Question 1

When preferred stock has a preference as to dividends,the current year's preferred dividend must be paid before a dividend can be paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a current liability?

Accepted Answer

A) Prepaid insurance 
B) Retained earnings 
C) Unearned rent revenue 
D) Bonds payable 
E) Common stock 
A) Prepaid insurance 
B) Retained earnings 
C) Unearned rent revenue 
D) Bonds payable 
E) Common stock

Question 3

Which of the following is not a problem inherent in balance sheet presentation?

Accepted Answer

A) Most assets are valued at cost. 
B) Varying methods are used for asset valuation. 
C) Not all items of value to the firm are included as assets. 
D) Liabilities related to contingencies may not appear on the balance sheet. 
E) The owners' interest will be indicated. 
A) Most assets are valued at cost. 
B) Varying methods are used for asset valuation. 
C) Not all items of value to the firm are included as assets. 
D) Liabilities related to contingencies may not appear on the balance sheet. 
E) The owners' interest will be indicated.

Question 4

Match each account to the proper account description;not all letters will be used.
-Paid-In Capital in Excess of Par

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 5

Which of the following is not true about an ESOP?

Accepted Answer

A) An ESOP will reduce the amount of voting stock in the hands of employees. 
B) An ESOP must be a permanent trusted plan for the exclusive benefit of the employees. 
C) The plan participants become eligible for favorable taxation of distributions from the plan. 
D) Commercial lending institutions,insurance companies,and mutual funds are permitted an exclusion from income for 50% of the interest received on loans used to finance an ESOP's acquisition of company stock. 
E) An ESOP may reduce the potential of an unfriendly takeover. 
A) An ESOP will reduce the amount of voting stock in the hands of employees. 
B) An ESOP must be a permanent trusted plan for the exclusive benefit of the employees. 
C) The plan participants become eligible for favorable taxation of distributions from the plan. 
D) Commercial lending institutions,insurance companies,and mutual funds are permitted an exclusion from income for 50% of the interest received on loans used to finance an ESOP's acquisition of company stock. 
E) An ESOP may reduce the potential of an unfriendly takeover.

Question 6

There are two types of subsequent events under GAAP;those that require retroactive recognition,and those that do not require retroactive recognition but require disclosure in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Match each account to the proper account description;not all letters will be used.
-Equipment

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 8

At the beginning of the year,Execon Company had total assets of $200,000,total liabilities of $110,000,and shareholders' equity of $90,000.For the year,Execon Company earned net income of $75,000 and declared cash dividends of $30,000.At the end of the year,the company had total assets of $300,000 and its shareholders' equity was at $135,000.At the end of the year,Execon Corporation had total liabilities of:

Accepted Answer

A) $0. 
B) $45,000. 
C) $50,000. 
D) $165,000. 
E) None of the answers are correct. 
A) $0. 
B) $45,000. 
C) $50,000. 
D) $165,000. 
E) None of the answers are correct.

Question 9

The purpose of a balance sheet is to show the financial condition of an accounting entity for a period of time.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a common characteristic of preferred stock?

Accepted Answer

A) Voting rights 
B) Preference as to dividends 
C) Preference in liquidation 
D) Callability by the corporation 
E) None of the answers are correct. 
A) Voting rights 
B) Preference as to dividends 
C) Preference in liquidation 
D) Callability by the corporation 
E) None of the answers are correct.

Question 11

If dividends are not declared by the board of directors in a particular year,a holder of cumulative preferred stock will never be paid that dividend.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a current asset?

Accepted Answer

A) Marketable securities 
B) Material inventory 
C) Unearned rent income 
D) Prepaid interest 
E) Accrued insurance 
A) Marketable securities 
B) Material inventory 
C) Unearned rent income 
D) Prepaid interest 
E) Accrued insurance

Question 13

Match each account to the proper account description;not all letters will be used.
-Marketable Securities

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 14

Match
-Equipment

Accepted Answer

A) Current Assets 
B) Tangible Assets 
C) Investments 
D) Intangibles 
E) Other
F)Current Liability
G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item Not Included on Balance Sheet 
A) Current Assets 
B) Tangible Assets 
C) Investments 
D) Intangibles 
E) Other
F)Current Liability
G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item Not Included on Balance Sheet

Question 15

Treasury stock is best classified as:

Accepted Answer

A) a current asset. 
B) a long-term investment. 
C) a contra liability. 
D) a reduction of stockholders' equity. 
E) a reduction of retained earnings. 
A) a current asset. 
B) a long-term investment. 
C) a contra liability. 
D) a reduction of stockholders' equity. 
E) a reduction of retained earnings.

