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Saint leo mba560 week 4 multiple choice (Feb 01, 2014)

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Question;1.Which of the following would;notbe classified as a current asset? (Points: 2);Marketable Securities;Equipment;Prepaid Expenses;Interest Receivable;Question;2. 2.In accounting for a contingent liability, if the likelihood of;the obligation is possible, a company must: (Points: 2);recognize the liability and report it on the balance sheet.;provide disclosure in;the footnotes to the financial statements.;not recognize or disclose the liability until it is certain and the exact amount;is known.;do nothing.;Question;3. 3.Long-term debt would likely be used for which of the;following? (Points: 2);Acquisition of inventory;Paying premiums for insurance;Purchasing a building;Paying salaries;Question;4. 4.In accounting for a contingent liability, if the likelihood of;the obligation is probable but the amount cannot be estimated, a company;must: (Points: 2);recognize the liability and report it on the balance sheet.;provide disclosure in;the footnotes to the financial statements.;not recognize or disclose the liability until it is certain and the exact;amount is known.;do nothing.;Question;5. 5.When does warranty cost appear on the statement of cash flows?;(Points: 2);When there is a settlement of a warranty claim made by a customer;When the warranty obligation is recognized;When the sale of merchandise is made;None of the above;Question;6. 6.In accounting for a contingent liability, if the likelihood of;the obligation is probable and the amount can be estimated, a company must;(Points: 2);report the liability on the balance sheet.;provide disclosure in the footnotes to the financial statements.;not recognize the liability until it is certain and the exact amount is;known.;do nothing.;Question;7. 7.On January 1, 2010, Hays Corporation arranged a $3,000 line of;credit with the Barnett Bank. It agreed to accept the bank's offer of 1%;above the prime rate with interest payments on December 31 of each year.;All borrowings and payments on principal are to take place on January 1 of;each year. Hays began its loan transactions with Barnett Bank by borrowing;$1,000 on January 1, 2010. Hays paid the first year's interest payment on;December 31, 2010. Barnett Bank's prime rate was 4 % for 2010. Which of the;following answers shows the effect of this event on the financial;statements?;Row;Assets;=;Liabilities;+;Equity;Revenue;-;Expenses;=;Net Inc.;Cash;One;(50);=;(50);+;NA;NA;-;NA;=;NA;(50) FA;Two;(50);=;NA;+;(50);NA;-;50;=;(50);(50) OA;Three;(40);=;(40);+;NA;NA;-;NA;=;NA;(40) FA;Four;(40);=;NA;+;(40);NA;-;40;=;(40);(40) OA;(Points;2);Row One;Row Two;Row Three;Row Four;Question;8. 8.The Halogen Corporation issued a 5-year note payable on;January 1, 2010 for $2,500. The interest rate is 5% and the annual payment;of $578, due each December 31, includes both interest and principal. Which;of the following correctly shows the effects of the December 31, 2011;payment?;Row;Assets;=;Liabilities;+;Equity;Revenue;-;Expenses;=;Net Inc.;Cash;One;(578);=;(476);+;(102);NA;-;102;=;(102);(476)FA/(102)OA;Two;578;=;578;+;NA;NA;-;NA;=;NA;578FA;Three;(578);=;(578);+;NA;NA;-;NA;=;NA;(578)FA;Four;(578);=;(476);+;(50);NA;-;50;=;(50);(476)FA/(50)OA;(Points;2);Row One;Row Two;Row Three;Row Four;Question;9. 9.A contingent liability is: (Points: 2);an unearned revenue.;a potential obligation, the existence, or amount of which depends on a future;event.;an amount owed to a state or local government.;an amount related to an impairment loss on an intangible asset.;Question;10. 10.Quayle Company has been sued by a customer who claims injury;from use of Quayle?s product. The company?s lawyers and a consultant;believe the likelihood of a judgment against Quayle is remote. What should;Quayle do to account for this potential liability? (Points: 2);Recognize the liability and report it on the balance sheet.;Provide disclosure in the footnotes to the financial statements.;Report an allowance account on the balance sheet.;Do nothing.;Question;11. 11.Reissuance of treasury stock for cash is what kind of;transaction? (Points: 2);Asset source;Asset use;Asset exchange;Claims exchange;Question;12. 12.Which of the following entities would have a "Paid-in;Capital in Excess" account in the equity section of the balance sheet?;(Points: 2);A sole proprietorship;A corporation;A partnership;All of the above;Question;13. 13.The term "Retained Earnings" is best explained by;which of the following statements? (Points: 2);Money set aside for the redemption of bonds payable;A measure of equity generated by a corporation through its operating;activities;Cash retained in a separate bank account designated for emergency uses;The difference between total revenue and total expenses in an accounting;period;Question;14. 14.Which form of business organization is established as a;separate legal entity from its owners? (Points: 2);Sole proprietorship;Corporation;Partnership;None of the above;Question;15. 15.When a company purchases treasury stock: (Points: 2);total equity decreases.;cash flow from investing activities decreases.;total assets are unaffected.;total assets increase.;Question;16. 16.Mitchell Company was authorized to issue 50,000 shares of;common stock. The company issued 27,000 shares of stock and later purchased;5,000 shares of treasury stock. The number of outstanding shares of common;stock is: (Points: 2);45,000;28,000;22,000;17,000;Question;17. 17.Flynn Company issued 2,000 shares of $10 par value common;stock at a market price of $16. As a result of this accounting event, total;paid-in capital would: (Points: 2);increase by $12,000.;be unaffected by the event.;increase by $32,000.;increase by $20,000.;Question;18. 18.Madison Company paid dividends of $3,000, $6,000, and;$10,000 during 2008, 2009, and 2010 respectively. The company had 500;shares of preferred stock outstanding with a $10 per share cumulative;dividend. The amount of dividends received by the common shareholders;during 2010 would be: (Points: 2);$6,000;$5,000;$3,000;$4,000;Question;19. 19.Which of the following is a reason why a corporation may;choose not to pay cash dividends? (Points: 2);The board and management prefer to reinvest all net income for future growth.;The corporation does not have adequate cash.;The corporation does not have adequate Retained Earnings.;All of the above are valid reasons not to pay dividends.;Question;20. 20.Grant Corporation declared a 2-for-1 stock split when it had;12,000 shares of $5 par value common stock outstanding. If the market price;of the stock had been $20 a share before the split, the par value, number;of shares, and approximate market value after the split would be;Row;Par Value;No. of Shares;Market Value;One;$2.50;24,000;$10.00;Two;$2.50;24,000;$ 5.00;Three;$2.50;12,000;$10.00;Four;$5.00;24,000;$20.00;(Points;2);Row One;Row Two;Row Three;Row Four

 

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