Accounting I Final
50)In the fixed-percentage-of-declining-balance depreciation method, the book value of the asset is multiplied by A) A constant depreciation rate. B) An increasing depreciation rate. C) A rate that changes each year but is determined from a table. D) A decreasing depreciation rate.
A constant depreciation rate
116) The entry to record the issuance of common stock at a price above its par value includes: A) A debit to Common Stock. B) A credit to Cash. C) A credit to Additional Paid-in Capital: Common Stock. D)A credit to a liability account for the difference between the price paid by the stockholders and the par value of the stock.
A credit to Additional Paid-in Capital: Common Stock
168) Declaration and distribution of a stock dividend cause each of the following effects except: A) A decrease in retained earnings. B) An increase in legal capital of the issuing corporation. C) An increase in the number of shares of stock outstanding. D) A decrease in total assets of the issuing corporation.
A decrease in total assets of the issuing corporation.
143) An example of an unusual and infrequent gain or loss is: A) A large gain from disposal of a segment of the business. B) A loss due to restructuring charges. C)A gain or loss from sale of an expensive machine no longer needed in the business. ' D)A large loss arising from inability to collect an account receivable from a bankrupt customer.
A loss due to restructuring charges.
142) Which of the following would not be classified as an unusual and/or infrequent item? A) A loss from an enacted law that made inventory unsalable B) A loss from settlement of a lawsuit C) A loss from restructuring charges D) A loss from a natural disaster that affects the company at infrequent intervals
A loss from restructuring charges
44) The cost of a new windshield wiper on a delivery vehicle would be classified as: A) An unusual and infrequent expense. B) Part of the cost of goods sold. C) A revenue expenditure. D) A capital expenditure.
A revenue expenditure
105) The advantages of corporations going public include all of the following except: A) Limited shareholder liability. B) Ability to remove assets. C) Professional management. D) Transferability of ownership.
Ability to remove assets.
61) All of the following may be considered intangible assets except: A) Goodwill. B) Franchises. C) Copyrights. D) Accounts receivable.
Accounts receivable.
27) The primary reason a physical inventory is taken is to: A) Ensure the periodic inventory record is valued correctly. B)Both ensure the periodic inventory record is being stored securely and that it is valued correctly. C) Adjust the perpetual inventory record for unrecorded shrinkage losses. D) Ensure the perpetual inventory record is being stored in a secure manner.
Adjust the perpetual inventory record for unrecorded shrinkage losses.
29) The write-down of inventory A) Only affects the income statement and not the balance sheet. B) Affects both the income statement and the balance sheet. C) Only affects the balance sheet and not the income statement. D) Affects neither the income statement nor the balance sheet.
Affects both the income statement and the balance sheet.
88) When a company sells bonds between interest dates they will pay which of the following at the first interest payment date? A) An amount more than the stated interest rate times the principal. B) An amount less than the stated interest rate times the principal. C) The company may skip the first interest payment date since the appropriate time has not passed. D) An amount equal to the stated interest rate times the principal.
An amount equal to the stated interest rate times the principal.
46) Capital expenditures are recorded as: A) Income. B) An expense. C) A liability. D) An asset.
An asset.
47) Revenue expenditures are recorded as: A) An expense. B) Income. C) An asset. D) A liability.
An expense.
150) Which of the following statistics is generally computed for both common and preferred stock? A) Annual dividend per share B) Price-earnings ratio (P/E ratio) C) Retained earnings per share D) Earnings per share
Annual dividend per share
68) Assets that have been pledged as security for a loan: A) Are disclosed in the notes to the financial statements. B) Become the property of the lender until the loan is paid in full. C) Are reported as liabilities on the balance sheet. D) Must be sold when the loan matures.
Are disclosed in the notes to the financial statements.
73) Interest payable on a loan becomes a liability: A) At the maturity date. B) When the note payable is issued. C) When the borrowed money is received. D) As it accrues.
As it accrues.
141) The purpose of developing the subtotal "Income from Continuing Operations" in an income statement is to: A) Assist investors in forecasting future operating results. B) Increase the amount of reported net income. C) Provide investors with the information necessary to compute earnings per share. D) Decrease the amount of income subject to income taxes.
