Question 1

The prices of bonds are quoted on bond exchanges as a percentage of the bonds' face value.

Accepted Answer

A) True 
 B)False

Question 2

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets.

Accepted Answer

A) True 
 B)False

Question 3

Illustrate the effects on the accounts and the financial statements of each of the following transactions:

Accepted Answer

Assets = Liabilities + Stockholders' Equ

Question 4

Which of the following is a characteristic of deferred income tax payable?

Accepted Answer

A) Deferred income tax payable is often generated due to timing differences. 
B) Deferred income tax payable may be either a current or long-term liability. 
C) Deferred income tax payable represents the deferred payment of taxes to later years through tax planning techniques. 
D) All of these are characteristics of deferred income tax payable. 
A) Deferred income tax payable is often generated due to timing differences. 
B) Deferred income tax payable may be either a current or long-term liability. 
C) Deferred income tax payable represents the deferred payment of taxes to later years through tax planning techniques. 
D) All of these are characteristics of deferred income tax payable.

Question 5

During the first year of operations,a company granted warranties on its products.The estimated cost of the product warranty liability at the end of the year is $12,750.The product warranty expense of $12,750 should be recorded in the year the related product sale is made.

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

A) $798.85 
B) $873.77 
C) $1,242.00 
D) $1,323.00 
A) $798.85 
B) $873.77 
C) $1,242.00 
D) $1,323.00

Question 7

On April 1,10,000 shares of $20 par common stock were issued at $24.Illustrate the effects on the accounts and the financial statements.

Accepted Answer

Balance Sheet Accounts Financial Stateme

Question 8

A current liability is a debt that is reasonably expected to be paid:

Accepted Answer

A) between 6 months and 18 months. 
B) out of currently recognized revenues. 
C) within one year. 
D) out of cash currently on hand. 
A) between 6 months and 18 months. 
B) out of currently recognized revenues. 
C) within one year. 
D) out of cash currently on hand.

Question 9

Medicare taxes are withheld from an employee's pay only till the employee has earned a specific amount each year.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) Fixed assets 
B) Long-term liabilities 
C) Stockholders' equity 
D) Intangible assets 
A) Fixed assets 
B) Long-term liabilities 
C) Stockholders' equity 
D) Intangible assets

Question 11

A company has total assets of $320,000,total liabilities of $180,000,and total stockholders' equity is $140,000.Calculate ratio of liabilities to stockholders' equity.

Accepted Answer

A) 2.3 
B) 1.7 
C) 1.3 
D) 3.2 
A) 2.3 
B) 1.7 
C) 1.3 
D) 3.2

Question 12

In order to record a contingent liability,the liability must be probable and reasonably estimated.

Accepted Answer

A) True 
 B)False

Question 13

Smith Co.is considering the following alternative plans for financing the company:

Accepted Answer

Plan I Plan II Earnings before bond inte

Question 14

Prior to the last weekly payroll period of the calendar year,the cumulative earnings of employees A and B are $106,150 and $91,000,respectively.Their earnings for the last completed payroll period of the year are $850 each.Social security tax rate is 6% on maximum of $106,800.All earnings are subject to Medicare tax of 1.5%.Assuming that the payroll will be paid on December 29,what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

Accepted Answer

A) $127.50 
B) $115.50 
C) $76.50 
D) $63.75 
A) $127.50 
B) $115.50 
C) $76.50 
D) $63.75

Question 15

What is the effect of a stock dividend on the balance sheet?

Accepted Answer

A) Decrease total assets and decrease total stockholders' equity 
B) Decrease total assets and increase total stockholders' equity 
C) Increase total liabilities and decrease total stockholders' equity 
D) No effect on total assets,total liabilities,or total stockholders' equity 
A) Decrease total assets and decrease total stockholders' equity 
B) Decrease total assets and increase total stockholders' equity 
C) Increase total liabilities and decrease total stockholders' equity 
D) No effect on total assets,total liabilities,or total stockholders' equity

Question 16

The ratio of liabilities to total assets is also called the debt ratio.

