Accounting

Cash dividends are recorded on the:

Declaration date and payment date

When treasury stock is acquired, what is the effect on total stockholders' equity?

Decrease

Which of the following statements regarding the corporate form of business is correct?

Disadvantages are that the business is subject to government regulations and double taxation on its income.

The issuance of notes payable for borrowing is classified in the statement of cash flows as a(n):

Financing activity

Advantages of the corporate form of business include which of the following? I. Double taxation II. Ability to raise capital III. Ability to transfer ownership IV. More paperwork V. Limited liability

II., III., V

If a company issues 1,000 shares of $1 par value common stock for $20 per share, what would be the effect on the balance sheet?

Increase assets and increase stockholders' equity

A company issued 20,000 shares of $1 par value common stock for $80,000. The issuance would have which of the following effects?

Increase the Common Stock account for $20,000.

On June 1, the board of directors declares a cash dividend to be paid on June 30 to stockholders of record on June 15. On which date would the company record the Dividends Payable account?

June 1

Kansas Enterprises purchased equipment for $60,000 on January 1, 2024. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years. Using the straight-line method, depreciation expense for 2025 and the book value at December 31, 2025, would be:

$11,000 and $38,000, respectively.

Loring Company reported net income of $225,000. Beginning and ending inventory balances were $47,500 and $49,500, respectively. Accounts payable balances at the beginning and end of the year were $41,500 and $37,500, respectively. Assuming that all relevant information has been presented, the company would report net operating cash flows of:

$219,000.

During 2024, Victory Solutions had the following cash flows: (1) received cash of $5,000 billed to a customer in 2023; (2) earned $20,000 of net income; (3) paid interest of $6,000 on a corporate bond issued; (4) paid dividends of $8,000 to its stockholders; (5) borrowed $40,000 from a local bank; and (6) purchased its own shares of common stock for $10,000. What is Victory Solutions' net cash flows fromfinancing activities for 2024?

$22,000

Assume net income was $220,000, depreciation expense was $5,900, accounts receivable decreased by $11,500, and accounts payable decreased by $2,700. The amount of net cash flows from operating activities is:

$234,700.

Clothing Emporium was organized on January 1, 2024. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2024, Clothing Emporium had the following transactions relating to stockholders' equity: Issued 30,000 shares of common stock at $7 per share Issued 20,000 shares of common stock at $8 per share Reported a net income of $100,000 Paid dividends of $50,000

$250,000

California Adventures issues 5,000 shares of 8%, $100 par value preferred stock at the beginning of 2023. All remaining shares are common stock. The company was not able to pay dividends in 2023, but plans to pay dividends of $100,000 in 2024.Assuming the preferred stock is noncumulative, how much of the $100,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2024?

$40,000 to preferred stockholders and $60,000 to common stockholders

Surf's Up, Incorporated issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2023. All remaining shares are common stock. The company was not able to pay dividends in 2023, but plans to pay dividends of $18,000 in 2024.Assuming the preferred stock is noncumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2024?

$6,000 to preferred stockholders and $12,000 to common stockholders

A company had the following cash flows for the year: (a) Purchased land, $60,000 (b) Borrowed from a local bank, $100,000 (c) Paid employee salaries, $50,000 (d) Issued common stock, $75,000 (e) Paid dividends, $20,000 (f) Sold equipment, $40,000 (g) Sold services to customers, $120,000 What amount would be reported for netinvesting cash inflows (outflows) in the statement of cash flows?

($20,000)

Consider the following items: (a) Decrease in accounts receivable(b) Issuance of common stock(c) Increase in interest receivable(d) Purchase of land(e) Decrease in accounts payable(f) Gain on the sale of equipment(g) Depreciation expense(h) Payment of dividends(i) Decrease in utilities payable(j) Increase in inventory How many of these items would be added to net income when using the indirect method to prepare the operating activities section of the statement of cash flows?

2

When $2,500 of accounts receivable are determined to be uncollectible, which of the following should the company record to write off the accounts using the allowance method?

A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable

When treasury stock is resold at a price above cost:

Additional Paid-in Capital is increased.

Why would a corporation purchase its own stock?

All of the other answer choices are correct.

In preparing a statement of cash flows under the indirect method, adjustments to net income include:

All of these answers are adjustments needed under the indirect method.

Paying salaries to employees for the current period would have what effect on the accounting equation?

Assets decrease and stockholders' equity decreases

Which of the following financing alternatives has the highest preference for dividends/interest payments?

Bonds

The par value of shares issued is normally recorded in the:

Common Stock account

Arrow Printers paid $2,000 interest on short-term notes payable, $10,000 interest on long-term bonds, and $6,000 in dividends on its common stock. Arrow would report cash outflows from activities, as follows:

Operating, $12,000; Financing, $6,000

On December 2, Coley Corporation acquired 1,000 shares of its $3 par value common stock for $24 each.On December 20, Coley Corporation resold 600 shares for $14 each. Which of the following is correct regarding the journal entry for the resold shares?

Credit Treasury Stock $14,400

When a company issues 33,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include a:

Credit to Additional Paid-in Capital for $297,000.

On November 1, 2024, New Morning Bakery signed a $200,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2025. New Morning Bakery should record which of the following adjusting entries at December 31, 2024?

Debit Interest Expense and credit Interest Payable, $2,000

On July 1, 2024, Charlie Company paid $18,000 to Rent-An-Office for rent covering 18 months from July 2024 through December 2025. What adjusting entry should Charlie Company record on December 31, 2024?

Debit Rent Expense and credit Prepaid Rent for $6,000

Large stock dividends and stock splits are issued primarily to:

Lower the trading price of the stock per share

The issuer of a 5% common stock dividend (small stock dividend) to common stockholders should debit Stock Dividends for an amount equal to the:

Market value of the shares issued

We calculate cash return on assets as

Net cash flows from operating activities divided by average total assets.

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect net income for the current period?

Net income will be too high.

When an investment is made in another corporation's common stock, what is the effect on total stockholders' equity?

No effect

The payment of salaries is classified in the statement of cash flows as a(n):

Operating activity

The board of directors of Capstone Incorporated declared a $0.90 per share cash dividend on its $3 par common stock. On the date of declaration, there were 42,000 shares authorized, 22,000 shares issued, and 4,000 shares held as treasury stock.What is the entry when the dividends are declared? TransectionAccount TitleDebitCreditA.Dividends16,200A.Dividends Payable16,200B.Dividends16,200B.Cash16,200C.Dividends37,800C.Dividends Payable37,800D.Dividends19,800D.Cash19,800

Option A

The correct order from the smallest number of shares to the largest number of shares is:

Outstanding, issued, and authorized

The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should credit Common Stock for an amount equal to the:

Par value of the shares issued

Which of the following is correct about the statement of cash flows?

Paying dividends to investors creates a cash outflow from financing activities.

A feature common to both stock splits and stock dividends is:

That there is no effect on total stockholders' equity

All publicly held corporations are regulated by what government organization?

The Securities and Exchange Commission

Common stockholders usually have all of the following rights except:

To participate in the day-to-day operations.

The balance of Retained Earning at the end of the year represents:

Total earnings less payments to owners over the life of the company

The corporation's own stock that has been issued and then bought back by the company is referred to as:

Treasury Stock