Assist investors in forecasting future operating results.
8) When the LIFO costing method is in use, the seller: A)Must sell the oldest unit in inventory first. B) Must sell the most recently acquired units first. C) Assumes that the most recently acquired units are sold first. D) Assumes that the oldest units in inventory are sold first.
Assumes that the most recently acquired units are sold first.
62) International standards require that goodwill: A) Be expensed immediately. B) Be capitalized and amortized over 40 years or less. C) Be capitalized and amortized over 20 years or less. D) Be capitalized and reviewed annually and its value should be adjusted if impaired.
Be capitalized and reviewed annually and its value should be adjusted if impaired.
51) Which of the following situations is impossible? A) Book value is less than residual value. B) Book value is less than the original cost. C) Book value is equal to the residual value. D) Book value is greater than residual value.
Book value is less than residual value.
144) Which of the following items would be included in the discontinued operations section of the income statement? A) Income or loss from operating the segment prior to its disposal. B) Only losses and not gains on the disposal of a segment. C)Both the income (loss) from operating the segment prior to its disposal, and the gain or loss on disposal of the segment. D) The gain or loss on disposal of the segment.
Both the income (loss) from operating the segment prior to its disposal, and the gain or loss on disposal of the segment.
52)Responsibility for selection of the depreciation methods used in financial reporting rests with: A) The FASB. B) The IRS. C) The CPA firm that audits the company's financial statements. D) Company management.
Company management.
4)Kent Company has used the same inventory method for many years. This is an example of which principle A) Consistency B) Realization C) Cost D) Matching
Consistency
155) Diluted earnings per share is a hypothetical computation to warn stockholders what could happen if: A) Convertible securities are converted into shares of common stock. B) Non-recurring losses were to recur. C)Consideration was given to the loss from operations discontinued during the current period. D) Loss contingencies turn out adversely
Convertible securities are converted into shares of common stock.
107) A primary disadvantage of the corporate form of organization is: A)Corporation may continue its operations without disruption despite retirement of individual stockholders. B) Corporate earnings are subject to double taxation. C) Unlimited personal liability for business debts. D) Ownership is difficult to transfer.
Corporate earnings are subject to double taxation.
161) Which of the following would have no effect on Retained Earnings? A) A prior period adjustment B) Declaration of a stock split C) Declaration of a stock dividend D) Declaration of a cash dividend
Declaration of a stock spli
132) Which of the following is not a characteristic of most preferred stock? A) Preference as to dividends. B) No voting power. C) Dividends that vary as income changes. D) Preference as to assets in the event of liquidation of the company.
Dividends that vary as income changes.
139) Doogle Corporation sold a segment of its operations in 2017 and suffered an loss in 2018 that was both unusual and infrequent. Which of the following would be the most useful in attempting to predict Doogle's performance for 2019? A) Doogle's total assets at the end of 2018. B) Doogle's retained earnings at the end of 2018. C) Doogle's income from continuing operations in 2017 and 2018. D) Doogle's net income in 2017 and 2018.
Doogle's income from continuing operations in 2017 and 2018
11)In a period of rising prices, a company is most likely to use the specific identification method of pricing inventory if: A) Management's primary objective is to minimize income taxes. B)Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income. C) Each item in the inventory is unique. D)Management wants the same unit cost assigned to items sold and items remaining in inventory.
Each item in the inventory is unique.
83)Temple Corporation purchased a piece of real estate, paying $400,000 cash and financing $700,000 of the purchase price with a 10-year, 15% installment note. The note calls for equal monthly payments that will result in the debt being completely repaid by the end of the tenth year. In this situation: A)The portion of each payment representing interest expense will increase over the 10-year period, since principal is being paid off, yet the payment amount does not decrease. B)The portion of each monthly payment representing repayment of principal remains the same throughout the 10-year period. C) The aggregate amount of the monthly payments is $700,000. D)Each monthly payment is greater than the amount of interest accruing each month.
Each monthly payment is greater than the amount of interest accruing each month.
10)During a period of steadily falling prices, which of the following methods of measuring the cost of goods sold is likely to result in the lowest taxable income? A) LIFO B) Specific identification C) Average cost D) FIFO
FIFO
2)Which of the following is not considered an acceptable inventory cost method according to GAAP? A) Average cost B) Last-in, first-out C) First-in, last-out D) First-in, first-out
First-in, last-out
151) Earnings per share figures are shown in the income statement: A) For common stock as well as for preferred stock. B) For all publicly owned, as well as for all privately held, corporations. C)For income before non-recurring items and for income from continuing operations, as well as for net income. D As an optional disclosure for all corporations, and may be omitted completely or disclosed in a footnote at the option of the issuing corporation.
For income before non-recurring items and for income from continuing operations, as well as for net income.
63) Which of the following would not be amortized? A) Patent. B) Copyright. C) Franchise fee. D) Goodwill.
Goodwill.
66)Total stockholders' equity of Mallet Company is $4,000,000. The fair market value of Mallet's net identifiable assets (assets less liabilities) is $5,000,000. Hammer Corporation makes an offer to purchase Mallet's entire business for $5,800,000. In this situation: A)Hammer Corporation is willing to pay $1,800,000 for goodwill generated by Mallet and Hammerwill report this goodwill in its balance sheet if the purchase is finalized. B) Mallet Company should report goodwill of $1,800,000 in its balance sheet. C)HammerCorporation is willing to pay $800,000 for goodwill generated by Mallet, and Hammer will report this goodwill in its balance sheet if the purchase is finalized. D) Mallet Company should report goodwill of $800,000 in its balance sheet
HammerCorporation is willing to pay $800,000 for goodwill generated by Mallet, and Hammer will report this goodwill in its balance sheet if the purchase is finalized.
7)The specific identification method is more appropriate than a cost flow assumption method: A) If purchase costs are rising. B) For a large inventory of identical low-priced items. C) If each item in the inventory is unique. D) If purchase costs are falling.
If each item in the inventory is unique.
16)With respect to the valuation of inventory and measurement of the cost of goods sold, the principle of consistency means that the same method should be applied: A) In financial statements and income tax returns. B) By all companies in a given industry. C) In successive accounting periods. D) To all products in the inventory.
In successive accounting periods.
77) The current portion of long-term debt should be reported: A) In the current liabilities section of the balance sheet. B) In the long-term liabilities section of the balance sheet, along with the other long-term debt. C) Separately in the long-term liabilities section of the balance sheet. D) In a separate section of the balance sheet, between long-term liabilities and shareholders' equity
In the current liabilities section of the balance sheet.
133) The financial statements of a corporation that failed during the current year to pay any dividends on its cumulative preferred stock should: A)Show the amount of the omitted dividends as a deduction from retained earnings. B) List the omitted dividends as a long-term liability. C) Include a footnote disclosing the amount of the dividends in arrears. D) Include the amount of the omitted dividends among its current liabilities.
Include a footnote disclosing the amount of the dividends in arrears
1) Which of the following is generally not true about inventory? A) Inventory is usually shown on the balance sheet at cost. B)Inventory must be managed on a unit-by-unit (i.e., specific identification method. C) Inventory is a non-financial asset. D) Inventory consists of all goods owned and held for sale to customers.
Inventory must be managed on a unit-by-unit (i.e., specific identification method.
31) If an error in valuing inventory occurs in one year: A) It has no effect upon the income statement, only on the balance sheet. B) It is self-correcting after two years. C) It has no effect upon income in the following year. D) Retained earnings will be adversely affected until corrected.
It is self-correcting after two years.
53)Which of the following statements is not correct with respect to an asset with a five-year life owned by a company that uses straight-line depreciation and the half-year convention? A)It will have a book value that exceeds its salvage value at the end of its economic life. B) It will have the same depreciation expense in the first and last years. C) It will have a smaller depreciation expense in Year 4 than it does in Year 2. D) It will be depreciated over six accounting years.
It will have a smaller depreciation expense in Year 4 than it does in Year 2.
163) Large stock dividends tend to: A) Keep stock prices down. B) Increase stock prices. C) Have no effect upon stock prices. D) Decrease total assets.
Keep stock prices down.
70) The two basic characteristics of estimated liabilities are: A) Probable and reasonably estimated. B) Probable and non-interest bearing. C) Known to exist and interest bearing. D) Known to exist and amount unable to be determined until a later date.
Known to exist and amount unable to be determined until a later date.
12)During periods of inflation, which method will yield the smallest ending inventory and the largest cost of goods sold? A) Specific identification B) LIFO C) Average cost D) FIFO
LIFO
14)Which of the following inventory approaches is not in accord with the physical flow of merchandise in most businesses? A) FIFO B) Specific identification C) Average cost D) LIFO
LIFO
3)When prices are increasing, which inventory method will produce the highest cost of goods sold? A) Average cost B) FIFO C) Cost of goods sold will be the same under these methods. D) LIFO
LIFO
9)During a period of steadily falling prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit? A) Average cost B) Specific identification C) LIFO D) FIFO
LIFO
6) During periods of inflation, when comparing LIFO with FIFO: A) LIFO inventory would be higher and cost of sales would be lower. B) LIFO inventory would be lower and cost of sales would be higher. C) LIFO inventory and cost of sales would be higher. D) LIFO inventory and cost of sales would be lower.
LIFO inventory would be lower and cost of sales would be higher.
64) Intangible assets are assets used in business operations but which: A) Have been depreciated below their estimated salvage values. B) Lack physical substance. C) Cannot be sold. D) Cannot be specifically identified.
Lack physical substance.
39)Which of the following assets is not subject to depreciation and whose usefulness does not decline over time? A) Copyrights B) Coal mine C) Patents D) Land
Land
108) Public corporations are required by law or regulation to perform all of the following except: A) Disclose their financial information to the public. B) Make regularly scheduled dividend payments to all stockholders. C) Submit much of their financial information to the SEC for review. D) Have their annual financial statements audited by an independent CPA.
Make regularly scheduled dividend payments to all stockholders.
13)In a period of rising prices, a company is most likely to use the FIFO method of pricing inventory if: A) Each item in the inventory is unique. B)Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income. C) Management's primary objective is to minimize income taxes. D)Management wants the same unit cost assigned to items sold and items remaining in inventory.
Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income.
148) The price-earnings ratio is the: A) Market price divided by book value of a share of stock. B) Par value of a share of common stock divided by EPS. C) Market price of a share of common stock divided by EPS. D) Book value of a share of common stock divided by EPS.
Market price of a share of common stock divided by EPS.
160) A small stock dividend is recorded at: A) Book value. B) Market value. C) Par value. D) No amount, just a memorandum entry is required
Market value.
78) Which of the following payroll taxes do not stop once an employee reaches a certain level of income: A) Medicare taxes. B) Unemployment taxes. C) Medicare, Social security, and unemployment taxes. D) Social security taxes.
Medicare taxes.
137) A 2-for-1 stock split will: A) Decrease the total par value of the stock and increase the number of shares outstanding. B) Not change the total par value of the stock and increase the number of shares outstanding. C) Increase the total par value of the stock and increase the number of shares outstanding. D) Increase total stockholders' equity.
Not change the total par value of the stock and increase the number of shares outstanding
45)The application of the matching principle to depreciation of plant and equipment can best be described as: A)Offsetting the revenue of an accounting period with the estimated decline in market value of plant and equipment during the accounting period. B)Offsetting revenue of an accounting period with the portion of the cost of plant and equipment estimated to have been used up during the accounting period. C)The matching of the depreciation expense reported in the income statement for an accounting period with the accumulated depreciation reported in the balance sheet. D) The matching of the book value of an asset with its market value.
Offsetting revenue of an accounting period with the portion of the cost of plant and equipment estimated to have been used up during the accounting period.
164) Dividends become a liability of a corporation: A) On the date payment is to be made. B) On the date the board of directors declares the dividend. C) On the date of record. \ D) When cumulative preferred stock dividends are in arrears
On the date the board of directors declares the dividend.
89) Which of the following is not an accurate statement regarding the distinction between debt and equity? A)Most debt requires the borrower to pay interest; equity financing does not obligate the company to make a specified payment. B) The providers of equity are owners of the business; the providers of borrowed funds are creditors. C)If a business ceases operations and liquidates, claims of all creditors have legal priority over claims of the stockholders. D)Only equity is considered a source of financing for operations of the business, since debt must be repaid at a specified maturity date.
Only equity is considered a source of financing for operations of the business, since debt must be repaid at a specified maturity date.
71) If a business ceases operations and liquidates, which of the following will be paid last? A) Owners. B) Employees. C) Creditors who have collateral for their loans. D) General creditors.
Owners.
104) A call provision on a bond: A) Allows the corporation to revise the stated interest rate. B) Always creates the lowest price at which the bond will sell for. C) Permits the corporation to redeem the bonds at a specified price. D) Allows the corporation to revise the maturity date.
Permits the corporation to redeem the bonds at a specified price.
69) All of the following are examples of current liabilities except: A) Unearned revenue. B) Income taxes payable. C) Pledged assets. D) Accounts payable.
Pledged assets.
156) Which of the following would not be used in computing diluted earnings per share? A) Stock options B)Weighted-average number of shares of common stock outstanding during the year C) Preferred stock D) Convertible bonds
Preferred stock
103) The price at which a bond sells is equal to the: A) Present value to investors of the future principal and interest payments. B) Maturity value of the bonds plus the present value to investors of the future interest payments. C) Sum of the future interest payments, plus the maturity value of the bonds. D) Sum of the future interest payments, minus the maturity value of the bonds.
Present value to investors of the future principal and interest payments
17)In a manufacturing company, the "just-in-time" concept of inventory management is best illustrated by: A)Completing the manufacturing process just before the deadline established by the customer. B) Selling finished products before they go out of style. C)Receiving deliveries of materials from suppliers just before the materials are used in the production process. D)An automated factory that reduces production time below that of other companies in the industry.
Receiving deliveries of materials from suppliers just before the materials are used in the production process
54)The adjusting entries to record depreciation or amortization expense or to write down assets that have become impaired: A) Reduce net income, but have no direct effect on cash balances. B) Affect neither net income nor cash balances. C) Decrease cash balances, but have no direct effect upon net income. D) Reduce both net income and cash balances.
Reduce net income, but have no direct effect on cash balances
28)As a result of taking an annual physical inventory, it usually is necessary in a perpetual inventory system to make an entry: A) Reducing the cost of goods sold. B) Increasing assets and increasing the cost of goods sold. C) Reducing assets and increasing liabilities. D) Reducing assets and increasing the cost of goods sold.
Reducing assets and increasing the cost of goods sold.
167) A large stock dividend and a stock split are similar in that they both cause a: A) Reduction in retained earnings. B) Reduction in total stockholders' equity. C) Reduction in the par value per share. D) Reduction in the market price per share.
Reduction in the market price per share.
37)Armstrong Company recently acquired a new computer system. Which of the following costs associated with the computer should not be debited to the Equipment account? A) Replacement of several circuit boards damaged during installation B) Wages paid to system programmers hired to prepare the new computer for use C) Installation of new electrical power supplies required for the computer D)Insurance coverage purchased by Armstrong to cover the computer during shipment from the manufacturer
Replacement of several circuit boards damaged during installation
114) Which of the following best describes the relationship between revenue and retained earnings? A) Revenue represents a cash receipt; retained earnings is an element of stockholders' equity. B)Revenue represents the price of goods sold or services rendered; retained earnings represents cash available for paying dividends. C) Revenue increases net income, which in turn increases retained earnings. D) Retained earnings is equal to assets minus expenses
Revenue increases net income, which in turn increases retained earnings.
43) Which of the following is a capital expenditure? A) Sales tax paid in conjunction with the purchase of office equipment B) Monthly fuel costs for a truck owned by the company C) Monthly rent of a delivery truck D)Small expenditures to acquire long-lived assets, such as $13 to purchase a wastebasket
Sales tax paid in conjunction with the purchase of office equipment
169) A 2-for-1 stock split: A)Should logically cause the market price per share to drop by approximately 50%. B) Is accounted for in the same way as a 100% stock dividend. C)Is recorded by transferring the par value of additional shares from retained earnings to the common stock account. D)Increases the number of outstanding shares of common stock, but par value per share remains the same as before the split.
