Accounting Final

To find the return on common stockholders' equity, divide net income available to common stockholders by ________ stockholders' equity. A average total B ending total C ending common D average common

D average common

Thomas is nearing retirement and would like to invest in a stock that will provide a good steady income. Thomas should choose a stock with a: 1. high current ratio. 2. high dividend payout. 3. high earnings per share. 4. high price-earnings ratio.

high dividend payout.

Stockholders' Equity Journal Entries For Questions 45-47, prepare the proper journal entry for the given ___ transaction on your scratch paper. Then, use the pull-down menus to select the proper action for the accounts given to record the transaction. King Corporation issued 10 shares of $5 par common stock in exchange for $70. Cash 70 Common Stock (10 * 5 ) 50 Paid in Capital in Excess Par 20 Cash 70 Common Stock 50 Paid-in Capital in Excess of Par 20

Ace Corporation had 500 shares of $10 par stock outstanding. Ace declared a 10% stock dividend. The market value of the stock was $15 each. Stock Dividends (500 * 10% * 15) 750 Common Stock Dividend Distributable (500 * 10% * 10) 500 Paid in capital in excess of par 250 Cash----- Common Stock Dividend Distributable 500 Paid in capital in excess of par 250 Stock Dividends 750

The cost of a long-term asset is expensed A. when it is paid for B. as the asset benefits the company C. in the period in which it is acquired D. in the period in which it is disposed of

B. as the asset benefits the company

The effect of a stock dividend is to A. decrease total assets and stockholders' equity B. change the composition of stockholders' equity C. decrease total assets and total liabilities D. increase the book value per share of common stock

B. change the composition of stockholders' equity

FIFO tends to decrease taxes when: or increasing A. costs are constant B. costs are decreasing C. costs are increasing D. FIFO will always yield the lowest possible taxes

B. costs are decreasing

Equipment costing $40,000 with a salvage value of $8,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 6 years __ change in the salvage value, the depreciated expense for the year should be: A. $6,000 B. $5,300 C. $8,000 D. $4,000

A. $6,000

Where would "Sales Returns and Allowances" be included on a multiple step income statement? A. As part of Net Sales B. As part of Other Revenues and Gains C. As part of Other Expenses and Losses D. As Operating Expenses

A. As part of Net Sales

Which of the following is a false statement regarding partnerships? Sole Proprietorship A. Partnerships are limited to less than one hundred partners B. partners may be held personally liable for the partnership debts C. The accounting records for the partnership should be maintained separately from the accounting records of the partners D. Partnerships may have as few as two partners

A. Partnerships are limited to less than one hundred partners

The Mitchell Global Company accepts a note in exchange for the sale of goods. The journal entry on Mitchell Global Company includes a: A. credit to Sales B. credit to Note Receivable C. debit to Accounts Receivable D. debit to Note Payable

A. credit to Sales

On December 31, 2011, salaries owed to employees total $2,350 and will be paid on January 4, 2012. The adjusting entry prepared on December 31, 2011, includes a: A. debit to Salary Expense for $2350 B. debit to Salary Payable for $2,350 C. credit to Cash for $2,350 D. credit to Salary Expense for $2,350

A. debit to Salary Expense for $2350

The declining-balance method of depreciation produces a(n) A. decreasing depreciation expense each period B. increasing depreciation expense each period C. declining percentage rate each period D. constant amount of depreciation expense each period (Straight-line)

A. decreasing depreciation expense each period

A credit decreases the balance of which types of accounts? A. expenses and assets B. liabilities and expenses C. assets and liabilities D. assets and stockholders' equity

A. expenses and assets

The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2012. The dividend is to be paid on August 15, 2012, to stockholders of record on July 31, 2012. The correct entry to be recorded on July 15, 2012, will include a A. debit to Dividends Payable B. debit to Cash Dividends C. credit to Cash D. credit to Cash Dividends

B. debit to Cash Dividends

Jackson Inc. reported net income of $186,000 during 2022 and paid dividends of $26,000 on common stock. It also paid dividends on its 10,000 shares of 6%, $100 par value, noncumulative preferred stock. Common stockholders' equity was $1,200,000 on January 1, 2022, and $1,600,000 on December 31, 2022. The company's return on common stockholders' equity for 2022 is: 1. 10.0%. 2. 9.0%. 3. 7.1%. 4. 13.3%.

2. 9.0%.

Which of these statements about stock dividends is true? 1. Stock dividends reduce a company's cash balance. 2. A stock dividend has no effect on total stockholders' equity. 3. A stock dividend decreases total stockholders' equity. 4. A stock dividend ordinarily will increase total stockholders' equity.

2. A stock dividend has no effect on total stockholders' equity.

A major disadvantage of a corporation is: 1. limited liability of stockholders. 2. additional taxes. 3. transferable ownership rights. 4. None of the above.

2. additional taxes.

Taft Industries had 250,000 shares of common stock outstanding before a stock split occurred and 500,000 shares outstanding after the stock split. The stock split was A 2-for-1. B 5-for-1. C 2-for-5. D 1-for-5.

A 2-for-1.

The board of directors of Pilgrim Company authorizes a $100,000 restriction of retained earnings for a future plant expansion. This action will A decrease total assets and total stockholders' equity. B decrease total retained earnings and increase total liabilities. C increase stockholders' equity and decrease total liabilities. D reduce the amount of retained earnings available for dividend declarations.

D reduce the amount of retained earnings available for dividend declarations.

Stewart Soaps began business by issuing 25,000 shares of $5 par value common stock for $20 per share. During its first year, the corporation sustained a net loss of $5,000. The year-end balance sheet would show A total paid-in capital of $475,000. B common stock of $125,000. C common stock of $500,000. D total paid-in capital of $595,000.

B common stock of $125,000.

What type of account is the Allowance for Doubtful Accounts? A. Asset B. Contra-Asset C. Liability D. Contra Revenue

B. Contra-Asset

A-Team Corporation issued 1,000 shares of $5 par value stock for land. The stock is actively traded at $9 per share. The land was advertised for sale at $10,500. The land should be recorded at A $5,000. B $10,500. C $9,000. D $4,000.

C $9,000.

The following totals for the month of April were taken from the payroll register of Metz Company Salaries $20,000 FICA taxes withheld 1,533 Income taxes withheld 4,400 Medical insurance deductions 800 Federal unemployment taxes 160 State unemployment taxes 1,000 The entry to record the payment of net payroll would include a A. debit to Salaries and Wages Payable for $12,107 B. debit to Salaries and Wages Payable for $13,267 C. debit to Salaries and Wages Payable for $12, 267 D. credit to Cash for $12,267

B. debit to Salaries and Wages Payable for $13,267

A truck costing $30,000 and on which $26,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include A. gain of $4000 B. loss of $4000 C. credit to Accumulated Depreciation for $26,000 D. credit to Accumulated Depreciation for $30,000

B. loss of $4000

A characteristic of a plant asset is that it is: A. intangible B. used in the operations of a business C. held for sale in the ordinary course of the business D. not currently used in the business but held for future use

B. used in the operations of a business

West County Bank agrees to lend Drake Builders Company $100,000 on January 1. Drake Builders Company signs a $100,000, 6%, 6-month note. What is the adjusting entry required if Drake Builders Company prepares financial statements on March 30? A. interest expense 3,000 interest payable 3000 B. interest expense 3000 cash 3000 C. interest expense 1500 interest payable 1500 D. interest payable 1500 interest expense 1500

C. interest expense 1500 interest payable 1500

If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting A. legal expense B. the Intangible Loss account C. the Patent Account D. a revenue expenditure account

