported during an accounting period, but has no effect on the total book value of plant assets on the balance sheet. c. has no effect on the book value of plant assets on the balance sheet or the amount of income reported on the income statement. d. affects the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period.

d. affects the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period.

Depreciation is ----------------a. an accumulation of funds to replace the related plant asset. b. the cash allocated each period to maintain a plant asset. c. the difference between the original cost and salvage value of an asset. d. an effort to achieve proper matching of the cost of operating assets.

d. an effort to achieve proper matching of the cost of operating assets.

One example of a temporary difference between financial and tax reporting results from

d. depreciation of long-term assets.

There are some liabilities, such as income tax payable, for which the amounts must be estimated. Failure to estimate these amounts and record them would be a violation of the

d. matching principle.

The equity method of accounting for an investment is used when a company purchasesa. 15% of the equity securities of a second company. b. more than 20% of the debt securities of a second company. c. 100% of the debt securities of a second company. d. more than 20% of the equity securities of a second company.

d. more than 20% of the equity securities of a second company.

Assuming a company uses the allowance method, the entry to recognize the write-off of the specific uncollectible accounts willa. decrease total assets and total equity. b. increase total assets and decrease total equity. c. increase total assets and total equity. d. not affect total assets or total equity.

d. not affect total assets or total equity.

The primary purpose of the statement of cash flows is to provide information about

d. the cash inflows and outflows of the company.

Using different depreciation methods for book purposes versus tax purposes for the same asset is ----------------a. not allowed since the amount can only be calculated one way or the other, not both. b. contrary to GAAP. c. against the Internal Revenue Code, and as such, against the law. d. the direct result of the differing goals of financial and tax accounting.

d. the direct result of the differing goals of financial and tax accounting.

If a company issues $5 par value common stock,

c. $5 per share is presented in the Common Stock account on the balance sheet.

Which of the following is reported as a financing activity on the statement of cash flows?

c. Payment of cash dividends