Question 1

On June 5, Glover Co. issued a $60,000, 6%, 120-day note payable to Jones Co. How much will Glover Co. have to pay at maturity? (Assume 360 days in a year)

Accepted Answer

A)  $63,600 
B)  $58,800 
C)  $60,000 
D)  $61,200 
A)  $63,600 
B)  $58,800 
C)  $60,000 
D)  $61,200 D

Question 2

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 D

Question 3

The total earnings of an employee for a payroll period is referred to as gross pay.

Accepted Answer

A) True 
 B)False  True

Question 4

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

Accepted Answer

A)  Paid-in Capital and Retained Earnings. 
B)  Common Stock and Retained Earnings. 
C)  Stock, Paid-In Capital, and Retained Earnings. 
D)  Common Stock and Preferred Stock. 
A)  Paid-in Capital and Retained Earnings. 
B)  Common Stock and Retained Earnings. 
C)  Stock, Paid-In Capital, and Retained Earnings. 
D)  Common Stock and Preferred Stock.

Question 5

If 20,000 shares are authorized, 14,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $13,500.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

How is treasury stock shown on the balance sheet?

Accepted Answer

A)  As an asset 
B)  As a reduction of stockholders' equity 
C)  As an addition to stockholders' equity 
D)  Treasury stock is not shown on the balance sheet. 
A)  As an asset 
B)  As a reduction of stockholders' equity 
C)  As an addition to stockholders' equity 
D)  Treasury stock is not shown on the balance sheet.

Question 11

The cost of a product warranty should be included as an expense in the:

Accepted Answer

A)  period the cash is collected for a product sold on account. 
B)  future period when the cost of repairing the product is paid. 
C)  period of the sale of the product. 
D)  future period when the product is repaired or replaced. 
A)  period the cash is collected for a product sold on account. 
B)  future period when the cost of repairing the product is paid. 
C)  period of the sale of the product. 
D)  future period when the product is repaired or replaced.

Question 12

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 13

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

None

Question 14

Which of the following is a reason to undergo a reverse stock split?

Accepted Answer

A)  To reduce the stock's market price per share. 
B)  To increase total stockholders' equity. 
C)  To reduce total stockholders' equity. 
D)  To increase the market value of the stock per share. 
A)  To reduce the stock's market price per share. 
B)  To increase total stockholders' equity. 
C)  To reduce total stockholders' equity. 
D)  To increase the market value of the stock per share.

Question 15

Gross earnings for a payroll period less payroll deductions are referred to as:

Accepted Answer

A)  overtime pay. 
B)  bonus pay. 
C)  gross pay. 
D)  net pay. 
A)  overtime pay. 
B)  bonus pay. 
C)  gross pay. 
D)  net pay.

Question 16

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 17

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 18

If $1,000,000 of 10% bonds are issued at 98, the amount of cash received from the sale is:

Accepted Answer

A)  $980,000. 
B)  $975,000. 
C)  $987,500. 
D)  $1,000,000. 
A)  $980,000. 
B)  $975,000. 
C)  $987,500. 
D)  $1,000,000.

Question 19

For accounting purposes, stated value is treated the same way as par value.

Accepted Answer

A) True 
 B)False

Question 20

Payroll taxes levied against employees become liabilities:

Accepted Answer

A)  on the first of the following month. 
B)  at the time the liability for the employees' wages is paid. 
C)  when earned by the employee. 
D)  at the end of an accounting period. 
A)  on the first of the following month. 
B)  at the time the liability for the employees' wages is paid. 
C)  when earned by the employee. 
D)  at the end of an accounting period.

On June 5, Glover Co. issued a $60,000, 6%, 120-day note payable to Jones Co. How much will Glover Co. have to pay at maturity? (Assume 360 days in a year)

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?

The total earnings of an employee for a payroll period is referred to as gross pay.

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

If 20,000 shares are authorized, 14,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $13,500.

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

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.

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

How is treasury stock shown on the balance sheet?

The cost of a product warranty should be included as an expense in the:

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

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.

Which of the following is a reason to undergo a reverse stock split?

Gross earnings for a payroll period less payroll deductions are referred to as:

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

Where is interest expense listed on the income statement?

If $1,000,000 of 10% bonds are issued at 98, the amount of cash received from the sale is:

For accounting purposes, stated value is treated the same way as par value.

Payroll taxes levied against employees become liabilities:

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

On June 5, Glover Co. issued a $60,000, 6%, 120-day note payable to Jones Co. How much will Glover Co. have to pay at maturity? (Assume 360 days in a year)

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?

The total earnings of an employee for a payroll period is referred to as gross pay.

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

If 20,000 shares are authorized, 14,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $13,500.

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

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.

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

How is treasury stock shown on the balance sheet?

The cost of a product warranty should be included as an expense in the:

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

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.

Which of the following is a reason to undergo a reverse stock split?

Gross earnings for a payroll period less payroll deductions are referred to as:

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

Where is interest expense listed on the income statement?

If $1,000,000 of 10% bonds are issued at 98, the amount of cash received from the sale is:

For accounting purposes, stated value is treated the same way as par value.

Payroll taxes levied against employees become liabilities:

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