C. the Patent Account

The closing entry for utilities expense would include: A. a debit to Utilities Expense and a credit to Income Summary B. a debit to net income and a credit to Utilities Expense C. a debit to Utilities Expense and a credit to net income D. a debit to Income Summary and a credit to Utilities Expense

D. a debit to Income Summary and a credit to Utilities Expense

Treasury Stock is a(n) A. contra asset account B. retained earnings account C. asset account D. contra stockholders' equity account

D. contra stockholders' equity account

Gomez Corporation issues 800, 10-year, 8%, $1,000 bonds dated January 1, 2012, at 96% of face value. The journal entry to record the issuance will show a A. debit to Cash of $800,000 B. credit to Discount on Bonds Payable for $32,000 C. credit to Bonds Payable for $768,000 D. debit to Cash for $768,000

D. debit to Cash for $768,000

A company receives $88, of which $8 is for sales tax. The journal entry to record the sale would include a A. debit to Sales Tax Expense for $8 B. credit to Sales Tax Payable for $8 C. debit to Sales for $88 D. debit to Cash for $80

D. debit to Cash for $80

Cash dividends paid to the stockholders will: A. increase assets and decrease liabilities B. decrease assets and increase liabilities C. have no effect on stockholders' equity D. decrease assets and decrease stockholders' equity

D. decrease assets and decrease stockholders' equity

Each of the following items affect the cash balance per books except: A. bank service charges B. notes collected by the bank C. NSF checks D. outstanding checks

D. outstanding checks

(LO 1) Which of these is not a major advantage of a corporation? 1. Separate legal existence. 2. Continuous life. 3. Government regulations. 4. Transferable ownership rights.

Government regulations.

ABC Corp. issues 1,000 shares of $10 par value common stock at $12 per share. When the transaction is recorded, credits are made to: 1. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $2,000. 2. Common Stock $12,000. 3. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000. 4. Common Stock $10,000 and Retained Earnings $2,000.

3. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000.

The return on common stockholders' equity is usually increased by all of the following, except: 1. an increase in the return on assets ratio. 2. an increase in the use of debt financing. 3. an increase in the company's stock price. 4. an increase in the company's net income.

3. an increase in the company's stock price.

In the stockholders' equity section of the balance sheet, common stock: 1. is listed before preferred stock. 2. is added to total capital stock. 3. is part of paid-in capital. 4. is part of additional paid-in capital

3. is part of paid-in capital.

U-Bet Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2022. No dividends were declared in 2020 or 2021. If U-Bet wants to pay $375,000 of dividends in 2022, common stockholders will receive: 1. $0. 2. $295,000. 3. $215,000. 4. $135,000.

4. $135,000.

Zealot Inc. has retained earnings of $500,000 and total stockholders' equity of $2,000,000. It has 100,000 shares of $8 par value common stock outstanding, which is currently selling for $30 per share. If Zealot declares a 10% stock dividend on its common stock: 1. net income will decrease by $80,000. 2. retained earnings will decrease by $80,000 and total stockholders' equity will increase by $80,000. 3. retained earnings will decrease by $300,000 and total stockholders' equity will increase by $300,000. 4. retained earnings will decrease by $300,000 and total paid-in capital will increase by $300,000.

4. retained earnings will decrease by $300,000 and total paid-in capital will increase by $300,000.

Preferred stock may have priority over common stock except in: 1. dividend preference. 2. preference to assets in the event of liquidation. 3. cumulative dividends. 4. voting.

4. voting.

Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders' equity of $1,200,000. It has 200,000 shares of $2 par value common stock outstanding which is currently selling for $5 per share. If Candela Company declares a 2-for-1 stock split on its common stock, which of the following will occur? This is correct answer : A Par value will become $1.00 per share. B Par value will become $2.00 per share. C Total par value of outstanding shares will increase. D Par value will become $2.50 per share.

A Par value will become $1.00 per share.

