Question 1

When the market rate of interest is more than the contract rate of a bond, the bond will sell for a discount.

Accepted Answer

A) True 
 B)False

Question 2

The issuance of common stock affects both paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 3

If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.

Accepted Answer

A) True 
 B)False

Question 4

The summary of the payroll for the monthly pay period ending July 15 indicated the following: $\begin{array}{lr}
\text { Salaries } & \$ 180,000 \
\text { Federal income tax withheld } & 32,300 \
\text { Medical insurance withheld } & 7,370 \
\text { Social security tax withheld } & 10,800 \
\text { Medicare tax withheld } & 2,700
\end{array}$ Illustrate the effects on the accounts and the financial statements of (a) the payroll and (b) the employer's payroll tax expense for the month.The state unemployment tax rate is 4.2%, and the federal unemployment tax rate is 0.8%.Only $30,000 of salaries are subject to unemployment taxes.

Accepted Answer

The answer of The summary of the payroll for the...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount:

Accepted Answer

A)  less than face value. 
B)  equal to the face value. 
C)  greater than face value. 
D)  that cannot be determined. 
A)  less than face value. 
B)  equal to the face value. 
C)  greater than face value. 
D)  that cannot be determined.

Question 7

Which of the following transactions decreases the profitability of a company?

Accepted Answer

A)  Issuing a note payable 
B)  Purchasing treasury stock 
C)  Declaring cash dividend 
D)  Recording payroll tax expense 
A)  Issuing a note payable 
B)  Purchasing treasury stock 
C)  Declaring cash dividend 
D)  Recording payroll tax expense

Question 8

The following information is available for Amanda Co.for the current year. $$\begin{array} { l r } 
\text { Common shares outstanding } & 150,000 \
\text { Preferred stock dividend declared and paid } & \$ 90,000 \
\text { Net income } & \$ 300,000
\end{array}$$ ? Calculate the company's earnings per share.

Accepted Answer

A)  $1.10 
B)  $2.60 
C)  $2.00 
D)  $1.40 
A)  $1.10 
B)  $2.60 
C)  $2.00 
D)  $1.40

Question 9

Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet?

Accepted Answer

A)  Bonds Payable 
B)  Common Stock 
C)  Dividends Payable 
D)  Cash 
A)  Bonds Payable 
B)  Common Stock 
C)  Dividends Payable 
D)  Cash

Question 10

Before a stock dividend can be declared or paid, there must be sufficient cash.

Accepted Answer

A) True 
 B)False

Question 11

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Accepted Answer

A) True 
 B)False

Question 12

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

Accepted Answer

A) True 
 B)False

Question 13

A corporation has 10,000 shares outstanding of $25 par value and a current market value of $100 per share.If the corporation issues a 5-for-1 stock split, the market value of the stock will fall to approximately $20.

Accepted Answer

A) True 
 B)False

Question 14

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

Accepted Answer

A) True 
 B)False

Question 15

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

Accepted Answer

A) True 
 B)False

Question 16

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 2,000.

Accepted Answer

A) True 
 B)False

Question 17

Paid-in capital and retained earnings are the two major categories of stockholders' equity for a corporation.

Accepted Answer

A) True 
 B)False

Question 18

Emerald Co.has 50,000 shares at $12 par common stock outstanding.If the company decides to buy 20% of its shares for $15 per share, the total stockholders' equity will:

Accepted Answer

A)  increase by $600,000. 
B)  increase by $750,000. 
C)  decrease by $150,000. 
D)  decrease by $120,000. 
A)  increase by $600,000. 
B)  increase by $750,000. 
C)  decrease by $150,000. 
D)  decrease by $120,000.

Question 19

When a corporation issues bonds, it executes a contract with the bondholders known as a bond debenture.

Accepted Answer

A) True 
 B)False

Question 20

Contingent liabilities that are probable but cannot be reasonably estimated are disclosed in the:

Accepted Answer

A)  notes to the financial statements. 
B)  current liabilities section of the balance sheet. 
C)  retained earnings section of the statement of stockholders' equity. 
D)  long term-liabilities section of the balance sheet. 
A)  notes to the financial statements. 
B)  current liabilities section of the balance sheet. 
C)  retained earnings section of the statement of stockholders' equity. 
D)  long term-liabilities section of the balance sheet.

When the market rate of interest is more than the contract rate of a bond, the bond will sell for a discount.

The issuance of common stock affects both paid-in capital and retained earnings.

If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.

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

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount:

Which of the following transactions decreases the profitability of a company?

The following information is available for Amanda Co.for the current year. Common shares outstanding 150,000 Preferred stock dividend declared and paid \ 90,000 Net income \ 300,000 ? Calculate the company's earnings per share.

Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet?

Before a stock dividend can be declared or paid, there must be sufficient cash.

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

A corporation has 10,000 shares outstanding of $25 par value and a current market value of $100 per share.If the corporation issues a 5-for-1 stock split, the market value of the stock will fall to approximately $20.

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 2,000.

Paid-in capital and retained earnings are the two major categories of stockholders' equity for a corporation.

Emerald Co.has 50,000 shares at $12 par common stock outstanding.If the company decides to buy 20% of its shares for $15 per share, the total stockholders' equity will:

When a corporation issues bonds, it executes a contract with the bondholders known as a bond debenture.

Contingent liabilities that are probable but cannot be reasonably estimated are disclosed in the:

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

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Exam 8: Liabilities and Stockholders Equity

When the market rate of interest is more than the contract rate of a bond, the bond will sell for a discount.

The issuance of common stock affects both paid-in capital and retained earnings.

If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.

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

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount:

Which of the following transactions decreases the profitability of a company?

The following information is available for Amanda Co.for the current year. Common shares outstanding 150,000 Preferred stock dividend declared and paid \ 90,000 Net income \ 300,000 ? Calculate the company's earnings per share.

Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet?

Before a stock dividend can be declared or paid, there must be sufficient cash.

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

A corporation has 10,000 shares outstanding of $25 par value and a current market value of $100 per share.If the corporation issues a 5-for-1 stock split, the market value of the stock will fall to approximately $20.

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 2,000.

Paid-in capital and retained earnings are the two major categories of stockholders' equity for a corporation.

Emerald Co.has 50,000 shares at $12 par common stock outstanding.If the company decides to buy 20% of its shares for $15 per share, the total stockholders' equity will:

When a corporation issues bonds, it executes a contract with the bondholders known as a bond debenture.

Contingent liabilities that are probable but cannot be reasonably estimated are disclosed in the:

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