When stock dividends are distributed, (Points : 3)

Common Stock Dividends Distributable is decreased. Retained Earnings is decreased. Paid-in Capital in Excess of Par is debited if it is a small stock dividend. no entry is necessary if it is a large stock dividend.

Question 2.2. The best managed companies will have (Points : 3)

no uncollectible accounts. a very strict credit policy. a very lenient credit policy. some accounts that will prove to be uncollectible.

Question 3.3. A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a (Points : 3)

corporation is organized for the purpose of making a profit. corporation is subject to more federal and state government regulations. corporation is an accounting economic entity. corporation's temporary accounts are closed at the end of the accounting period.

Question 4.4. Generally, the most important category on the statement of cash flows is cash flows from (Points : 3)

operating activities. investing activities. financing activities. significant noncash activities.

Question 5.5. Each of the following is an example of a significant noncash activity except (Points : 3)

conversion of bonds into common stock. exchanges of plant assets. issuance of debt to purchase assets. stock dividends.

Question 6.6. Farr Company purchased a new van for floral deliveries on January 1, 2012. The van cost $48,000 with an estimated life of 5 years and $12,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2013? (Points : 3)

$7,680 $23,040 $30,720 $11,520

Question 7.7. Significant noncash transactions would not include (Points : 3)

conversion of bonds into common stock. asset acquisition through bond issuance. treasury stock acquisition. exchange of plant assets.

Question 8.8. The size of the petty cash fund is dependent on (Points : 3)

the wishes of the custodian of the fund. anticipated disbursements for the year. anticipated disbursements for a three- to four-week period. the size of the regular cash account.

Question 9.9. An employee authorized to sign checks should not record (Points : 3)

owner cash contributions. mail receipts. cash disbursement transactions. sales transactions.

Question 10.10. A note payable is in the form of (Points : 3)

a contingency that is reasonably likely to occur. a written promissory note. an oral agreement. a standing agreement.

Question 11.11. On October 1, 2012, Holt Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life and $20,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2012, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation? (Points : 3)

$52,000 $60,000 $72,000 $76,000

Question 12.12. The category that is generally considered to be the best measure of a company's ability to continue as a going concern is (Points : 3)

cash flows from operating activities. cash flows from investing activities. cash flows from financing activities. usually different from year to year.

Question 13.13. Under the corporate form of business organization (Points : 3)

a stockholder is personally liable for the debts of the corporation. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. the corporation's life is stipulated in its charter. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

Question 14.14. Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $36,000 that will produce an estimated 100,000 units over its useful life. Estimated salvage value at the end of its useful life is $3,000. What is the depreciation cost per unit? (Points : 3)

$3.30 $3.60 $.33 $.36

Question 15.15. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that (Points : 3)

bond interest is deductible for tax purposes. interest must be paid on a periodic basis regardless of earnings. income to stockholders may increase as a result of trading on the equity. the bondholders do not have voting rights.

Question 16.16. If no-par stock is issued without a stated value, then (Points : 3)

the par value is automatically $1 per share. the entire proceeds are considered to be legal capital. there is no legal capital. the corporation is automatically in violation of its state charter.

Question 17.17. Cash receipts from interest and dividends are classified as (Points : 3)

financing activities. investing activities. operating activities. either financing or investing activities.

Question 18.18. Bad Debts Expense is considered (Points : 3)

an avoidable cost in doing business on a credit basis. an internal control weakness. a necessary risk of doing business on a credit basis. avoidable unless there is a recession.

Question 19.19. With an interest-bearing note, the amount of assets received upon issuance of the note is generally (Points : 3)

equal to the note's face value. greater than the note's face value. less than the note's face value. equal to the note's maturity value.

Question 20.20. If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%? (Points : 3)

$3,000,000 $90,000 $300,000 $210,000

Question 21.21. Of the items below, the one that appears first on the statement of cash flows is (Points : 3)

noncash investing and financing activities. net increase (decrease) in cash. cash at the end of the period. cash at the beginning of the period.

Question 22.22. Investors who receive checks in their names for interest paid on bonds must hold (Points : 3)

registered bonds. coupon bonds. bearer bonds. direct bonds.

Question 23.23. The allowance method of accounting for uncollectible accounts is required if (Points : 3)

the company makes any credit sales. bad debts are significant in amount. the company is a retailer. the company charges interest on accounts receivable.

Question 24.24. A credit balance in Cash Over and Short is reported as a(n) (Points : 3)

asset. liability. miscellaneous expense. miscellaneous revenue.

Question 25.25. Stockholders of a company may be reluctant to finance expansion through issuing more equity because (Points : 3)

leveraging with debt is always a better idea. their earnings per share may decrease. the price of the stock will automatically decrease. dividends must be paid on a periodic basis.