What happens if no-par value stock does not have a stated value? A The entire proceeds from the issuance of the stock becomes legal capital. B The entire proceeds from the issuance of the stock becomes additional paid-in capital. C The entire proceeds from the issuance of the stock becomes cash dividends. D The entire proceeds from the issuance are recorded as retained earnings.

A The entire proceeds from the issuance of the stock becomes legal capital.

50 shares of $5 par preferred stock are issued for $20 per share. Total Paid-in Capital: Increase Retained Earnings: none Total Stockholders' Equity: increase

A $1 per share cash dividend is declared and issued Total Paid-in Capital: no effect? Retained Earnings: decrease Total Stockholders Equity: decrease

The interest charged on a $200,000 note payable, at the rate of 6% (assuming a 360 day year), on a 60-day note would be A. $12,000 B. $6,000 C. $3,000 D. 2000

D. 2000

Which are a contra account Allowance Unearned service rev Treasury stock All of the above

All of the above

In what way is a corporation different from a sole proprietorship or partnership? A A corporation's temporary accounts are closed at the end of the accounting period. B A corporation is subject to more federal and state government regulations. C A corporation is organized for the purpose of making a profit. D A corporation is an accounting economic entity.

B A corporation is subject to more federal and state government regulations.

Which of the following is true about corporations? A Stockholders wishing to sell their corporation shares must get the approval of other stockholders. B The corporation's life is stipulated in its charter. C A stockholder is personally liable for the debts of the corporation. D Stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.

B The corporation's life is stipulated in its charter.

Hadley Corporation issued 200,000 shares of $5 par value common stock for $25 per share. During that year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show A common stock of $5,000,000. B common stock of $1,000,000. C total paid-in capital of $4,600,000. D total paid-in capital of $5,400,000.

B common stock of $1,000,000.

When a corporation purchases treasury stock, the acquisition A increases the company's total assets and total stockholders' equity. B decreases the company's total assets and total stockholders' equity. C requires that a gain or loss be recognized on the income statement. D has no effect on total assets and total stockholders' equity.

B decreases the company's total assets and total stockholders' equity.

Use the following selected information from ABC Corporation to determine the amount that will be reported on the balance sheet for retained earnings: Beginning Retained Earnings $3,000,000 Beginning Common Stock $300,000 Ending Common Stock $430,000 Total Revenues $850,000 Total Expenses $1,120,000 Dividends $0 A. $3,540,000 B. $2,730,000 C. $2,860,000 D. $3,160,000

B. $2,730,000

Which one of the following is not an objective of a system of internal controls? A. Safeguard company assets B. Overstate liabilities in order to be conservative C. Enhance the accuracy and reliability of accounting records D. reduce the risk of errors

B. Overstate liabilities in order to be conservative

If a company uses a perpetual inventory system, it will maintain all of the following accounts except: A. Cost of Goods Sold B. Purchases C. Sales D. Inventory

B. Purchases

Disposal of Asset Jones Company purchased a machine for $20,000 on January 1, 2011. __ machine has been depreciated using straight-line method over an 8 year life with a $4,000 salvage value. If Jones Company sells the machine on January 1, 2013 for $12,000, what gain or loss should the company record on the sale? Fill in the blanks below. Cost: 20,000 Depreciation = 20,000 - 4,000 / 8 years = 2000 * 2 = (4000) Book Value at Disposal: 16000 Proceeds from Sale: 12,000 Is there a Gain or a Loss? Loss Amount of gain or loss $4000

Bonds Payable On July 1, 2011, Triton Company issued $850,000 of 9%, 10-year bonds, with semi-annual interest payments on January 1 and July 1. The bonds were issued at par. Using the accounts below, prepare the necessary entries for July 1, 2011 and December 31, 2011. Enter amounts with no commas and no dollar signs. Chart of Accounts: Bonds Payable, Cash, Interest Expense, Interest Payable, Interest Receivable, Interest Revenue July 1, 2011 Debit Cash $850,000 Credit Bonds Payable $850,000 850,000 * 9% * 6/12 = 38250 December 31, 2011 Debit Interest Expense $38250 Credit Interest Payable $38250

