Quiz
Accounting Final
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Questions in this quiz (164)
1Plant assets are defined as:
- ATangible assets used in a company’s operations that have a useful life of more than one accounting period.
- BCurrent assets.
- CAssets that are physically consumed when used.
- DIntangible assets used in the operations of a business that have a useful life of more than one accounting period.
- ETangible assets used in the operation of business that have a useful life of less than one accounting period.
2One characteristic of plant assets is that they are:
- ACurrent assets.
- BUsed in operations.
- CNatural resources.
- DLong-term investments.
- EIntangible.
3Which of the following is not a relevant factor in computing depreciation?
- ACost.
- BSalvage value.
- CUseful life.
- DDepreciation method.
- EMarket value.
4Depreciation:
- AMeasures the decline in market value of an asset.
- BMeasures physical deterioration of an asset.
- CIs the process of allocating the cost of a plant asset to expense while it is in use.
- DIs an outflow of cash from the use of a plant asset.
- EIs applied to land.
5The useful life of a plant asset is:
- AThe length of time it is used in a company’s operations.
- BNever related to its physical life.
- CIts productive life, but not to exceed one year.
- DDetermined by the FASB.
- EDetermined by law.
6The term inadequacy refers to:
- AThe inability of a plant asset to meet its demands.
- BAn asset reaching its book value.
- CAn asset that does not have a salvage value.
- DThe condition where the salvage value is too small to replace the asset.
- EThe process of depletion.
7The term, obsolescence, as it relates to the useful life of an asset, refers to:
- AThe halfway point of an asset’s useful life.
- BThe process of becoming outdated and no longer used.
- CThe inability of a company’s plant assets to reach its book value.
- DAn asset’s salvage value becoming less than its replacement cost.
- EIntangible assets that have been fully amortized.
8The modified accelerated cost recovery system (MACRS):
- AIs not acceptable for financial reporting.
- BIs an outdated system that is no longer used by companies.
- CIs required for financial reporting.
- DIs identical to units of production depreciation.
- EDoes not allow partial year depreciation.
9The calculation of total asset turnover is:
- AGross profit divided by average total assets.
- BAverage total assets divided by gross profit.
- CNet sales divided by average total assets.
- DAverage total assets multiplied by net sales.
- ENet assets multiplied by total assets.
10Land improvements are:
- AAdditions that increase the usefulness of land and are not depreciated.
- BAdditions to land that have limited useful lives.
- CIncluded in the cost of the land account.
- DExpensed in the period incurred.
- EAlso called basket purchases.
11Which of the following is not classified as a plant asset?
- ALand.
- BLand improvements.
- CBuildings.
- DMachinery and equipment.
- EPatent.
12The cost of land would not include:
- APurchase price.
- BCost of parking lot lighting.
- CCosts of removing existing structures.
- DTitle insurance fees.
- EGovernment assessments.
13The formula to compute annual straight-line depreciation is:
- ADepreciable cost divided by useful life in units.
- B(Cost plus salvage value) divided by the useful life in periods.
- C(Cost minus salvage value) divided by the useful life in periods.
- DCost multiplied by useful life in periods.
- ECost divided by useful life in units.
14The total cost of an asset minus accumulated depreciation is called:
- AHistorical cost.
- BBook value.
- CPresent value.
- DCurrent (market) value.
- EReplacement cost.
15The depreciation method that charges the same amount of expense to each period of the asset's useful life is called:
- AAccelerated depreciation.
- BDeclining-balance depreciation.
- CStraight-line depreciation.
- DUnits-of-production depreciation.
- EModified accelerated cost recovery system (MACRS) depreciation.
16The depreciation method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:
- AAccelerated depreciation.
- BDeclining-balance depreciation.
- CStraight-line depreciation.
- DUnits-of-production depreciation.
- EModified accelerated cost recovery system (MACRS) depreciation.
17The depreciation method which uses a depreciation rate that is a multiple of the straight-line rate is called:
- ABook value depreciation.
- BDeclining-balance depreciation.
- CAmortization.
- DUnits-of-production depreciation.
- EModified accelerated cost recovery system (MACRS) depreciation.
18The depreciation method that produces more depreciation expense during the early years of an asset’s life and less expense in the later years is a(n):
- AAccelerated depreciation method.
- BBook value depreciation method.
- CStraight-line depreciation method.
- DDepletion method.
- EUnrealized depreciation method.
19Revenue expenditures:
- AAre costs that do not materially increase a plant asset’s life or capabilities.
- BAre known as balance sheet expenditures because they relate to plant assets.
- CExtend the asset's useful life.
- DSubstantially benefit future periods.
- EAre debited to asset accounts when incurred.
20Another name for a capital expenditure is:
- ARevenue expenditure.
- BAsset expenditure.
- CLong-term expenditure.
- DContributed capital expenditure.
