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