A ________ does not require a formal journal entry on a corporation's books. A 100% stock dividend B 2% stock dividend C 2-for-1 stock split D $1.00 per share cash dividend

C 2-for-1 stock split

Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders' equity of $1,200,000. It has 200,000 shares of $2 par value common stock outstanding which is currently selling for $5 per share. If Candela Company declares a 2-for-1 stock split on its common stock, which of the following will occur? A Total paid-in capital will increase by $1,000,000. B Retained earnings will decrease by $1,000,000. C There will be no effect on total common stockholders' equity. D Net income will increase by $1,000,000.

C There will be no effect on total common stockholders' equity.

When a company declares a stock dividend, the declaration will A increase total assets. B increase total liabilities. C increase paid-in capital. D change the total of stockholders' equity.

C increase paid-in capital.

In addition to cash, the issuance of common stock affects A only the retained earnings account. B only the income statement. C only the paid-in capital accounts. D both the paid-in capital account and the retained earnings account.

C only the paid-in capital accounts.

When companies set their dividend payout, they generally aim for a rate that is A variable. B high. C sustainable. D low.

C sustainable.

What is the total stockholders' equity based on the following account balances? Common Stock $400,000 Paid-in Capital in Excess of Par 50,000 Retained Earnings 175,000 Treasury Stock 25,000 A. $650,000 B. $625,000 C. $600,000 D. $450,000

C. $600,000

Keller Company issued a five-year interest-bearing note payable for $100,000 on January 1, 2011. Each January the company is required to pay $20,000 on the note. How will this note be reported on the December 31, 2012 balance sheet? A. Long-term Debt, $100,000 B. Long-term Debt, $80,000 C. Long-term Debt, $60,000; Long-term Debt due within one year, $20,000 D. Long-term Debt of $80,000; Long-term Debt due within one year, $20,0

C. Long-term Debt, $60,000; Long-term Debt due within one year, $20,000

If Norben Company issues 2,000 shares of $5 par value common stock for $140,000, the account A. Common Stock will be credited for $140,000 B. Paid-in Capital in Excess of Par Value will be credited for $10,000 C. Paid-in Capital in Excess of Par Value will be credited for $130,000 D. Cash will be debited for $130,000

C. Paid-in Capital in Excess of Par Value will be credited for $130,00

Generally accepted accounting principles are primarily formulated by: A. the Securities and Exchange Commission B. the American institute of Certified Public Accountants C. The Financial Accounting Standards Board D. The Federal Reserve Board

C. The Financial Accounting Standards Board

Bonds that may be exchanged for common stock at the option of the bondholders are called A. options B. stock bonds C. convertible bonds D. callable bonds- bonds that you can retire

C. convertible bonds

A business purchases a truck by signing a note payable to the seller. Such a transaction would include a: A. credit to truck B. debit to Note Payable C. credit to Note Payable D. debit to an expense account

C. credit to Note Payable

Advantages of the corporate form of organization is Disadvantage = tax treament A. professional management B. tax treatment C. ease of transfer of ownership D. its status as a separate legal entity

C. ease of transfer of ownership

Which of the following statements is true? A A stock split will increase the number of shares outstanding and will increase total stockholders' equity. B Both a stock split and a stock dividend will increase the number of shares outstanding and will both increase total stockholders' equity. C A stock split will increase the number of shares outstanding but will decrease total stockholders' equity. D Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity.

D Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity.

ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to A Common Stock $10,000 and Retained Earnings $2,000. B Common Stock $12,000. C Common Stock $10,000 and Paid-in Capital in Excess of Stated Value-Common Stock $2,000. D Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000.

D Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000.

