Question 1

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 2

A corporation has the following stockholders' equity accounts at the end of the current fiscal year, after the closing entries have been posted: Common Stock, $5 par, $2,000,000; Paid-In Capital in Excess of Par--Common Stock, $375,000; Retained Earnings, $1,285,000. The earnings for the current year, during which there were no unusual items, were $300,000.
Compute the earnings per share of common stock.

Accepted Answer

$.75 per share ($300

Question 3

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Accepted Answer

A) True 
 B)False

Question 4

If 50,000 shares are authorized, 35,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 33,000.

Accepted Answer

A) True 
 B)False

Question 5

Treasury stock is a contra-equity account.

Accepted Answer

A) True 
 B)False

Question 6

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

Accepted Answer

A)  Increase cash $2,600; increase retained earnings $2,600 
B)  Increase cash $1,000; increase common stock $1,000 
C)  Increase cash $2,600; increase common stock $1,000 and increase paid-in capital $1,600 
D)  Increase cash $2,600; increase common stock $1,600 and increase paid-in capital $1,000 
A)  Increase cash $2,600; increase retained earnings $2,600 
B)  Increase cash $1,000; increase common stock $1,000 
C)  Increase cash $2,600; increase common stock $1,000 and increase paid-in capital $1,600 
D)  Increase cash $2,600; increase common stock $1,600 and increase paid-in capital $1,000

Question 7

The main source of paid-in capital is from issuing stock.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following will be classified as a current liability?

Accepted Answer

A)  Two-year notes payable 
B)  Bonds payable 
C)  Mortgage loan 
D)  Unearned rent 
A)  Two-year notes payable 
B)  Bonds payable 
C)  Mortgage loan 
D)  Unearned rent

Question 9

FICA tax is a payroll tax that is paid only by employers.

Accepted Answer

A) True 
 B)False

Question 10

A corporation, which had 20,000 shares of common stock outstanding, declared a 3-for-1 stock split.
 (a)What will be the number of shares outstancing after the split?
(b)If the common stock had a market price of $ \$ 240 $ per share before the stock split, what would be an approximate market price per share after the split?

Accepted Answer

(a)60,000

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Medicare taxes are paid by both the employee and the employer.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

A bond is simply a form of an interest-bearing note.

Accepted Answer

A) True 
 B)False

Question 17

A corporation has 50,000 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:

Accepted Answer

A)  200,000 shares. 
B)  50,000 shares. 
C)  250,000 shares. 
D)  12,500 shares. 
A)  200,000 shares. 
B)  50,000 shares. 
C)  250,000 shares. 
D)  12,500 shares.

Question 18

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 net pay for the employee?

Accepted Answer

A)  $798.85 
B)  $873.77 
C)  $953.16 
D)  $1,223.77 
A)  $798.85 
B)  $873.77 
C)  $953.16 
D)  $1,223.77

Question 19

As interest is recorded on an interest-bearing note, the Interest Expense account is:

Accepted Answer

A)  decreased; the Interest Payable account is increased. 
B)  increased; the Interest Payable account is increased. 
C)  increased; the Notes Payable account is decreased. 
D)  increased; the Notes Payable account is increased. 
A)  decreased; the Interest Payable account is increased. 
B)  increased; the Interest Payable account is increased. 
C)  increased; the Notes Payable account is decreased. 
D)  increased; the Notes Payable account is increased.

Question 20

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

Most employers are levied a tax on payrolls for:

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

If 50,000 shares are authorized, 35,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 33,000.

Treasury stock is a contra-equity account.

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

The main source of paid-in capital is from issuing stock.

Which of the following will be classified as a current liability?

FICA tax is a payroll tax that is paid only by employers.

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

Medicare taxes are paid by both the employee and the employer.

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

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

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

A bond is simply a form of an interest-bearing note.

A corporation has 50,000 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:

As interest is recorded on an interest-bearing note, the Interest Expense account is:

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

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

Most employers are levied a tax on payrolls for:

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

If 50,000 shares are authorized, 35,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 33,000.

Treasury stock is a contra-equity account.

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

The main source of paid-in capital is from issuing stock.

Which of the following will be classified as a current liability?

FICA tax is a payroll tax that is paid only by employers.

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

Medicare taxes are paid by both the employee and the employer.

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

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

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

A bond is simply a form of an interest-bearing note.

A corporation has 50,000 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:

As interest is recorded on an interest-bearing note, the Interest Expense account is:

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

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