Financial Accting Final

Many stockholders choose to invest in preferred stock because:

Dividends are distributed to preferred stockholders before common stockholders

When will bonds sell at a discount?

The state rated of interest is less than the market rate of interest at the time of issue

If bonds are issued at 101.25, this means that:

$1000 bond sold for $1012.50

The interest charged by the bank, at the rate 9%, on a 3-month, discounted note payable for 100,000 is:

$2,250 (9000 / 4 = 2250)

The excess of sales price of treasury stock over it's cost should be credited to:

Additional Paid-In Capital

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

Decrease as the bonds approach their maturity date

One of the main disadvantages of the corporate form is

Double taxation of dividends

1. Current Liabilities Are...

Due and payable within one year

When a corporation declares a cash dividend, which of the following is true?

Equity decreases

When a corporation declares a stock dividend, which of the following is true?

Equity remains the same

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

Financing activities

Issued shares represent the

Number of shares that the corporation has sold

Which of the following would most likely be classified as a current liability?

Portion of a long-term debt due within one year

Under the effective interest method, the cash paid on each interest payment date will:

Remain constant regardless of the issuance price