Question: Current Liabilities are valued at replacement value.True or False? Answer _______ Bonds-Straight-Line amortization is not allowed under IFRS.True or False Answer _______ Dividends are required
- Current Liabilities are valued at replacement value.True or False?
Answer _______
- Bonds-Straight-Line amortization is not allowed under IFRS.True or False
Answer _______
- Dividends are required to be paid in cash.True or False
Answer _______
- A liability is created for the future payment of dividends on the declaration date.
Answer _______
- Prepaid Expenses are classified as Current Assets.True or False?
Answer _______
Multiple Choice (12 Questions @ 5 points each)
6.When a bond issue sale price is higher than the bond face amount, the effective interest rate is:
a.Lower than the stated rate
b.Higher than the stated rate
c.Equal to the stated rate
d.Effective interest is not applicable to bonds
Answer _______
7.Icicles Inc. is a defendant in a current lawsuit that it estimates has probable loss of $175,000.The loss contingency should be:
a.Disclosed and accrued as a liability
b.Disclosed but not accrued as liability
c.Not Disclosed, but accrued as a liability
d.Not Disclosed and not accrued as a liability
Answer _______
8. Current liabilities include:
a.Revenue Receivable
b.Deferred Revenues
c.Mortgage Payable
d.Capital Stock
Answer _______
9. ___________ represents the accumulated earnings since inception of the company that have not been paid out to shareholders in the form of a dividend.
a.Comprehensive income
b.Net Income
c.Retained Earnings
d.Earning Liability
Answer _______
10) Superstar Company has the following items: common stock, $950,000; treasury stock, $205,000; deferred income taxes, $185,000 and retained earnings, $424,000. What total amount should Superstar Company report as stockholders' equity?
A)$1,764,000.
B)$1,169,000.
C)$1,354,000.
D)$745,000
E)none of the above
Answer _______
11.Sophia Company's 2020 financial statements contain the following selected data:
Income Taxes$45,000
Interest Expense25,000
Net Income80,000
Sophia Company's times interest earned for 2020 is:
A)
4.0 times
B)
5.0 times.
C)
6.0 times.
D)
3.2 times.
Answer _______
12. A bond is issued with a face amount of $600,000 and a stated interest rate of 10%. The current market rate of interest is 9%. These bonds will sell at a price that is:
A) Equal to $600,000.
B) Higher than $600,000.
C) Lower than $600,000.
D) None of the above
Answer _______
13.The cumulative feature of preferred stock
a.requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders.
b.limits the amount of cumulative dividends to the par value of the preferred stock.
c.means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock.
d.enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.
Answer _______
14.In 2020 Natel, Inc. had expenses of $275,000 revenues of $600,000, and declared dividends of $150,000. What is the impact to Retained Earnings?
A)decrease of $175,000
B)increase of $325,000
C)increase of $175,000
D)decrease of $325,000
E)none of the above
Answer _______
15.Assume common stock is the only class of stock outstanding in the Bart Corporation. Total stockholders' equity divided by the number of common stock shares outstanding is called:
a.book value per share.
b.par value per share.
c.stated value per share.
d.market value per share.
Answer _______
16.Which of the following investment securities will not reported at fair value under GAAP?
A) Bonds held as trading securities
B) Debt securities held as available for sale securities
C) Debt securities held to maturity
D) All of the above are reported at fair value
Answer _______
17.During the year, Silver Inc. incurred and paid the following costs related to its bonds:$50,000 to have bond certificates printed, $170,000 in legal fees, $25,000 accounting fees for registration information, and $100,000 to an underwriter as a commission. What is the amount of bond issue costs?
A) $345,000
B) $220,000
C) $245,000
D) $270,000
E) none of the above
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