Acct Exam 1
Which of the following characteristics refers to the fact that the property invested in a partnership by a partner becomes the joint property of all partners?
Co-ownership
Which of the following statements concerning taxation is accurate?
corporations pay state and federal income taxes
The entry to record issuance of an installment notes payable would include a
credit to notes payable
The entry to record an installment note payment would include a
debit to Notes Payable.
The journal entry to record the existing partners' purchase of a withdrawing partner's interest includes a
debit to the capital account of the partner withdrawing.
A debit balance in the capital account of a partner after selling noncash assets as part of liquidation is known as a
deficiency
When a partnership goes out of business, it is liquidated. The second step in this process is
division of gains or loss
The market interest rate related to a bond is also called the
effective interest rate
Cash dividends are paid on __________ stock.
outstanding
The statement of partnership equity shows all of the following except
realization
All of the following statements about retained earnings are true except
retained earnings represent surplus cash
Under the corporate form of business organization,
stockholders wishing to sell their shares need not get the approval of other stockholders, thus making it easy to transfer ownership rights.
Earnings per share is calculated by
(Net Income - Preferred Dividends)/Average Number of Common Shares Outstanding.
A corporation has 40,000 shares of $25 par value stock outstanding and 45,000 authorized shares. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be
120000
Ames and Barton are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and $70,000, respectively, at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $80,000. What amount of loss on realization should be allocated to Barton?
20000
Clarence and Clay are partners who share income in the ratio of 2:3 and have capital balances of $50,000 and $30,000, respectively. Miguel is admitted to the partnership and is given a 40% interest by investing $30,000. What is Clarence's capital balance after Miguel is admitted?
44400
As part of the initial investment, a partner contributes equipment that had originally cost $80,000 and on which accumulated depreciation of $50,000 has been recorded. If the partners agree on a valuation of $50,000 for the contributed equipment, what amount should be debited to the equipment account?
50000
Which of the following is incorrect with regard to forming a partnership?
Assets contributed by partners are debited to capital accounts
Which of the following statements is true concerning stock splits?
Each shareholder will own the same total par amount of stock before and after the split.
Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the reissuance would include a credit to
Paid-In Capital from Sale of Treasury Stock for $1,000.
Which of the following statements is not correct with regard to prior period adjustments?
Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period.
Which of the following is a characteristic of a partnership?
The partnership has limited life.
The balance in Unamortized Premium on Bonds Payable should be
added to the face amount of the related bonds payable on the balance sheet.
Any unamortized premium is reported
addition to the face amount
Common methods to divide partnership income or losses include all of the following except
basing it on working capital
When a new partner is admitted by contributing assets to the partnership,
both total assets and total owner's equity of the partnership are increased.
hich of the following is the appropriate general journal entry to record the declaration of cash dividends?
cash dividends cash dividends payable
A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 2-for-1 stock split, the market value of the stock is
expected to fall approximately $60
On the statement of partnership equity, each partner's capital account
in a separate column
Cumulative preferred stock
includes the right to receive regular dividends that were not declared (paid) in prior years.
Corporations whose stock is traded in a public market must report earnings per share on their
income statement
Retained earnings
is the cumulative total of net income, minus net losses, minus dividends
The interest portion of an installment note payment is computed by
multiplying the interest rate by the carrying amount (book value) of the note at the beginning of the period.
Which of the following increases retained earnings?
net income
Callable bonds are advantageous to the corporation because
the corporation reserves the right to redeem them early