Clayworks Corporation issued 300,000 shares of $5 par value common stock for $26 per share. During that year, the corporation sustained a net loss of $80,000. The year-end balance sheet would show A total paid-in capital of $7,000,000. B total paid-in capital of $6,300,000. C common stock of $7,800,000. D common stock of $1,500,000.

D common stock of $1,500,000.

On July 1, 2012 Linden Company purchased the copyright to Norman Computer Tutorials for $160,000. It is estimated that the copyright will ___ useful life of 5 years. The amount of Amortization Expense recognized for the year 2012 would be A. $32,000 B. $15,000 C. $29,600 D. $16,000

D. $16,000

A company purchased land for $210,000 cash. Real estate brokers' commission was $15,000 and $21,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at: same numbers A. $231,000 B. $210,000 C. $225,000 D. $246,000

D. $246,000

A company uses the percentage-of-receivables method of accounting for uncollectables. The year end accounts receivable are $225,000 and 2% are estimated uncollectible. The Allowance for Doubtful Accounts prior to adjustment has a debit balance of $1,400. The amount of the adjusting entry is: Same number A. $1,400 B. $3,100 C. $4,500 D. $5,900

D. $5,900

Smith Corporation purchased 100 shares of its $1 par common stock for $9 per share. Treasury Stock 900 Cash 900 Cash = decrease Common Stock = unaffected Treasury Stock = increase

Impact of Stockholders' Equity Events The transactions 48-50 list common equality transactions. For each, select the proper effect on Paid-in Capital, Retained Earnings, and Total Stockholders' Equity. A 2 for 1 stock split is issued. Total Paid-in Capital: no effect Retained Earnings: no effect Total Stockholders' Equity: no effect Increase in number of shares Reduction in the par or stated value No effect on Paid in Capital, Retained Earnings, and Total stockholders equity

Which of these statements is false? 1. Ownership of common stock gives the owner a voting right. 2. The stockholders' equity section begins with paid-in capital. 3. The authorization of capital stock does not result in a formal accounting entry. 4. Legal capital is intended to protect stockholders.

Legal capital is intended to protect stockholders.

Treasury stock may be repurchased: 1. to reissue the shares to officers and employees under bonus and stock compensation plans. 2. to signal to the stock market that management believes the stock is underpriced. 3. to have additional shares available for use in the acquisition of other companies. 4. More than one of the above.

More than one of the above.

Straight-line and Units of Production Depreciation Whitney Company purchased machinery on July 1, 2010, at a total cost of $104,000. Estimated residual value is $8,000, estimated life is 5 years or 20,000 hours. During 2010 and 2011, the machinery was used 2,100 and 4,500 hours, respectively. Compute depreciation under straight-line and units-of-production methods for the years ended December 31, 2010 and December 31, 2011. (Assume the company uses a calendar year end). Fill in the blanks with the amounts of the depreciation expense for the year under the different methods. Enter amounts with no commas and no dollar signs. Straight-line depreciation 2010 $_________ 2011 $________ Units of production depreciation 2010 $ 2011 $

Straight-line depreciation 2010 $__9600___ ( accumulated dep. = 38400) 2011 $___19200__ Units of production depreciation 2010 $__10080___ (acc. Dep. = 31680) 2011 $___21600__

A corporation's own stock that has been reacquired by the corporation and is being held for future use.

Treasury Stock

Entries for cash dividends are required on the: 1. declaration date and the record date. 2. record date and the payment date. 3. declaration date, record date, and payment date. 4. declaration date and the payment date.

declaration date and the payment date.

If everything else is held constant, earnings per share is increased by: 1. the payment of a cash dividend to common shareholders. 2. the payment of a cash dividend to preferred shareholders. 3. the issuance of new shares of common stock. 4. the purchase of treasury stock.

the purchase of treasury stock.

In the stockholders' equity section, the cost of treasury stock is deducted from: 1. total paid-in capital and retained earnings. 2. retained earnings. 3. total stockholders' equity. 4. common stock in paid-in capital.

total paid-in capital and retained earnings.