Should logically cause the market price per share to drop by approximately 50%.
138) A 2-for-1 stock split: A) Is accounted for in the same way as a stock dividend. B)Is recorded by transferring the par value of additional shares from retained earnings to the common stock account. C)Should logically cause the market price per share to drop by approximately 50%. D)Increases the number of outstanding shares of common stock, but par value per share remains the same as before the split.
Should logically cause the market price per share to drop by approximately 50%.
15)A store that sells expensive custom-made jewelry is most likely to determine its cost of goods sold using: A) Average cost. B) Specific identification. C) First-in, first-out. D) Last-in, last-out.
Specific identification.
109) In a corporation's organization chart, who has/have the highest position? A) Stockholders. B) President. C) CEO. D) Board of directors
Stockholders
106) Which of the following is not a characteristic of the corporate form of organization? A) Stockholders have authority to decide by majority vote the amount of dividends to be paid. B) Shares of stock in a corporation are more readily transferable than is an interest in a partnership. C)The corporation is a very efficient vehicle for obtaining large amounts of capital required for large-scale production. D) The owners of a corporation cannot lose more than the amount of their investment.
Stockholders have authority to decide by majority vote the amount of dividends to be paid
127) Assuming there is no preferred stock, book value per share of common stock is derived by which of the following? A) Net income divided by the number of shares outstanding. B) Stockholders' equity divided by the number of shares authorized. C) Net income divided by the number of shares authorized. D) Stockholders' equity divided by the number of shares outstanding.
Stockholders' equity divided by the number of shares outstanding.
65)The inclusion of the intangible asset goodwill in the financial statements of a company indicates: A)That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets. B) An unbroken record of annual earnings and dividends. C) That the company has a favorable reputation with its customers. D) A monopoly position in the industry or superior management.
That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.
115) If a corporation has only common stock outstanding, which of the following constitutes legal capital at a particular date? A) The sum of the Common Stock account and any additional paid-in capital. B) The total amount of stockholders' equity. C) The sum of the Common Stock account and retained earnings. D) The amount in the Common Stock account.
The amount in the Common Stock account.
117) When a corporation issues capital stock at a price higher than the par value: A) The entire issue price is credited to the Capital Stock account. B) The amount received in excess of par value becomes part of paid-in capital. C) The amount received over par value increases retained earnings. D)The amount received in excess of par value constitutes profit to the issuing corporation.
The amount received in excess of par value becomes part of paid-in capital.
5)Harris Corporation's inventory of a particular product includes 200 units purchased at a per-unit cost of $50, and another 100 units purchased at a unit cost of $60. If Harris sells 10 units of this product, the cost of goods sold will be: A) $500. B) $660. C) $550. D) The answer will depend upon the inventory cost flow assumption in use.
The answer will depend upon the inventory cost flow assumption in use.
36)Which of the following would not be considered as part of the cost of equipment recently purchased? A) The cost to repair damage incurred after dropping the equipment B) Sales tax C) Transportation charges D) Installation and setup charges
The cost to repair damage incurred after dropping the equipment
72) A measure of a company's liquidity is: A) Total assets divided by total equity. B) The dollar amount of liabilities that bear interest. C) The current ratio. D) The dollar amount of assets used as collateral for a loan.
The current ratio.
165) Dividends are first recorded and retained earnings are reduced on: A) The date of payment. B) The date of record. C) The ex-dividend date. D) The date of declaration
The date of declaration
84) When an installment note is structured as a "fully amortizing" loan with equal monthly payments (such as a traditional mortgage) A)The portion of each payment allocated to repayment of principal decreases each month as the mortgage is paid off. B)The portion of each payment allocated to interest expense is the same each month. C)The difference between the sum of all monthly payments and the principal amount of the note constitutes interest. D)The sum of the monthly payments is equal to the amount of the installment note (mortgage).
The difference between the sum of all monthly payments and the principal amount of the note constitutes interest.
136) The market price of a preferred stock will be affected by :A) The dividend rate. B) The chance that the company will not operate profitably. C) The level of interest rates. D)The dividend rate, the chance that the company will not operate profitably, and the level of interest rates.
The dividend rate, the chance that the company will not operate profitably, and the level of interest rates.
118) When no-par stock is issued A) There is no legal capital created because there is no par or stated value. B)The entire amount received is credited to the Additional Paid-in Capital account. C) The issue price is credited to the Capital Stock account. D)The transaction usually involves only an exchange for non-cash assets or services, since the stock has no value on the stock exchanges.
The issue price is credited to the Capital Stock account.
166) As a result of a 5% stock dividend: A) Total stockholders' equity decreases by 5%. B) The par value per share decreases by 5%. C)Both the number of shares outstanding and the total stockholders' equity increase by 5%. D)The number of shares owned by each stockholder increases by 5%, but total stockholders' equity does not change
The number of shares owned by each stockholder increases by 5%, but total stockholders' equity does not change
48) The term "accumulated depreciation" as used in accounting is best defined as: A) The portion of a plant asset recognized as expense since the asset was acquired. B) An expense of doing business. C)Earnings retained in the business that will be used to purchase another asset when the present asset is depreciated. D) Funds (or cash) set aside to replace the asset being depreciated.
The portion of a plant asset recognized as expense since the asset was acquired.
90) Which of the following does not affect the market price of an outstanding bond issue? A) Fluctuations in the current market rate of interest. B) The price at which the bonds were originally issued. C) The credit rating of the issuing corporation. D) The length of time remaining until the bonds' maturity date.
The price at which the bonds were originally issued.
38)Tomassi Company paid $450,000 to acquire a piece of real estate consisting of land and an office building with a parking lot. In this situation: A)The purchase price should be apportioned among the Land, Land Improvement, and Building accounts. B)Land, Land Improvement, and Building accounts should each be credited for the respective appraisal value of each item. C)Allocation of the entire $450,000 to Land results in an understatement of net income in the current and future accounting periods. D) The entire purchase price should be debited to the Land account only.
The purchase price should be apportioned among the Land, Land Improvement, and Building accounts.
49) The book value of an asset in the plant and equipment category is: A) The current replacement cost of the asset. B) The original cost of the asset. C) The undepreciated cost of the asset. D) The accumulated depreciation on the asset to date.
The undepreciated cost of the asset.
149) In computing earnings per share, the number of shares used is: A) The average of the beginning and the year-end number of shares outstanding. B) The weighted average of shares outstanding for the year. C) The year-end number of shares outstanding. D) The beginning of the year number of shares outstanding.
The weighted average of shares outstanding for the year
112) Which of the following is not a right of stockholders? A) To participate in dividends declared. B) To vote for directors and on key issues. C) To share in the distribution of assets if the corporation is liquidated. D) To select the Chief Executive Officer.
To select the Chief Executive Officer.
110) The ownership of common stock in a corporation usually carries all of the following rights except: A) To participate in dividends. B) To vote for directors. C) To share in a distribution of assets if the corporation is to be liquidated. D) To set corporate policies.
To set corporate policies.
113) The rights of a common stockholder do not include the right: A) To share in profits when the board of directors declares a dividend. B) To vote for directors. C)To withdraw a share of corporate net assets proportionate to the person's stockholdings. D)To receive a proportionate share of corporate assets upon liquidation, after creditors have been paid.
To withdraw a share of corporate net assets proportionate to the person's stockholdings.
128) The net assets of a corporation are equal to: A) Total assets - total liabilities. B) Total assets + retained earnings. C) Total assets - retained earnings. D) Total assets + total liabilities.
Total assets - total liabilities.
111) The board of directors' primary functions include all of the following except: A) Setting officers' salaries. B) Hiring corporate officers. C) Declaring dividends. D) Transacting corporate business.
Transacting corporate business
140) Of the items listed, which would appear closest to the bottom of the income statement? A) Discontinued operations B) Unusual and infrequent non-recurring items C) Income from continuing operations D) Prior period adjustment
Unusual and infrequent non-recurring items