Question 16

Match each account to the proper account description;not all letters will be used.
-Deferred Income Taxes (liability)

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 17

Match each account to the proper account description;not all letters will be used.
-Accumulated Depreciation

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 18

Match
-Copyright

Accepted Answer

A) Current Assets 
B) Tangible Assets 
C) Investments 
D) Intangibles 
E) Other
F)Current Liability
G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item Not Included on Balance Sheet 
A) Current Assets 
B) Tangible Assets 
C) Investments 
D) Intangibles 
E) Other
F)Current Liability
G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item Not Included on Balance Sheet

Question 19

Drama Products Inc.has issued redeemable preferred stock.For analysis purposes,these securities are best classified as:

Accepted Answer

A) marketable securities. 
B) long-term investments. 
C) long-term debt. 
D) paid-in capital. 
E) retained earnings. 
A) marketable securities. 
B) long-term investments. 
C) long-term debt. 
D) paid-in capital. 
E) retained earnings.

Question 20

Match
-Marketable Securities

Accepted Answer

A) Current Assets 
B) Tangible Assets 
C) Investments 
D) Intangibles 
E) Other
F)Current Liability
G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item Not Included on Balance Sheet 
A) Current Assets 
B) Tangible Assets 
C) Investments 
D) Intangibles 
E) Other
F)Current Liability
G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item Not Included on Balance Sheet

When preferred stock has a preference as to dividends,the current year's preferred dividend must be paid before a dividend can be paid to common stockholders.

Which of the following is a current liability?

Which of the following is not a problem inherent in balance sheet presentation?

Match each account to the proper account description;not all letters will be used. -Paid-In Capital in Excess of Par

Which of the following is not true about an ESOP?

There are two types of subsequent events under GAAP;those that require retroactive recognition,and those that do not require retroactive recognition but require disclosure in the notes to the financial statements.

Match each account to the proper account description;not all letters will be used. -Equipment

The purpose of a balance sheet is to show the financial condition of an accounting entity for a period of time.

Which of the following is not a common characteristic of preferred stock?

If dividends are not declared by the board of directors in a particular year,a holder of cumulative preferred stock will never be paid that dividend.

Which of the following is not a current asset?

Match each account to the proper account description;not all letters will be used. -Marketable Securities

Match -Equipment

Treasury stock is best classified as:

Match each account to the proper account description;not all letters will be used. -Deferred Income Taxes (liability)

Match each account to the proper account description;not all letters will be used. -Accumulated Depreciation

Match -Copyright

Drama Products Inc.has issued redeemable preferred stock.For analysis purposes,these securities are best classified as:

Match -Marketable Securities

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 3: Balance Sheet

When preferred stock has a preference as to dividends,the current year's preferred dividend must be paid before a dividend can be paid to common stockholders.

Which of the following is a current liability?

Which of the following is not a problem inherent in balance sheet presentation?

Match each account to the proper account description;not all letters will be used. -Paid-In Capital in Excess of Par

Which of the following is not true about an ESOP?

There are two types of subsequent events under GAAP;those that require retroactive recognition,and those that do not require retroactive recognition but require disclosure in the notes to the financial statements.

Match each account to the proper account description;not all letters will be used. -Equipment

The purpose of a balance sheet is to show the financial condition of an accounting entity for a period of time.

Which of the following is not a common characteristic of preferred stock?

If dividends are not declared by the board of directors in a particular year,a holder of cumulative preferred stock will never be paid that dividend.

Which of the following is not a current asset?

Match each account to the proper account description;not all letters will be used. -Marketable Securities

Match -Equipment

Treasury stock is best classified as:

Match each account to the proper account description;not all letters will be used. -Deferred Income Taxes (liability)

Match each account to the proper account description;not all letters will be used. -Accumulated Depreciation

Match -Copyright

Drama Products Inc.has issued redeemable preferred stock.For analysis purposes,these securities are best classified as:

Match -Marketable Securities

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters