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St. Leo MBA 560 module 4 quiz

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Question;1.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.;2.How does the;amortization of the principal balance affect the amount of interest expense;recorded each succeeding year? (Points: 2);Has no effect on;interest expense each succeeding yearIncreases the;amount of interest expense each succeeding yearReduces the amount;of interest expense each succeeding yearThe effect depends;on the interest rate;3.Borrowing by;issuing a note payable is a(n): (Points: 2);asset source;transaction.asset use;transaction.asset exchange;transaction.claims exchange;transaction.;4.A current asset;is a(n): (Points: 2);asset that will be;used in the operating activities of a business.asset generated by;the operations of a business within the past year.asset that is;expected to be used or converted to cash within one year or the operating;cycle, whichever is longer.miscellaneous asset;that is small in dollar amount.;5.Applegate Company;experienced an accounting event that affected its financial statements as;indicated below;Assets;=;Liab.;+ Equity;Rev.;? Exp.;= Net Inc.;Cash Flow;?;?;?;NA;+;?;-F/A - OA;Which of the following accounting events could have caused these effects on;Knight's statements? (Points: 2);Made a payment on a;term loanBorrowed funds;through a line of creditPaid interest on;bondsRepaid principal on;bonds at maturity;6.Current;liabilities include: (Points: 2);some notes payable.taxes payable.the current portion;of some long-term liabilities.all of the above.;7.Locke Company;issued bonds payable. Which of the following choices accurately reflects;how the issue would affect Locke's financial statements?;Row;Assets;=;Liab.;+;Equity;Rev.;-;Exp.;=;Net Inc.;Cash Flow;One;+;=;+;+;NA;NA;-;+;=;NA;NA;Two;+;=;+;+;+;NA;-;NA;=;NA;+ FA;Three;+;=;NA;+;+;NA;-;NA;=;NA;+ OA;Four;+;=;+;+;NA;NA;-;NA;=;NA;+ FA;(Points;2);Row OneRow TwoRow ThreeRow Four;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 OneRow TwoRow ThreeRow Four;9.Liquidity refers;to a company?s ability to: (Points: 2);sell inventory in a;timely manner.generate profits;from operations.repay liabilities;in the long run.generate cash flows;to pay current liabilities.;10.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.;On January 1, 2011, Hays borrowed an additional $1,000 from Barnett Bank;bringing the total amount borrowed to $2,000. On January 1, 2012, Hays paid;$500 on the principal of the loan. On December 31, 2012, Hays records the;2012 interest payment. The prime rate for 2012 was 5%. Which of the;following answers shows the effect of the 2012 interest payment on the;financial statements?;Row;Assets;=;Liabilities;+;Equity;Revenue;-;Expenses;=;Net Inc.;Cash;One;(75);=;(75);+;NA;NA;-;NA;=;NA;(75) FA;Two;(75);=;NA;+;(75);NA;-;75;=;(75);(75) OA;Three;(90);=;(90);+;NA;NA;-;NA;=;NA;(90) FA;Four;(90);=;NA;+;(90);NA;-;90;=;(90);(90) OA;(Points;2);Row OneRow TwoRow ThreeRow Four;11.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.;12.The;price-earnings ratio is the: (Points: 2);total average;stockholder's equity divided by the number of shares.interest rate on;borrowed money divided by the current prime rate.price of a;company's products as compared to its net income.market price of a;share of stock divided by the earnings per share.;13.Reissuance of;treasury stock for cash is what kind of transaction? (Points: 2);Asset sourceAsset useAsset exchangeClaims exchange;14.Which form of;business organization is established as a separate legal entity from its;owners? (Points: 2);Sole proprietorshipCorporationPartnershipNone of the above;15.The difference;between the corporate form of business organization and other forms is most;clearly shown in which of the following sections of the financial;statements? (Points: 2);Equity section of;the balance sheetExpenses section of;the income statementAssets section of;the balance sheetOperating;activities section of the statement of cash flows;16.Purchase of;treasury stock for cash is what kind of transaction? (Points: 2);Asset sourceAsset useAsset exchangeClaims exchange;17.Which of the;following would not be a reason for the market price of Bishop Corporation;stock to decrease? (Points: 2);Bishop?s net income;for the current year was lower than last year.The general;condition and future outlook of the economy are shaky.There has been a;recent decrease in key interest rates.Investors expect;Bishop?s financial performance to decline in the future.;18.The issuance of a;stock dividend will: (Points: 2);not affect total;equity.increase retained;earnings.decrease total;paid-in capital.decrease net;income.;19.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;20.What kind of;transaction is the declaration of a stock dividend? (Points: 2);Asset source;transactionClaims exchange;transactionAsset use;transactionAsset exchange;transaction

 

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