Question 1

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 2

An employee receives an hourly rate of $30, 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, $300; cumulative earnings for year prior to current week, $90,700; 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)  $1,147.95 
B)  $1,059.75 
C)  $1,470.00 
D)  $1,359.75 
A)  $1,147.95 
B)  $1,059.75 
C)  $1,470.00 
D)  $1,359.75

Question 3

On November 21 of the current year, Maroon Inc.reacquired 50,000 shares of its common stock at $4 per share.As a result of this transaction, net assets of the company:

Accepted Answer

A)  increase by $200,000. 
B)  decrease by $200,000. 
C)  remain unchanged. 
D)  increase by $50,000. 
A)  increase by $200,000. 
B)  decrease by $200,000. 
C)  remain unchanged. 
D)  increase by $50,000.

Question 4

Federal unemployment compensation taxes that are collected by the federal government are not paid directly to the unemployed but are allocated among the states for use in state programs.

Accepted Answer

A) True 
 B)False

Question 5

The _____ is determined by transactions between buyers and sellers of similar bonds.

Accepted Answer

A)  stated interest rate 
B)  effective interest rate 
C)  internal interest rate 
D)  straight-line rate 
A)  stated interest rate 
B)  effective interest rate 
C)  internal interest rate 
D)  straight-line rate

Question 6

On March 15, Silver Co.issued a $80,000, 5%, 90-day note payable to Gold Co.How much will Silver Co.have to pay at maturity? (Assume 360 days in a year)

Accepted Answer

A)  $84,000 
B)  $79,000 
C)  $80,000 
D)  $81,000 
A)  $84,000 
B)  $79,000 
C)  $80,000 
D)  $81,000

Question 7

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 8

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

Accepted Answer

A) True 
 B)False

Question 9

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 10

One of the conditions for paying a cash dividend is sufficient retained earnings.

Accepted Answer

A) True 
 B)False

Question 11

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

_____ liabilities may arise from past transactions if certain events occur in the future.

Accepted Answer

A)  Current 
B)  Noncurrent 
C)  Long-term 
D)  Contingent 
A)  Current 
B)  Noncurrent 
C)  Long-term 
D)  Contingent

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

During the first year of operations, employees earned vacation pay of $50,000.The vacations will be taken during the second year.The vacation pay expense should be recorded in the first year of operations.

Accepted Answer

A) True 
 B)False

Question 18

Treasury stock is a contra-equity account.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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

Where is interest expense listed on the income statement?

On November 21 of the current year, Maroon Inc.reacquired 50,000 shares of its common stock at $4 per share.As a result of this transaction, net assets of the company:

Federal unemployment compensation taxes that are collected by the federal government are not paid directly to the unemployed but are allocated among the states for use in state programs.

The _____ is determined by transactions between buyers and sellers of similar bonds.

On March 15, Silver Co.issued a $80,000, 5%, 90-day note payable to Gold Co.How much will Silver Co.have to pay at maturity? (Assume 360 days in a year)

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

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

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

One of the conditions for paying a cash dividend is sufficient retained earnings.

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

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

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

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

_____ liabilities may arise from past transactions if certain events occur in the future.

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

During the first year of operations, employees earned vacation pay of $50,000.The vacations will be taken during the second year.The vacation pay expense should be recorded in the first year of operations.

Treasury stock is a contra-equity account.

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.

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

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

Where is interest expense listed on the income statement?

On November 21 of the current year, Maroon Inc.reacquired 50,000 shares of its common stock at $4 per share.As a result of this transaction, net assets of the company:

Federal unemployment compensation taxes that are collected by the federal government are not paid directly to the unemployed but are allocated among the states for use in state programs.

The _____ is determined by transactions between buyers and sellers of similar bonds.

On March 15, Silver Co.issued a $80,000, 5%, 90-day note payable to Gold Co.How much will Silver Co.have to pay at maturity? (Assume 360 days in a year)

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

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

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

One of the conditions for paying a cash dividend is sufficient retained earnings.

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

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

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

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

_____ liabilities may arise from past transactions if certain events occur in the future.

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

During the first year of operations, employees earned vacation pay of $50,000.The vacations will be taken during the second year.The vacation pay expense should be recorded in the first year of operations.

Treasury stock is a contra-equity account.

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.

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

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