Accepted Answer

A) True 
 B)False

Question 17

FICA tax is a payroll tax that is paid by both the employee and the employer.

Accepted Answer

A) True 
 B)False

Question 18

If 20,000 shares are authorized,15,000 shares are issued,and 500 shares are reacquired,the number of outstanding shares is 19,500.

Accepted Answer

A) True 
 B)False

Question 19

The par value per share of common stock represents:

Accepted Answer

A) the minimum selling price of the stock established by the articles of incorporation. 
B) the minimum amount the stockholder will receive when the corporation is liquidated. 
C) the monetary amount assigned to each share of stock in the articles of incorporation. 
D) the amount of dividends per share to be received each year. 
A) the minimum selling price of the stock established by the articles of incorporation. 
B) the minimum amount the stockholder will receive when the corporation is liquidated. 
C) the monetary amount assigned to each share of stock in the articles of incorporation. 
D) the amount of dividends per share to be received each year.

Question 20

Liabilities due beyond one year are classified as .

Accepted Answer

A) current liabilities 
B) long-term liabilities 
C) contingent liabilities 
D) fixed liabilities 
A) current liabilities 
B) long-term liabilities 
C) contingent liabilities 
D) fixed liabilities

The prices of bonds are quoted on bond exchanges as a percentage of the bonds' face value.

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets.

Illustrate the effects on the accounts and the financial statements of each of the following transactions:

Which of the following is a characteristic of deferred income tax payable?

During the first year of operations,a company granted warranties on its products.The estimated cost of the product warranty liability at the end of the year is $12,750.The product warranty expense of $12,750 should be recorded in the year the related product sale is made.

On April 1,10,000 shares of $20 par common stock were issued at $24.Illustrate the effects on the accounts and the financial statements.

A current liability is a debt that is reasonably expected to be paid:

Medicare taxes are withheld from an employee's pay only till the employee has earned a specific amount each year.

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

A company has total assets of $320,000,total liabilities of $180,000,and total stockholders' equity is $140,000.Calculate ratio of liabilities to stockholders' equity.

In order to record a contingent liability,the liability must be probable and reasonably estimated.

Smith Co.is considering the following alternative plans for financing the company:

What is the effect of a stock dividend on the balance sheet?

The ratio of liabilities to total assets is also called the debt ratio.

FICA tax is a payroll tax that is paid by both the employee and the employer.

If 20,000 shares are authorized,15,000 shares are issued,and 500 shares are reacquired,the number of outstanding shares is 19,500.

The par value per share of common stock represents:

Liabilities due beyond one year are classified as .

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

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Exam 8: Liabilities and Stockholders Equity

The prices of bonds are quoted on bond exchanges as a percentage of the bonds' face value.

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets.

Illustrate the effects on the accounts and the financial statements of each of the following transactions:

Which of the following is a characteristic of deferred income tax payable?

During the first year of operations,a company granted warranties on its products.The estimated cost of the product warranty liability at the end of the year is $12,750.The product warranty expense of $12,750 should be recorded in the year the related product sale is made.

On April 1,10,000 shares of $20 par common stock were issued at $24.Illustrate the effects on the accounts and the financial statements.

A current liability is a debt that is reasonably expected to be paid:

Medicare taxes are withheld from an employee's pay only till the employee has earned a specific amount each year.

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

A company has total assets of $320,000,total liabilities of $180,000,and total stockholders' equity is $140,000.Calculate ratio of liabilities to stockholders' equity.

In order to record a contingent liability,the liability must be probable and reasonably estimated.

Smith Co.is considering the following alternative plans for financing the company:

What is the effect of a stock dividend on the balance sheet?

The ratio of liabilities to total assets is also called the debt ratio.

FICA tax is a payroll tax that is paid by both the employee and the employer.

If 20,000 shares are authorized,15,000 shares are issued,and 500 shares are reacquired,the number of outstanding shares is 19,500.

The par value per share of common stock represents:

Liabilities due beyond one year are classified as .

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