Accounting 5-8
Which of the following entities would have a paid-in capital in excess of par (or stated) value account in the equity section of the balance sheet?
A corporation
Which of the following entities would report income tax expense on its income statement?
A corporation
Which of the following would not be a reason for the market price of Carlyle Corporation to increase?
A sustained increase in key interest rates
How would accountants estimate the amount of a company's uncollectable accounts expense.
All are correct
Which of the following statements is a reason why a company would buy treasury stock?
All of these are reasons a company would buy treasury stock.
Which of the following is not a reason why a corporation may choose to not pay dividends?
All of these are valid reasons to not pay dividends.
Which of the following statements best describes the term "par value"
An amount used in determining a corporation's legal capital
Which of the following items would be least likely to appear in the current liabilities section of a classified balance sheet?
Bonds Payable
Which form of business organization is established as a legal entity separate from its owners?
Corporation
The term "double taxation" refers to which of the following?
Corporations must pay income taxes on their net income, and their stockholders must pay income taxes on their dividends.
Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?
LIFO
Which of the following is not considered an advantage of the corporate form of business organization?
Lack of government regulation
The amount of accounts receivable that is actually expected to be collected is known as the:
Net realizable value
Which of the following terms designates the maximum number of shares of stock that a corporation may issue?
Number of shares authorized
Which of the following items is not classified as a current asset?
Office equipment
Which of the following statements about the impact of treasury stock on the amounts reported on the balance sheet is correct?
The balance in the treasury stock account reduces total stockholders' equity
Under what condition is a pending lawsuit recognized as a liability on a company's balance sheet?
The outcome is probable and can be reasonably estimated.
Which of the following is not normally a preference given to the holders of preferred stock?
The right to vote before the common stockholders at the corporation's annual meeting
Which of the following is a negative or contra equity account?
Treasury stock
Which of the following is a disadvantage of a sole proprietorship?
Unlimited liability
When do the effects of product warranties appear on the statement of cash flows?
When there is a settlement of a warranty claim made by a customer.
Which of the following is a claims exchange transaction?
accrued interest on a note payable
The practice of reporting the net realizable value of receivables in the financial statements is commonly called:
allowance method of accounting for uncollectible accounts
Which of the following terms is used to identify the expense recognition for intangible assets?
amortization
Issuing a not payable is a(n):
asset source transaction
The party who borrows money in a note payable is known as the:
both maker and issuer
Which of the following businesses is most likely to use a specific identification cost flow method?
car dealership
Which of the following terms is used to identify the process of expense recognition for property, plant and equipment
depreciation
Which of the following intangible assets does not convey a specific legal right or privilege?
goodwill
Which of the following statements is correct regarding accounting treatment of goodwill?
goodwill is recorded as an asset and is not written off as an expense unless its value decreases
The par value of a company's stock:
has little connection to the market value of the stock
What term is used to describe the situation where the value of an intangible asset may be significantly diminished?
impairment
The primary reason for a business to allow customers to purchase goods or services on accounts is to:
increase sales
Which of the following would be classified as a tangible asset?
land
Bonds payable are usually classified on the balance sheet as:
long-term liabilities
Which of the following assets does not have an indefinite useful life?
patent
A company that uses the allowance method to account for uncollectible accounts:
reports the net realizable value of its accounts receivable on the balance sheet
Issuing bonds payable when the market rate of interest is less than the stated interest rate:
results in bonds issued at a premium.
Which one of the following is not an accurate description of the allowance for doubtful accounts?
the account is a temporary account.
The percent of receivables method to estimate uncollectible accounts expense is also known as:
the balance sheet approach
Which of the following should be the main determinant for selection of the allocation method for long term operational assets?
the method that best matches the pattern of asset use
Which of the following is not an advantage of accepting credit cards from retail customers?
there are fees charged for the privilege of accepting credit cards.
Regardless of the specific type of long-term debt, which of the following is normally required with debt transactions?
to repay the interest and repay the debt
Which of the following would be classified as a long term operational asset?
trademark
Goodwill may be recorded in which of the following circumstances?
when one business acquires another business