Question 1

Federal unemployment compensation tax is a tax that is paid only by employers.

Accepted Answer

A) True 
 B)False  True

Question 2

On July 1, George Co.issued $3,000,000 of 10-year, 8% bonds at par.Interest on the bonds is payable semiannually on December 31 and June 30.As a result of this transaction, net assets of the company:

Accepted Answer

A)  decrease by $240,000. 
B)  increase by $3,000,000. 
C)  is not effected. 
D)  decrease by $120,000. 
A)  decrease by $240,000. 
B)  increase by $3,000,000. 
C)  is not effected. 
D)  decrease by $120,000. C

Question 3

Which of the following is an effect of payment of cash dividends on a company's financial statements?

Accepted Answer

A)  A decrease in cash and stockholders' equity 
B)  A decrease in cash and liability 
C)  An increase in stockholders' equity and liability 
D)  A decrease in cash and an increase in liability 
A)  A decrease in cash and stockholders' equity 
B)  A decrease in cash and liability 
C)  An increase in stockholders' equity and liability 
D)  A decrease in cash and an increase in liability B

Question 4

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

Accepted Answer

A) True 
 B)False

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

Smith Co.is considering the following alternative plans for financing the company: $$\begin{array}{l}&\text { Plan I }&\text { Plan II }\
\text { Issue } 10 \% \text { Bonds (at face) } & - & \$ 1,000,000 \
\text { Issue } \$ 10 \text { Common Stock } & \$ 3,000,000 & \$ 2,000,000\
\text { Income tax is estimated at } 40 \% \text { of income. }
\end{array}$$ Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

Accepted Answer

\[\begin{array} { | l | r | r | } 
\hlin

Question 7

A 10% stock dividend will increase the book value per share.

Accepted Answer

A) True 
 B)False

Question 8

The following information is for employee William Heedy for the week ended March 15.
Total hours worked: 48
Rate: $16 per hour, with double time for all hours in excess of 40
Federal income tax withheld: $200
United Fund deduction: $50
Cumulative earnings prior to current week: $6,400
Tax rates:
Social security: 6% on maximum earnings of $106,800
Medicare tax: 1.5% on all earnings; on both employer and employee
State unemployment: 4.2% on maximum earnings of $7,000; on employer
Federal unemployment: 0.8% on maximum earnings of $7,000; on employer
(a)Determine (1) total earnings, (2) total deductions, and (3) cash paid.
(b)Determine each of the employer's payroll taxes related to the earnings of William Heedy for the week ended March 15.

Accepted Answer

None

Question 9

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 10

The excess of issue price over par of common stock is termed as:

Accepted Answer

A)  discount. 
B)  income. 
C)  deficit. 
D)  premium. 
A)  discount. 
B)  income. 
C)  deficit. 
D)  premium.

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

Accepted Answer

A)  a premium. 
B)  their face value. 
C)  a discount. 
D)  a discount or a premium. 
A)  a premium. 
B)  their face value. 
C)  a discount. 
D)  a discount or a premium.

Question 14

A company issues 5,000 shares of $15 par common stock.As a result, the earnings per share of the company _____.

Accepted Answer

A)  increases 
B)  remains unchanged 
C)  decreases 
D)  equals to $15 
A)  increases 
B)  remains unchanged 
C)  decreases 
D)  equals to $15

Question 15

Cash dividends are not paid on shares of treasury stock.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

If 50,000 shares are authorized, 37,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 35,000.

Accepted Answer

A) True 
 B)False

Question 20

Most employers are required to withhold a portion of the earnings of each employee for FICA tax.

Accepted Answer

A) True 
 B)False

Federal unemployment compensation tax is a tax that is paid only by employers.

On July 1, George Co.issued $3,000,000 of 10-year, 8% bonds at par.Interest on the bonds is payable semiannually on December 31 and June 30.As a result of this transaction, net assets of the company:

Which of the following is an effect of payment of cash dividends on a company's financial statements?

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

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 10% stock dividend will increase the book value per share.

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

The excess of issue price over par of common stock is termed as:

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.

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

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

A company issues 5,000 shares of $15 par common stock.As a result, the earnings per share of the company _____.

Cash dividends are not paid on shares of treasury stock.

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

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

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

If 50,000 shares are authorized, 37,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 35,000.

Most employers are required to withhold a portion of the earnings of each employee for FICA tax.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 8: Liabilities and Stockholders Equity

Federal unemployment compensation tax is a tax that is paid only by employers.

On July 1, George Co.issued $3,000,000 of 10-year, 8% bonds at par.Interest on the bonds is payable semiannually on December 31 and June 30.As a result of this transaction, net assets of the company:

Which of the following is an effect of payment of cash dividends on a company's financial statements?

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

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 10% stock dividend will increase the book value per share.

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

The excess of issue price over par of common stock is termed as:

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.

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

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

A company issues 5,000 shares of $15 par common stock.As a result, the earnings per share of the company _____.

Cash dividends are not paid on shares of treasury stock.

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

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

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

If 50,000 shares are authorized, 37,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 35,000.

Most employers are required to withhold a portion of the earnings of each employee for FICA tax.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters