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Accounting MCQs with Correct Solution




Question;Question 1;The stockholders' equity section of Sliver Corporation's balance sheet at December 31, 2014, was as follows;Common stock ($10 par value, authorized 1,000,000shares, issued and outstanding 900,000 shares)...;$ 9,000,000Paid-In capital in excess of par................... 2,700,000Retained earnings.................................. 1,300,000Total stockholders' equity......................... $13,000,000;On January 2, 2015, Sliver purchased and retired 100,000 shares of its stock for $1,800,000. Sliver records treasury stock using the par value method. Immediately after retirement of these 100,000 shares, the balances in the additional paid-in capital and retained earnings accounts should be;Paid-In Capital Retainedin Excess of Par Earnings;$900,000 $1,300,000;$1,400,000 $800,000;$1,900,000 $1,300,000;$2,400,000 $800,0000.6 points Question 2;To compute the price to pay for a bond, you use;only the present value of $1 concept.;only the present value of an annuity of $1 concept.;both of these.;neither of these.0.6 points Question 3;For a liability to exist;the identity of the party owed must be known.;the exact amount must be known.;a past transaction or event must have occurred.;an obligation to pay cash in the future must exist.0.6 points Question 4;Bonds usually sell at a premium;when the market rate of interest is greater than the stated rate of interest on the bonds.;when the stated rate of interest on the bonds is greater than the market rate of interest.;when the price of the bonds is greater than their maturity value.;in none of these cases.0.6 points Question 5;On July 31, 2013, Rangers Corporation purchased 500,000 shares of Tigers Corporation. On December 31, 2014, Rangers distributed 250,000 shares of Tigers stock as a dividend to Rangers' stockholders. This is an example of a;liquidating dividend.;investment dividend.;property dividend.;stock dividend.0.6 points Question 6;A company declared a cash dividend on its common stock in December 2013, payable in January 2014. Retained Earnings would;increase on the date of declaration.;not be affected on the date of declaration.;not be affected on the date of payment.;decrease on the date of payment.0.6 points Question 7;Craig Corporation issued a $100,000, 10-year, 10 percent bond on January 1, 2013, for $112,000. Craig uses the straight-line method of amortization. On April 1, 2016, Craig reacquired the bonds for retirement when they were selling at 102 on the open market. How much gain or loss should Craig recognize on the retirement of the bonds?;$2,000 loss;$3,900 gain;$6,100 gain;$8,200 loss0.6 points Question 8;If a $1,000, 9 percent, 10-year bond was issued at 96 plus accrued interest one month after the authorization date, how much cash was received by the issuer?;$967.50;$960.00;$1,007.50;$992.500.6 points Question 9;Which of the following represents a liability?;The obligation to pay for goods that a company expects to order from suppliers next year.;The obligation to provide goods that customers have ordered and paid for during the current year.;The obligation to pay interest on a five-year note payable that was issued the last day of the current year.;The obligation to distribute shares of a company's own common stock next year as a result of a stock dividend declared near the end of the current year.0.6 points Question 10;Which of the following does NOT meet the FASB's definition of a liability?;The signing of a three-year employment contract at a fixed annual salary;An obligation to provide goods or services in the future;A note payable with no specified maturity date;An obligation that is estimated in amount0.6 points Question 11;Which of the following is most likely to be found in state laws regarding payment of dividends?;Dividends may be paid from legal capital.;Retained earnings are available for dividends unless restricted by contract or by statute.;Unrealized capital is available for any type of dividend.;Capital from donated assets is available for dividends.0.6 points Question 12;Which of the following is true of accrued interest on bonds that are sold between interest dates?;It is computed at the effective market rate.;It will be paid to the seller when the bonds mature.;It is extra income to the buyer.;None of these is true.0.6 points Question 13;Adam Corporation owns 1,000 shares of common stock of Rosen, Inc., a large publicly traded company listed on a major stock exchange. If Rosen issues a 20 percent stock dividend when the par value is $10 per share and the market value is $70 per share, how much and what type of income should Adam report?;$0;$2,000 ordinary income;$14,000 ordinary income;$2,000 ordinary income and $12,000 extraordinary income;Question 14;On June 1, Continental Company issued 8,000 shares of its $10 par common stock to Divide for a tract of land. The stock had a fair market value of $18 per share on this date. On Divide's last property tax bill, the land was assessed at $96,000. Continental should record an increase in Additional Paid-In Capital of;$96,000.;$64,000.;$40,000.;$16,000.;0.6 points;Question 15;At the date of the financial statements, common stock shares issued would exceed common stock shares outstanding as a result of the;declaration of a stock split.;purchase of treasury stock.;declaration of a stock dividend.;payment in full of subscribed stock.;0.6 points;Question 16;Accrued interest on bonds that are sold between interest dates;is ignored by both the seller and the buyer.;increases the amount a buyer must pay to acquire the bonds.;is recorded as a loss on the sale of the bonds.;decreases the amount a buyer must pay to acquire the bonds.;0.6 points;Question 17;The issuance price of a bond does not depend on the;face value of the bond.;riskiness of the bond.;method used to amortize the bond discount or premium.;effective interest rate.;0.6 points;Question 18;Select the statement that is incorrect concerning the appropriations of retained earnings.;Appropriations of retained earnings reflect funds set aside for a designated purpose, such as plant expansion.;Appropriations of retained earnings do not change the total amount of stockholders' equity.;Appropriations of retained earnings can be made as a result of contractual requirements.;Appropriations of retained earnings can be made at the discretion of the board of directors.;0.6 points;Question 19;The net amount of a bond liability that appears on the balance sheet is the;call price of the bond plus bond discount or minus bond premium.;face value of the bond plus related premium or minus related discount.;face value of the bond plus related discount or minus related premium.;maturity value of the bond plus related discount or minus related premium.;0.6 points;Question 20;Which of the following is NOT a component of comprehensive income?;Asset revaluation reserve;Net income;Foreign currency translation adjustment;Minimum pension liability adjustment;0.6 points;Question 21;Assuming the straight-line method of amortization is used, the average yearly interest expense on a $250,000, 11 percent, 20-year bond issued at 94 would be;$26,750.;$27,500.;$28,250.;$29,500.;0.6 points;Question 22;How would a stock split affect each of the following?;TotalStockholders' AdditionalAssets Equity Paid-In Capital;Increase Increase No effect;No effect No effect No effect;No effect No effect Increase;Decrease Decrease Decrease;0.6 points;Question 23;Which of the following presentation formats is permitted by Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"?;I. A single statement of income and comprehensive income.II. Two statements of income, a traditional income statement ending with net income, and a second statement beginning with net income, all the elements of comprehensive income, and a total of comprehensive income.III. Within the statement of changes in stockholders' equity.;Only I;I and III;I and II;I, II, and III;0.6 points;Question 24;Romer Corporation, a calendar-year firm, is authorized to issue $200,000 of 10 percent, 20-year bonds dated January 1, 2014, with interest payable on January 1 and July 1 of each year.;If the bonds were issued on April 1, 2014, the amount of accrued interest on the date of sale is;$20,000.;$10,000.;$2,500.;$5,000.;0.6 points;Question 25;Any gains or losses from the early extinguishment of debt should be;recognized in income of the period of extinguishment.;treated as an increase or decrease in Paid-In Capital.;allocated between a portion that is an increase (decrease) in Paid-In Capital and a portion that is recognized in current income.;amortized over the remaining original life of the extinguished debt.


Paper#43689 | Written in 18-Jul-2015

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