- EBalance sheet expenditure.
21To capitalize an expenditure is to:
- AIncrease an expense account.
- BDecrease an expense account.
- CIncrease the revenue account.
- DDecrease an asset account.
- EIncrease an asset account.
22Extraordinary repairs:
- AAre revenue expenditures.
- BAre expenditures that extend an asset’s useful life beyond its original estimate.
- CAre credited to accumulated depreciation.
- DAre additional costs of plants assets that do not materially increase the asset's life.
- EAre expensed when incurred.
23Which of the following pertaining to ordinary repairs is false?
- AThey are expenditures to keep an asset in good operating condition.
- BTheir costs are reported as expenses on the current-period income statement.
- CThey extend the useful life of an asset beyond its original estimate by several years.
- DThey include activities such as cleaning, lubricating, and changing oil.
- EThey are treated as expenses.
24Betterments:
- AAre expenditures that make a plant asset more efficient or productive.
- BAre also called ordinary repairs.
- CAlways increase an asset’s life.
- DAre revenue expenditures.
- EAre credited against the asset account when incurred.
25Depletion is:
- AThe process of allocating the cost of a natural resource to the period when it is consumed.
- BCalculated using the double-declining balance method.
- CAlso called amortization.
- DAn increase in the value of a natural resource when incurred.
- EThe process of allocating the cost of intangibles to periods when they are used.
26Intangible assets do not include:
- APatents.
- BCopyrights.
- CTrademarks.
- DGoodwill.
- ELand held as an investment.
27Amortization is:
- AThe allocation of the cost of an intangible asset to expense over its estimated useful life.
- BThe process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use.
- CThe process of allocating the cost of natural resources to periods when they are consumed.
- DAn accelerated form of expensing an asset's cost.
- EAlso called depletion.
28Owning a patent:
- AGives the owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.
- BGives the owner exclusive rights to manufacture and sell a patented item or to use a process for 20 years.
- CGives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.
- DIndicates that the value of a company exceeds the fair market value of a company's net assets if purchased separately.
- EGives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.
29Holding a copyright:
- AGives its owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.
- BGives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years.
- CGives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.
- DIndicates that the value of a company exceeds the fair market value of a company's net assets if purchased separately.
- EGives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years.
30A leasehold is:
- AThe right that a company or government grants an entity to sell a product or service under specified conditions.
- BThe same as a patent.
- CThe rights the lessor grants to the lessee under the terms of a lease.
- DRecorded as revenue expenditure when paid.
- EAn asset held as an investment.
31The meaning of goodwill in accounting is:
- AThe amount by which a company's value exceeds the value of its individual assets and liabilities.
- BLong term assets held as investment.
- CThe support of the board of directors for the operating decisions of management.
- DThe cost of developing, maintaining, or enhancing the value of a trademark.
- ERights granted to an entity to deliver a product or service under specified conditions.
32Liabilities that are due within one year (or the company’s operating cycle if longer) are:
- ACurrent assets.
- BCurrent liabilities.
- CLong-term liabilities.
- DOperating cycle liabilities.
- EBills.
33Obligations due after one year (or the company’s operating cycle if longer) are reported as:
- ACurrent assets.
- BCurrent liabilities.
- CLong-term liabilities.
- DOperating cycle liabilities.
- EBills.
34In order to be reported, liabilities:
- AMust be of a known amount.
- BAre at times estimated if the exact amount is not known.
- CMust have certainty in exactly whom to pay.
- DAlways have a definite date for payment.
- EWill always require a future outflow of cash.
35Which of the following pertaining to known liabilities is false?
- AThey include accounts payable, notes payable, and payroll obligations.
- BThey can arise from agreements or contracts.
- CThey are measurable.
- DThey can arise from laws.
- EThey may depend on a future event occurring.
36Accounts payable are:
- AAmounts owed to suppliers for products or services purchased on credit.
- BAmounts received in advance from customers for future services.
- CEstimated liabilities.
- DAlso referred to as unearned revenues.
- EAlways payable within 30 days.
37Sales taxes payable is reported as a(n):
- AEstimated liability.
- BContingent liability.
- CCurrent liability.
- DBusiness expense.
- ELong-term asset.
38Which of the following does not apply to unearned revenues?
- AMay also be called deferred revenues.
- BThey are amounts received in advance from customers for future products or services.
- CGift cards are an example.
- DThey can result from advance ticket sales.
- EClassified as a long-term asset.
39A contingent liability is:
- AAlways of a specific amount.
- BA potential obligation that depends on a future event arising from a past transaction or event.
- CAn obligation that will never require a future payment.
- DAn obligation arising from the purchase of goods or services on credit.
- EAn obligation arising from a future event.
40Contingent liabilities are recorded or disclosed in the financial statement notes unless they are:
- AProbable and estimable.
- BRemote (very unlikely).
