Accounting Final

Which of the following conditions indicate a company has a relatively high level of financial risk? A) A low times-interest earned ratio B) A low debt to assets ratio C)A high return on equity

A) A low times-interest earned ratio

Which of the following describes a callable bond? A) Can be called for early retirement at the option of the issuer. B) Can be called for early retirement at the option of the bondholder. C) Convertible to common stock at the option of the bondholder.

A) Can be called for early retirement at the option of the issuer.

Hudson Co. borrowed $20,000 from Dallas Co. on March 1, Year 1. Houston issued a note payable that had one year term and annual interest rate of 8%. How will the necessary adjustment, dated December 31 Year 1, affect the elements of the Year 1 financial statements? A) Increase liabilities and increase expenses. B) Increase assets and increase revenues.

A) Increase liabilities and increase expenses.

Which of the following would be classified as a tangible asset? A) Land B) Goodwill C) Copyright

A) Land

Which of the following correctly shows the effect of the insurance of the note on Platte's financial statements? *chart* A) Option A B) Option B C) Option C D) Option D

A) Option A

The Platte Corporation issues a 5-year note payable on January 1, 2016 for $5,000. The interest rate is 5% and the annual payment of $1,156 due each December 31, includes both interest and principal. Which of the following answers correctly shows the effect of the issuance of the note on Platte's financial statements? A) assets liability $5,000 equity revenue expense net inco - NA Cash Flow +FA B) assets 5,000 .... C) assets 5,000... D) assets NA...

A) assets liability $5,000 equity revenue expense net inco - NA Cash Flow +FA

*Paragraph on harding company* What value will be recorded of the building? A) $175,000 B) $950,000

B) $950,000

A company's classified balance sheet show current assets $8650 and current liabilities of $6,000. What is the company's current ratio? A) 0.69 to 1 B) 1.44 to 1 C) 1.16 to 1

B) 1.44 to 1

Which of the following correctly describes an installment note? A) An installment note requires interest payments with the entire principal paid at maturity. B) An installment note requires earl payments of interest and principal in which the amount of interest decreases over the life of the note. C) An installment note requires equal payments of interest and principal in which the amount of interest increases over the life of the note.

B) An installment note requires earl payments of interest and principal in which the amount of interest decreases over the life of the note.

Which financial statement reports the amount of accumulated depreciation? A ) Income statement B) Balance sheet C) Statement of cash flows

B) Balance sheet

Which of the following describes the characteristics of a convertible bond? A) Bonds mature at specified intervals throughout the life of the total issuance. B) Bonds may be exchanged for stock at the discretion of the bondholder. C) bonds mature on a specified date in the future.

B) Bonds may be exchanged for stock at the discretion of the bondholder.

Which of the following terms is used to describe the process of expense recognition for property plant and equipment? A) Amortization B) Depreciation C) Depletion

B) Depreciation

Franklin Company issued a $40,000 note to the Mercantile Bank on August 1, Year 1. The note carried a one-year term and a 12% rate of interest. How will the adjusting entry, dated December 31, Year 1, to record accused interest expense impact the elements of the financial statements ? A) Decrease assets and decrease retained earnings by $2,000 B) Increase liabilities and decrease equity by $2,000

B) Increase liabilities and decrease equity by $2,000

What is the current ratio used to evaluate? A) Solvency B) Liquidity C) Equity

B) Liquidity

The Platte Corporation issues a 5-year note payable on January 1, 2016 for $5,000. The interest rate is 5% and the annual payment of $1,156 due each December 31, includes both interest and principal. Which of the following shows the effect of the December 31, 2016 payment? A) not answer B) liability 906 Cash flow (906) FA (250)

B) liability 906 Cash flow (906) FA (250)

The times-interest-earned ratio is calculated by which of the following? A) Total assets divided by interest expense B) Net income divided by interest expense. C) Earnings before interest and taxes divided by interest expense.

C) Earnings before interest and taxes divided by interest expense.

... Which of the following is correct? A) Gates' current ratio will be higher than Markham's B) Gates' current ratio will be lower than Markham's C) Gates' debt to asset ratio will be higher than Markham's

C) Gates' debt to asset ratio will be higher than Markham's

Which of the following is considered an accelerated depreciation method? A) Double-declining balance B) Units -of-production C) MACRS D) Both double-declining -balance and MACRS

D) Both double-declining -balance and MACRS

Flagler Company purchased equipment that cost $90,000. A) Option A B) Option B C) Option C D) Option D

D) Option D

Which of the following shows the effect of the December 31, Year 1 Payment? *chart* A) Option A B) Option B C) Option C D) Option D

D) Option D

Under what conditions should a pending lawsuit be recognized as a liability on a company's balance sheet? A) The amount can be reasonably estimated B) The outcome is probable. C) The outcome is reasonably possible. D) The outcome is probable and can be reasonably estimated.

D) The outcome is probable and can be reasonably estimated.