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1. In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in;a. the financing section.;b. the "extraordinary" section.;c. a separate schedule or note to the financial statements.;d. the stockholders' equity section.;2. Which one of the following affects cash during a period?;a. Recording depreciation expense;b. Declaration of a cash dividend;c. Write-off of an uncollectible account receivable;d. Payment of an accounts payable;3. Horizontal analysis evaluates a series of financial statement data over a period of time;a. that has been arranged from the highest number to the lowest number.;b. that has been arranged from the lowest number to the highest number.;c. to determine which items are in error.;d. to determine the amount and/or percentage increase or decrease that has taken place.;4. Which one of the following is not a characteristic generally evaluated in analyzing financial statements?;a. Liquidity;b. Profitability;c. Marketability;d. Solvency;5. A major disadvantage resulting from the use of bonds is that;a. earnings per share may be lowered.;b. interest must be paid on a periodic basis.;c. bondholders have voting rights.;d. taxes may increase.;6. When bonds are converted into common stock;a. the market price of the stock on the date of conversion is credited to the Common Stock account.;b. the market price of the stock and the bonds is ignored when recording the conversion.;c. the market price of the bonds on the date of conversion is credited to the Common Stock account.;d. gains or losses on the conversion are recognized.;7. If a stockholder receives a dividend that reduces retained earnings by the fair market value of the stock, the stockholder has received a;a. large stock dividend.;b. cash dividend.;c. contingent dividend.;d. small stock dividend;8. If bonds are originally sold at a discount using the straight-line amortization method;a. Interest expense in the earlier years of the bond?s life will be less than the interest to be paid.;b. Interest expense in the earlier years of the bond?s life will be the same as interest to be paid.;c. Unamortized discount is subtracted from the face value of the bond to determine its carrying value.;d. Unamortized discount is added to the face value of the bond to determine its carrying value.;9. Corporations invest in other companies for all of the following reasonsexcept to;a. house excess cash until needed.;b. generate earnings.;c. meet strategic goals.;d. increase trading of the other companies? stock.;10. Under the equity method, the Stock Investments account is increased when the;a. investee company reports net income.;b. investee company pays a dividend.;c. investee company reports a loss.;d. stock investment is sold at a gain.;11. Securities bought and held primarily for sale in the near term to generate income on short-term price differences are;a. trading securities.;b. available-for-sale securities.;c. never-sell securities.;d. held-to-maturity securities.;12. All of the following statements about short-term investments are true except;a. Short-term investments are also called marketable securities;b. Trading securities are always classified as short-term investments.;c Short-term assets must be readily marketable.;d. Short-term investments are listed below accounts receivable in the current asset section of the balance sheet.;13. If bonds with a face value of $150,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to;a. Bonds Payable for $150,000.;b. Bonds Payable for $135,000.;c. Discount on Bonds Payable for $15,000.;d. Bonds Payable equal to the market price of the bonds on the date of conversion;14. An unrealized loss on available-for-sale securities is;a. reported under Other Expenses and Losses in the income statement.;b. closed-out at the end of the accounting period.;c. reported as a separate component of stockholders' equity.;d. deducted from the cost of the investment;15. Which of the following is not a true statement regarding short-term debt investments?;a. The securities usually pay interest.;b. Investments are frequently government or corporate bonds.;c. This type of investment must be currently traded in the securities market.;d. Debt investments are recorded at the price paid less brokerage fees.

 

Paper#32125 | Written in 18-Jul-2015

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