- CReasonably possible.
- DProbable and not estimable.
- EPossible and estimable.
41Times interest earned is calculated by:
- AMultiplying interest expense by net income.
- BDividing interest expense by net income.
- CDividing income before interest expense and income taxes by interest expense.
- DMultiplying interest expense by income before interest expense and income taxes.
- EDividing income before interest expense by interest expense and income taxes.
42The correct times interest earned computation is:
- A(Net income + Interest expense + Income taxes)/Interest expense.
- B(Net income + Interest expense − Income taxes)/Interest expense.
- C(Net income − Interest expense − Income taxes)/Interest expense.
- D(Net income − Interest expense + Income taxes)/Interest expense.
- EInterest expense/(Net income + Interest expense − Income taxes expense).
43When a note comes due, the difference between the amount borrowed and the amount repaid is:
- AInterest.
- BPrincipal.
- CFace Value.
- DCash.
- EAccounts Payable.
44A short-term note payable:
- AIs a written promise to pay a specified amount on a stated future date within one year.
- BIs a contingent liability.
- CIs an estimated liability.
- DIs not a liability until the due date.
- ECannot be used to replace an account payable.
45Short-term notes payable:
- ACannot replace an account payable.
- BCan be issued in return for money borrowed from a bank.
- CAre normally categorized as noncurrent liabilities.
- DAre a conditional promise to pay.
- ERarely involve interest charges.
46Gross pay is:
- ATake-home pay.
- BTotal compensation earned by an employee before any deductions.
- CSalaries after taxes are deducted.
- DDeductions withheld by an employer.
- EThe amount of the paycheck.
47The employer should record payroll deductions as:
- AEmployee receivables.
- BPayroll taxes.
- CCurrent liabilities.
- DWages payable.
- EEmployee payables.
48Federal Insurance Contributions Act (FICA) taxes include:
- ASocial Security and Medicare taxes.
- BCharitable giving.
- CEmployee state income tax.
- DFederal and state unemployment taxes.
- EFarming income crop adjustment taxes.
49The Federal Insurance Contributions Act (FICA) requires that each employer file a:
- AW-4.
- BForm 941.
- CForm 1040.
- DForm 1099.
- EW-2.
50The Annual Federal Unemployment Tax Return is:
- AForm 940.
- BForm 1099.
- CForm 104.
- DForm W-2.
- EForm W-4.
51The Wage and Tax Statement given to each employee annually is:
- AForm 940.
- BForm 941.
- CForm 1040.
- DForm W-2.
- EForm W-4.
52A bank that is authorized to accept deposits of amounts payable to the federal government is a:
- ACredit union.
- BFederal Deposit Insurance Corporation (FDIC) insured bank.
- CFederal depository bank.
- DNational bank.
- ESecurities and Exchange Commission (SEC).
53An employer's federal unemployment taxes (FUTA) are reported:
- AAnnually.
- BSemiannually.
- CQuarterly.
- DMonthly.
- EWeekly.
54The rate that a state assigns based on a company’s stability in employing workers is the:
- AFederal Insurance Contributions Act (FICA) rate.
- BTax withholding rate.
- CPay rate.
- DCredit rating.
- EMerit rating.
55Employer payroll taxes:
- AAre an added expense beyond the wages and salaries earned by employees.
- BRepresent the federal taxes withheld from employees.
- CRepresent the social security taxes withheld from employees.
- DAre paid by the employee.
- EAre payable for up to a maximum $137,700 of employee earnings.
56Federal Unemployment Taxes (FUTA) are:
- ASocial Security taxes.
- BMedicare taxes.
- CEmployee income taxes.
- DUnemployment taxes.
- EEmployee deductions.
57An estimated liability:
- AIs an unknown liability of a certain amount.
- BIs a known obligation of an uncertain amount that can be reasonably estimated.
- CIs a liability that may occur if a future event occurs.
- DCan be the result of a lawsuit.
- EIs not recorded until the amount is known for certain.
58Which of the following does not result in an estimated liability?
- AWarranties.
- BVacation benefits.
- CPension benefits.
- DBonuses.
- EUnearned revenues.
59A payroll register does not include:
- APay period dates.
- BHours worked.
- CGross pay and net pay.
- DDeductions.
- EPrior year’s earnings
60The wage bracket withholding table is used to:
- ACompute social security withholding.
- BCompute Medicare withholding.
- CCompute federal income taxes withheld.
- DPrepare the W-4.
- ECompute unemployment taxes.
61A table that shows the amount of federal income tax to be withheld from an employee’s gross pay is the:
- AForm 941.
- BTax table.
- CWage bracket withholding table.
- DW-2.
- EW-4.
62Companies with few employees often pay their employees with checks drawn on the company’s regular bank account, while companies with many employees often use a special bank account to pay employees. This special bank account is known as a(n):
- AFederal depository bank account.
- BEmployee's Individual Earnings account.
- CEmployees' bank account.
- DPayroll register account.
- EPayroll bank account.
63If a company uses a special payroll bank account:
- AThe company does not need to issue paychecks.
- BThe company draws one check for total payroll on the regular bank account and deposits it in the payroll bank account.
- CThe company must use a federal depository bank for the payroll bank account.
- DThere is no need for a payroll register.
- EThere is no need to issue W-2's.
64Which of the following can occur when the amount of income before taxes that the corporation reports on its income statement differs from the amount of income reported on its income tax return?
- AState Unemployment Taxes (SUTA) payable.
- BWarranty payable.
- CFederal Insurance Contributions Act (FICA) - social security taxes payable.
- DDeferred income tax liability.
- EFederal Unemployment Taxes (FUTA) payable.
65Sinking fund bonds:
- ARequire the issuer to set aside assets to pay bonds at maturity.
- BRequire equal payments of both principal and interest over the life of the bond issue.
- CDecline in value over time.
- DAre registered bonds.
- EAre bearer bonds.
66Bonds that give the issuer the option to retire them at a stated dollar amount before maturity are known as:
- AConvertible bonds.
- BSinking fund bonds.
- CCallable bonds.
- DSerial bonds.
- EJunk bonds.
67Secured bonds:
- AAre called debentures.
- BHave specific assets of the issuer pledged as collateral.
- CAre backed by the issuer's bank.
- DAre subordinated to those of other unsecured liabilities.
- EAre the same as sinking fund bonds.
68Bonds that have interest coupons attached to their certificates, which the bondholders present to a bank or broker for collection, are called:
- ACoupon bonds.
- BCallable bonds.
- CSerial bonds.
- DConvertible bonds.
- ERegistered bonds.
69Bonds issued in the names and addresses of their holders are called:
- ACallable bonds.
- BSerial bonds.
- CRegistered bonds.
- DCoupon bonds.
- EBearer bonds.
70The legal contract between the bond issuer and the bondholders is called a(n):
- ADebenture.
- BBond indenture.
- CMortgage.
- DInstallment note.
- ETerm bond.
71Bonds that mature at more than one date and thus are usually repaid over a number of periods are known as:
- ARegistered bonds.
- BBearer bonds.
- CCallable bonds.
- DSinking fund bonds.
- ESerial bonds.
72A legal agreement that helps protect a lender if a borrower does not make required payments on notes or bonds is called a(n):
- ASinking fund.
- BMortgage.
- CEquity.
- DLease.
- EIndenture.
73A liability requiring a series of payments to the lender is referred to as a(n):
- ADebenture.
- BDiscounted note.
- CInstallment note.
- DIndenture.
- EInvestment note.
74The carrying value of bonds at maturity always equals:
- Athe amount of cash originally received in exchange for the bonds.
- Bthe par value of the bond.
- Cthe amount of discount or premium.
- Dthe amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium.
- EThe amount in excess of par value.
75A disadvantage of bond financing is:
- ABonds do not affect owners' control.
- BInterest on bonds is tax deductible.
- CBonds can increase return on equity.
- DBonds pay periodic interest and require the repayment of par value at maturity.
- EAll of the choices listed are disadvantages.
76An advantage of bonds is:
- ABonds do not affect owner control.
- BBonds require payment of par value at maturity.
- CBonds can decrease return on equity.
- DBond payments can be burdensome when income and cash flow are low.
- EBonds require payment of periodic interest.
77Which of the following statements is true?
- AInterest on bonds is tax deductible.
- BInterest on bonds is not tax deductible.
- CDistributions to owners are tax deductible.
- DBonds do not have to be repaid.
- EBonds always increase return on equity.
78The party that has the right to exercise a call option on callable bonds is:
- AThe bondholder.
- BThe bond issuer.
- CThe bond indenture.
- DThe bond trustee.
- EThe bond underwriter.
79A company's total liabilities divided by its total equity is called the:
- AEquity ratio.
- BReturn on total assets ratio.
- CPledged assets to secured liabilities ratio.
- DDebt-to-equity ratio.
- ETimes secured liabilities earned ratio.
80The Discount on Bonds Payable account is:
- AA liability.
- BA contra liability.
- CAn expense.
- DA contra expense.
- EA contra equity.
81The Premium on Bonds Payable account is a(n):
- ARevenue account.
- BAdjunct liability account.
- CContra revenue account.
- DContra asset account.
- EEquity account.
82If an issuer sells bonds at a premium:
- AThe carrying value of the bond stays constant over time.
- BThe carrying value increases from the par value to the issue price over the bond’s term.
- CThe carrying value decreases from the par value to the issue price over the bond’s term.
- DThe carrying value increases from the issue price to the par value over the bond’s term.
- EThe carrying value decreases from the issue price to the par value over the bond’s term.
83Bonds that can be exchanged for a fixed number of shares of the issuing corporation’s stock are known as:
- ACoupon bonds.
- BCallable bonds.
- CSerial bonds.
- DConvertible bonds.
- ERegistered bonds.
84Bonds that give the issuer the option of retiring them at a stated dollar amount before maturity are:
- ADebentures.
- BSerial bonds.
- CSinking fund bonds.
- DRegistered bonds.
- ECallable bonds.
85The costs to start a corporation, including legal fees, promoters’ fees, and payments for a charter, are called:
- AMinimum legal capital.
- BStock subscriptions.
- COrganization expenses.
- DSelling expenses.
- EPrepaid fees.
86The right of common stockholders to purchase their proportional share of any common stock later issued by a corporation is called the:
- APreemptive right.
- BProxy right.
- CRight to call.
- DFinancial leverage.
- EVoting right.
87Market value per share is:
- AThe price at which a stock is bought and sold.
- BA contractual commitment by an investor to purchase unissued shares of stock.
- CStock not assigned a value per share.
- DThe right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.
- EAn amount assigned to no-par stock.
88The board of directors of a corporation:
- AIs elected by the corporate registrar.
- BAre responsible for day-to-day operations of the business.
- CDoes not have the power to bind the corporation to contracts, due to lack of mutual agency.
- DMay not also be executive officers of the corporation, due to the separate entity principle.
- EIs responsible for overseeing corporate activities.
89The number of shares that a corporation’s charter allows it to sell is referred to as:
- AIssued stock.
- BOutstanding stock.
- CCommon stock.
- DPreferred stock.
- EAuthorized stock.
90Par value of a stock refers to the:
- AIssue price of the stock.
- BAmount assigned per share by the corporation in its charter.
- CMarket value of the stock on the date of the financial statements.
- DMaximum selling price of the stock.
- EDividend value of the stock.
91When all authorized shares of a corporation’s stock have the same rights and characteristics, the stock is called:
- APreferred stock.
- BCommon stock.
- CPar value stock.
- DStated value stock.
- ENo-par value stock.
92The least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date is called the:
- APar value of preferred.
- BMinimum legal capital.
- CPremium capital.
- DStated value.
- EWorking capital.
93The total amount of cash and other assets that a corporation receives from its stockholders in exchange for its stock is:
- AAlways equal to its par value.
- BAlways equal to its stated value.
- CReferred to as paid-in capital.
- DReferred to as retained earnings.
- EAlways below its stated value.
94Stated value stock is:
- AAnother name for redemption value.
- BAn amount assigned to par value stock by the state of incorporation.
- CThe market value of the stock on the date of issuance.
- DThe difference between the par value of stock and the amount below or above par value paid-in by the stockholder.
- ENo-par stock that has an assigned “stated” value per share.
95Stockholders’ equity consists of which of the following?
- ALong-term assets.
- BPaid-in (or contributed) capital and retained earnings.
- CPaid-in (or contributed) capital and par value.
- DRetained earnings and cash.
- EPremiums and discounts.
96A class of stock for which there is no minimum legal capital is called:
- AConvertible stock.
- BNo-par stock.
- CCallable stock.
- DNoncumulative stock.
- EDiscounted stock.
97Retained earnings:
- AIs the cumulative net income (and loss) not distributed as dividends to its stockholders.
- BCan only be appropriated by setting aside a cash fund.
- CRepresent an amount of cash available to pay shareholders.
- DAre never adjusted for anything other than net income or dividends.
- ERepresents the amount shareholders are guaranteed to receive upon company liquidation.
98Prior period adjustments to financial statements can result from:
- AChanges in estimates of salvage value.
- BMaterial math errors.
- CDiscontinued operations.
- DChanges in tax law.
- EChanges in estimates of useful life.
99Prior period adjustments are reported in the:
- AMultiple-step income statement.
- BBalance sheet.
- CStatement of retained earnings.
- DStatement of cash flows.
- ESingle-step income statement.
100Changes in accounting estimates are:
- AConsidered accounting errors.
- BReported as prior period adjustments.
- CAccounted for with a cumulative “catch-up” adjustment.
- DStatement of cash flow items.
- EAccounted for in current and future periods.
101Companies report prior period adjustments, net of any income tax effects in the:
- AStatement of cash flows.
- BBalance sheet.
- CStatement of retained earnings.
- DIncome statement.
- ENo disclosure is required.
102Changes in retained earnings are commonly reported in the:
- AStatement of cash flows.
- BBalance sheet.
- CStatement of stockholders' equity.
- DMultiple-step income statement.
- ESingle-step income statement.
103The amount of income earned per share of outstanding common stock is known as:
- ARestricted retained earnings per share.
- BEarnings per share.
- CContinuing operations per share.
- DDividends per share.
- EReturn on assets per share.
104The price-earnings ratio is calculated by dividing:
- AMarket value (price) per share by earnings per share.
- BEarnings per share by par value per share.
- CDividends per share by earnings per share.
- DDividends per share by market value (price) per share.
- EMarket value (price) per share by dividends per share.
105The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:
- AReturn on assets.
- BDividend yield.
- CPrice-earnings ratio.
- DCurrent yield.
- EEarnings per share.
106The dividend yield is computed by dividing:
- AAnnual cash dividends per share by earnings per share.
- BEarnings per share by cash dividends per share.
- CAnnual cash dividends per share by the market value (price) per share.
- DPar value per share by cash dividends per share.
- ECash dividends per share by retained earnings.
107Stocks that pay large cash dividends on a regular basis are called:
- ASmall capital stocks.
- BMid capital stocks.
- CGrowth stocks.
- DLarge capital stocks.
- EIncome stocks.
108Stocks that pay little or no cash dividends but are attractive to investors because of expected stock price increases are known as:
- ASmall capital stocks.
- BMid capital stocks.
- CGrowth stocks.
- DLarge capital stocks.
- EIncome stocks.
109The date the directors vote to declare and pay a dividend is called the:
- ADate of stockholders' meeting.
- BDate of declaration.
- CDate of record.
- DDate of payment.
- ELiquidating date.
110The date for identifying the stockholders to receive dividends is called the:
- ADate of stockholders’ meeting.
- BDate of declaration.
- CDate of record.
- DDate of payment.
- ELiquidating date.
111A corporation's distribution of additional shares of its own stock to its stockholders without any payment in return is called a:
- AStock dividend.
- BStock subscription.
- CPremium on stock.
- DDiscount on stock.
- ETreasury stock.
112A stock dividend is recorded with a transfer from:
- AContributed capital to retained earnings.
- BRetained earnings to contributed capital.
- CRetained earnings to assets.
- DContributed capital to assets.
- EAssets to contributed capital.
113Preferred stock that gives its owners the right to be paid both the current and all prior periods’ unpaid dividends before any dividend is paid to common stockholders is called:
- ANoncumulative preferred stock.
- BGeneral preferred stock.
- CCallable preferred stock.
- DCumulative preferred stock.
- EConvertible preferred stock.
114When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of the cumulative dividend, the unpaid dividend amount is called:
- ACommon dividends.
- BDividends in arrears.
- CStock dividends.
- DRetained earnings.
- ENoncumulative dividends.
115Prepare the journal entry to record Harris Company’s issuance of 50,000 shares of its common stock assuming the shares have a $2 stated value and sell for $18 cash per share.
- ADebit Cash $900,000; credit Common Stock $900,000.
- BDebit Common Stock $900,000; credit Cash $900,000.
- CDebit Cash $900,000; credit Common Stock $100,000; credit Paid-in Capital in Excess of Stated Value, Common Stock $800,000.
- DDebit Common Stock $100,000; debit Paid-in Capital in Excess of Stated Value, Common Stock $800,000; credit Cash $900,000.
- EDebit Cash $100,000; credit Common Stock $100,000.
116A dividend preference for preferred stock means that:
- APreferred stockholders are paid their dividends before any dividends are paid to common stockholders.
- BPreferred shareholders are guaranteed dividends.
- CDividends are paid quarterly.
- DCommon stockholders receive dividends more frequently than preferred stockholders.
- EDividends must be declared on preferred stock.
117Stock shares that are reacquired by the issuing corporation are called:
- ACapital stock.
- BTreasury stock.
- CRedeemed stock.
- DPreferred stock.
- ECallable stock.
118Treasury stock is classified as:
- AAn asset account.
- BA contra asset account.
- CA revenue account.
- DA contra equity account.
- EA liability account.
119The statement of cash flows reports:
- AAssets, liabilities, and equity.
- BRevenues, gains, expenses, and losses.
- CCash receipts (inflows) and cash payments (outflows) for an accounting period.
- DEquity, net income, and dividends.
- EChanges in equity.
120Which of the following is not reported on the statement of cash flows:
- ACash flows from operating activities.
- BCash flows from financing activities.
- CCash flows from investing activities.
- DNet increase or decrease in cash.
- EThe financial position of the company at the end of the accounting period.
121The statement of cash flows is:
- AAnother name for the statement of financial position.
- BA financial statement that presents information about changes in equity during a period.
- CA financial statement that reports the cash receipts (inflows) and cash payments (outflows) for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities.
- DA financial statement that lists the types and amounts of assets, liabilities, and equity of a business on a specific date.
- EA financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period.
122An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):
- ACash dividend.
- BOperating activity.
- CCommon stock.
- DCash equivalent.
- EFinancing activity.
123Transactions and events that affect net income such as the production and purchase of inventory, the sale of goods and services to customers, and the expenditures to run a business are classified as:
- AFinancing activities.
