Question 1

The par value of common stock is rarely equal to its market value on the date the stock is issued.

Accepted Answer

A) True 
 B)False

Question 2

If the market rate of interest is 10%,a $10,000,12%,10-year bond that pays interest semiannually would sell at an amount:

Accepted Answer

A) less than face value. 
B) equal to the face value. 
C) greater than face value. 
D) that cannot be determined. 
A) less than face value. 
B) equal to the face value. 
C) greater than face value. 
D) that cannot be determined.

Question 3

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

Accepted Answer

A) Bonds Payable 
B) Common Stock 
C) Dividends Payable 
D) Cash 
A) Bonds Payable 
B) Common Stock 
C) Dividends Payable 
D) Cash

Question 4

Most employers are levied a tax on payrolls for:

Accepted Answer

A) sales tax. 
B) medical insurance premiums. 
C) federal unemployment compensation tax. 
D) union dues. 
A) sales tax. 
B) medical insurance premiums. 
C) federal unemployment compensation tax. 
D) union dues.

Question 5

When a corporation issues bonds,it executes a contract with the bondholders known as a bond indenture.

Accepted Answer

A) True 
 B)False

Question 6

Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

Accepted Answer

A) True 
 B)False

Question 7

One of the conditions for paying a cash dividend is formal action by the board of directors.

Accepted Answer

A) True 
 B)False

Question 8

If the market rate of interest is 7% and a corporation's bonds bear interest at 8%,the bonds will sell at a premium.

Accepted Answer

A) True 
 B)False

Question 9

If 50,000 shares are authorized,35,000 shares are issued,and 1,000 shares are reacquired,the number of outstanding shares is 36,000.

Accepted Answer

A) True 
 B)False

Question 10

Treasury stock is a contra-equity account.

Accepted Answer

A) True 
 B)False

Question 11

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 4-for-1 stock split,the number of shares outstanding after the split will be 40,000.

Accepted Answer

A) True 
 B)False

Question 12

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

Accepted Answer

A) 5,000 
B) 100,000 
C) 60,000 
D) 55,000 
A) 5,000 
B) 100,000 
C) 60,000 
D) 55,000

Question 13

Which of the following is necessary for a corporation to pay cash dividends?

Accepted Answer

A) Market value in excess of par value per share 
B) Order by the court of law 
C) Sufficient retained earnings 
D) Prior declaration of stock dividends 
A) Market value in excess of par value per share 
B) Order by the court of law 
C) Sufficient retained earnings 
D) Prior declaration of stock dividends

Question 14

Income tax based on taxable income may differ from the income tax based on "Income before Taxes" on the income statement.Which of the following could be a reason for this difference?

Accepted Answer

A) A business may use MACRS depreciation for tax reporting and straight-line for financial reporting purposes. 
B) Tax payments may not equal the tax due. 
C) Taxable income is based on Generally Accepted Accounting Principles. 
D) All of these could be reasons for the difference. 
A) A business may use MACRS depreciation for tax reporting and straight-line for financial reporting purposes. 
B) Tax payments may not equal the tax due. 
C) Taxable income is based on Generally Accepted Accounting Principles. 
D) All of these could be reasons for the difference.

Question 15

Medicare taxes are paid only by employee.

Accepted Answer

A) True 
 B)False

Question 16

The total earnings of an employee during a payroll period,including bonuses and overtime pay,is referred to as:

Accepted Answer

A) take-home pay. 
B) pay net of taxes. 
C) net pay. 
D) gross pay. 
A) take-home pay. 
B) pay net of taxes. 
C) net pay. 
D) gross pay.

Question 17

The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets,liabilities,or stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 18

Where is interest expense listed on the income statement?

Accepted Answer

A) Other expense section 
B) Cost of merchandise sold 
C) Operating expenses 
D) Interest expense is listed on the balance sheet,not the income statement. 
A) Other expense section 
B) Cost of merchandise sold 
C) Operating expenses 
D) Interest expense is listed on the balance sheet,not the income statement.

Question 19

The interest rate specified in the bond indenture is called the:

Accepted Answer

A) discount rate. 
B) contract rate. 
C) market rate. 
D) effective rate. 
A) discount rate. 
B) contract rate. 
C) market rate. 
D) effective rate.

Question 20

FICA tax becomes a liability to the federal government at the time the employees are paid.

Accepted Answer

A) True 
 B)False

The par value of common stock is rarely equal to its market value on the date the stock is issued.

If the market rate of interest is 10%,a $10,000,12%,10-year bond that pays interest semiannually would sell at an amount:

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

Most employers are levied a tax on payrolls for:

When a corporation issues bonds,it executes a contract with the bondholders known as a bond indenture.

Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

One of the conditions for paying a cash dividend is formal action by the board of directors.

If the market rate of interest is 7% and a corporation's bonds bear interest at 8%,the bonds will sell at a premium.

If 50,000 shares are authorized,35,000 shares are issued,and 1,000 shares are reacquired,the number of outstanding shares is 36,000.

Treasury stock is a contra-equity account.

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 4-for-1 stock split,the number of shares outstanding after the split will be 40,000.

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

Which of the following is necessary for a corporation to pay cash dividends?

Income tax based on taxable income may differ from the income tax based on "Income before Taxes" on the income statement.Which of the following could be a reason for this difference?

Medicare taxes are paid only by employee.

The total earnings of an employee during a payroll period,including bonuses and overtime pay,is referred to as:

The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets,liabilities,or stockholders' equity.

Where is interest expense listed on the income statement?

The interest rate specified in the bond indenture is called the:

FICA tax becomes a liability to the federal government at the time the employees are paid.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 8: Liabilities and Stockholders Equity

The par value of common stock is rarely equal to its market value on the date the stock is issued.

If the market rate of interest is 10%,a $10,000,12%,10-year bond that pays interest semiannually would sell at an amount:

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

Most employers are levied a tax on payrolls for:

When a corporation issues bonds,it executes a contract with the bondholders known as a bond indenture.

Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

One of the conditions for paying a cash dividend is formal action by the board of directors.

If the market rate of interest is 7% and a corporation's bonds bear interest at 8%,the bonds will sell at a premium.

If 50,000 shares are authorized,35,000 shares are issued,and 1,000 shares are reacquired,the number of outstanding shares is 36,000.

Treasury stock is a contra-equity account.

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 4-for-1 stock split,the number of shares outstanding after the split will be 40,000.

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

Which of the following is necessary for a corporation to pay cash dividends?

Income tax based on taxable income may differ from the income tax based on "Income before Taxes" on the income statement.Which of the following could be a reason for this difference?

Medicare taxes are paid only by employee.

The total earnings of an employee during a payroll period,including bonuses and overtime pay,is referred to as:

The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets,liabilities,or stockholders' equity.

Where is interest expense listed on the income statement?

The interest rate specified in the bond indenture is called the:

FICA tax becomes a liability to the federal government at the time the employees are paid.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters