AC/113 AC113 AC 113 UNIT 10 EXAM

 1.

Question :

The market interest rate related to a bond is also called the

Student Answer:

 stated interest rate

 effective interest rate

 contract interest rate.

 straight-line rate

Question 2.

Question :

A bond indenture is

Student Answer:

 a contract between the corporation issuing the bonds and the underwriters selling 
the bonds

 the amount due at the maturity date of the bonds

 a contract between the corporation issuing the bonds and the bondholders

 the amount for which the corporation can buy back the bonds prior to the maturity date.

Question 3.

Question :

A company sold 200 shares of common stock with a par value of $5 at a price of $12 per share. Which section of the statement of cash flows will contain this transaction?

Student Answer:

 Operating activities

 Investing activities

 Financing activities

 Sale of stock will not appear on the statement of cash flows

Question 4.

Question :

Employers do not incur payroll taxes for which tax?

Student Answer:

 FICA

 FUTA

 Wage Garnishments

 SUTA

Question 5.

Question :

The liability for a dividend is recorded on which of the following dates?

Student Answer:

 The date of record

 The date of payment

 The date of announcement

 The date of declaration

Question 6.

Question :

Stockholders' equity:

Student Answer:

 Is usually equal to cash on hand

 Includes paid-in capital and liabilities

 Includes retained earnings and paid-in capital

 Is shown on the income statement

Question 7.

Question :

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a _______.

Student Answer:

 stock dividend

 stock split

 stock option

 preferred dividend

Question 8.

Question :

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. 
What is the gross pay for the employee?

Student Answer:

 $798.85

 $873.77

 $1,242.00

 $1,323.00

Question 9.

Question :

How is treasury stock shown on the balance sheet?

Student Answer:

 As an asset

 As a decrease in stockholders' equity

 As an increase in stockholders' equity

 Treasury stock is not shown on the balance sheet

Question 10.

Question :

What options does a business have when financing operations?

Student Answer:

 Debt financing

 Equity financing

 Asset financing

 Both debt financing and equity financing

Question 11.

Question :

On June 5 Smith Co. issued a $60,000, 6%, 120-day note payable to Jones Co. How much will Smith Co. have to pay at maturity?

Student Answer:

 $63,600

 $58,800

 $60,000

 $61,200

Question 12.

Question :

In which section of the balance sheet would treasury stock be reported?

Student Answer:

 Fixed assets

 Long-term liabilities

 Stockholders' equity

 Intangible assets

Question 13.

Question :

A current liability is a debt that can reasonably be expected to be paid _______.

Student Answer:

 between 6 months and 18 months

 out of currently recognized revenues

 within one year

 out of cash currently on hand

Question 14.

Question :

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

Student Answer:

 Increase cash $2,600; increase retained earnings $2,600

 Increase cash $1,000; increase common stock $1,000

 Increase cash $2,600; increase common stock $1,000 and increase paid-in capital $1,600

 Increase cash $2,600; increase common stock $1,600 and increase paid-in capital $1,000

Question 15.

Question :

Which of the following is usually NOT a prerequisite to paying a cash dividend?

Student Answer:

 Formal action by the board of directors

 Market value in excess of par value per share

 Sufficient cash

 Sufficient retained earnings

Question 16.

Question :

Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet?

Student Answer:

 Bonds Payable

 Common Stock

 Dividends Payable

 Cash

Question 17.

Question :

Where is interest expense listed on the income statement?

Student Answer:

 Other expense section

 Cost of merchandise sold

 Operating expenses

 Interest expense is on the balance sheet, not the income statement

Question 18.

Question :

The major subdivisions of the Stockholders' Equity section of the balance sheet are

Student Answer:

 Paid-in Capital and Retained Earnings

 Common Stock and Retained Earnings

 Stock, Paid-In Capital, and Retained Earnings

 Common Stock and Preferred Stock

Question 19.

Question :

For the year that just ended, a company reports net income of $1,500,000. There are 500,000 shares authorized, 300,000 shares issued, and 250,000 shares of common stock outstanding. What is the earnings per share?

Student Answer:

 $5.00

 $2.50

 $6.00

 $3.00

Question 20.

Question :

Current liabilities are _______.

Student Answer:

 due but not receivable for more than one year

 due but not payable for more than one year

 due and receivable within one year

 due and payable within one year