- BInvesting activities.
- COperating activities.
- DDirect activities.
- EIndirect activities.
124The section in the statement of cash flows for reporting the purchase of equipment for cash is:
- AOperating activities.
- BFinancing activities.
- CInvesting activities.
- DSchedule of noncash investing or financing activity.
- EThis is not reported on the statement of cash flows.
125Which of the following is not an example of noncash financing and investing?
- ARetirement of debt by issuing equity stock.
- BPurchase of equipment by issuing a note payable.
- CPurchase of inventory using cash.
- DPurchase of a building by issuing equity stock.
- EConversion of preferred stock to common stock.
126The cash flow on total assets ratio is calculated by:
- ADividing cash flow from operations by average total assets.
- BDividing total cash flows by average total assets.
- CDividing average total assets by cash flow from financing activities.
- DDividing average total assets by total cash flows.
- ETotal cash flows divided by average total assets times 365.
127Preparation of the statement of cash flows does not involve:
- AComputing the net increase or decrease in cash.
- BComputing and reporting net cash provided or used by operations.
- CComputing the profit compared to the net increase or decrease in cash.
- DComputing and reporting net cash provided or used by financing activities.
- EComputing and reporting net cash provided or used by investing activities.
128The method of reporting operating activities that lists operating cash receipts and subtracts operating cash payments is referred to as the:
- ADirect method of reporting net cash provided or used by operating activities.
- BCash basis of accounting.
- CClassified statement of cash flows.
- DIndirect method of reporting net cash provided or used by operating activities.
- ENet method of reporting cash flows from operating activities.
129A statement of cash flows explains the difference between the beginning and ending balances of:
- ANet income.
- BEquity.
- CCash and cash equivalents.
- DWorking capital.
- ECash and intangible assets.
130If a company is using the indirect method to prepare the statement of cash flows, identify where an increase in the accounts receivable account should be reported:
- AAn increase in cash flows from operating activities.
- BAn increase in cash flows from investing activities.
- CA decrease in cash flows from operating activities.
- DA decrease in cash flows from investing activities.
- EAn increase in cash flows from financing activities.
131If a company is using the indirect method to prepare the statement of cash flows, a decrease in the inventory account should be reported as:
- AAn increase in cash flows from operating activities.
- BAn increase in cash flows from investing activities.
- CA decrease in cash flows from operating activities.
- DA decrease in cash flows from investing activities.
- EAn increase in cash flows from financing activities.
132A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:
- AAn increase in cash flows from financing activities.
- BAn increase in cash flows from investing activities.
- CA decrease in cash flows from operating activities.
- DA decrease in cash flows from investing activities.
- EA decrease in cash flows from financing activities.
133Which of the following is not a purpose of financial statement analysis:
- AProviding information to improve efficiency and effectiveness.
- BProviding information for managing and operating the company.
- CHelping external users make investing and lending decisions.
- DHelping the board of directors monitor management’s performance.
- EAssuring that the company will avoid an IRS audit.
134Evaluation of company performance can include comparison and/or assessment of all but which of the following:
- APast performance.
- BCurrent performance.
- CCurrent financial position.
- DFuture performance and risk.
- EExternal user needs and demands.
135The building blocks of financial statement analysis do not include:
- AIndustry analysis.
- BSolvency.
- CProfitability.
- DMarket prospects.
- ELiquidity and efficiency.
136Financial reporting refers to:
- AThe application of analytical tools to general-purpose financial statements.
- BThe communication of financial information useful for making investment, credit, and other business decisions.
- CGeneral-purpose financial statements only.
- DRatio analysis only.
- EProfitability.
137The ability to meet short-term obligations and efficiently generate revenues is called:
- ALiquidity and efficiency.
- BSolvency.
- CProfitability.
- DMarket prospects.
- ECreditworthiness.
138The ability to meet long-term obligations and generate future revenues is referred to as:
- ALiquidity and efficiency.
- BSolvency.
- CProfitability.
- DMarket prospects.
- ECreditworthiness.
139The ability to provide financial rewards to attract and retain financing is called:
- ALiquidity and efficiency.
- BSolvency.
- CProfitability.
- DMarket prospects.
- ECreditworthiness.
140The ability to generate positive market expectations is called:
- ALiquidity and efficiency.
- BLiquidity and solvency.
- CProfitability.
- DMarket prospects.
- ECreditworthiness.
141Standards for comparisons in financial statement analysis do not include:
- AIntracompany standards.
- BCompetitor standards.
- CIndustry standards.
- DManagement standards.
- EGuidelines (rules of thumb).
142Guidelines (rules-of-thumb) are general standards of comparison developed from:
- AIndustry guidelines.
- BPast experience.
- CAnalysis of competitors.
- DRelations between financial items.
- EDun and Bradstreet.
143Three common tools of financial analysis are:
- AFinancial reporting, sensitivity analysis, transactional analysis.
- BFair presentation, variance analysis, financial reporting.
- CHorizontal analysis, vertical analysis, ratio analysis.
- DRelativity analysis, financial reporting, fair value analysis.
- ELiquidation analysis, political analysis, fair value analysis.
144The comparison of a company's financial condition and performance across time is known as:
- AHorizontal analysis.
- BVertical analysis.
- CPolitical analysis.
- DFair value reporting.
- ELiquidation analysis.
145The measurement of key relations between financial statement items is known as:
- AFinancial reporting.
- BHorizontal analysis.
- CInvestment analysis.
- DRatio analysis.
- ERisk analysis.
146The comparison of a company's financial condition and performance to a base amount is known as:
- AFinancial reporting.
- BHorizontal ratios.
- CLiquidation analysis.
- DSensitivity analysis.
- EVertical analysis.
147Which component of the DuPont analysis reflects net income earned on each dollar of sales?
- AProfit margin
- BLeverage
- CAsset turnover
- DDebt ratio
- EPrice-earnings ratio
148Gains and losses that are normal and frequent are reported as:
- AA separate line item when computing earnings per share.
- BA prior period adjustment on the statement of retained earnings.
- CA gain or loss from disposing of the discontinued segment's net assets.
- DA gain or loss from operation of a discontinued segment.
- EPart of continuing operations.
149Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as:
- APeriod-to-period statements.
- BControlling statements.
- CSuccessive statements.
- DComparative statements.
- ESerial statements.
150Horizontal analysis:
- AIs a method used to evaluate changes in financial data across time.
- BIs also called vertical analysis.
- CIs the presentation of financial ratios.
- DIs a tool used to evaluate financial statement items relative to industry statistics.
- EEvaluates financial data across industries.
151Comparative financial statements in which each individual financial statement amount is expressed as a percentage of a base amount are called:
- AAsset comparative statements.
- BPercentage comparative statements.
- CCommon-size comparative statements.
- DSales comparative statements.
- EGeneral-purpose financial statements.
152Current assets minus current liabilities is:
- AProfit margin.
- BFinancial leverage.
- CCurrent ratio.
- DWorking capital.
- EQuick assets.
153Current assets divided by current liabilities is the:
- ACurrent ratio.
- BQuick ratio.
- CDebt ratio.
- DLiquidity ratio.
- ESolvency ratio.
154Quick assets (cash, short-term investments, and current receivables) divided by current liabilities is the:
- AAcid-test ratio.
- BCurrent ratio.
- CWorking capital ratio.
- DCurrent liability turnover ratio.
- EQuick asset turnover ratio.
155Net sales divided by average accounts receivable, net is the:
- ADays' sales uncollected.
- BAverage accounts receivable ratio.
- CCurrent ratio.
- DProfit margin.
- EAccounts receivable turnover ratio.
156Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:
- AProfit margin.
- BDays' sales uncollected.
- CAccounts receivable turnover ratio.
- DAverage accounts receivable ratio.
- ECurrent ratio.
157Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:
- AInventory turnover ratio.
- BProfit margin.
- CDays' sales in inventory.
- DCurrent ratio.
- ETotal asset turnover.
158Net sales divided by average total assets is the:
- AProfit margin.
- BTotal asset turnover ratio.
- CCurrent ratio.
- DSales return ratio.
- EReturn on total assets ratio.
159Net income divided by net sales is the:
- AReturn on total assets ratio.
- BProfit margin ratio.
- CCurrent ratio.
- DTotal asset turnover ratio.
- EDays' sales in inventory ratio.
160Net income divided by average total assets is:
- AProfit margin.
- BTotal asset turnover.
- CReturn on total assets.
- DDays' income in assets.
- ECurrent ratio.
161Annual cash dividends per share divided by market price per share is the:
- APrice-earnings ratio.
- BPrice-dividends ratio.
- CProfit margin.
- DDividend yield.
- EEarnings per share.
162How long a company holds inventory before selling it can be measured by dividing cost of goods sold by the average inventory balance to determine the:
- AAccounts receivable turnover.
- BInventory turnover.
- CDays' sales uncollected.
- DCurrent ratio.
- EPrice earnings ratio.
163A component of profitability, calculated by expressing net income as a percent of net sales, is the:
- AAcid-test ratio.
- BMerchandise turnover.
- CPrice earnings ratio.
- DAccounts receivable turnover.
- EProfit margin ratio.
164Which of the following ratios is a measure of solvency?
- AAcid-test ratio.
- BCurrent ratio.
- CTimes interest earned ratio.
- DTotal asset turnover.
- EDays' sales in inventory.
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- Accountant Accounting Final Quiz on Accounting Final, created by Melvin Dang on 08/05/2024.
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- Melvin Dang
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