Submitted 7/19/15 6:14 AM
Name Exam 2
Status Completed
Score 97 out of 100 points
Instruction
s
Question
1 1 out of 1 points
Which statement below is NOT a reason for a corporation to buy back its own
stock?
Selected Answer: To increase the shares outstanding
Correct Answer: To increase the shares outstanding
Question
2 1 out of 1 points
The reduction of par or stated value of stock by issuance of a proportionate
number of additional shares is termed a
Selected Answer: stock split.
Correct Answer: stock split.
Question
3 1 out of 1 points
The declaration and issuance of a stock dividend does NOT affect the total
amount of a corporation’s assets, liabilities, or stockholders’ equity.
Selected Answer: True
Correct Answer: True
Question
4 1 out of 1 points
The declaration of a stock dividend decreases a corporation’s stockholders’ equity
and decreases its liabilities.
Selected Answer: False
Correct Answer: False
Question
5 1 out of 1 points
A corporation has 10,000 shares of $100 par value stock outstanding. If the
corporation issues a 5-for-1 stock split, the number of shares outstanding after the
split will be 2,000.
Selected Answer: False
Correct Answer: False
Question
6 1 out of 1 points
If bonds are issued at a premium, the stated interest rate is
Selected Answer: higher than the market rate of interest.
Correct Answer: higher than the market rate of interest.
Question
7 1 out of 1 points
Cash dividends are not paid on shares of treasury stock.
Selected Answer: True
Correct Answer: True
Question
8 1 out of 1 points
The cost of a product warranty should be included as an expense in the
Selected Answer: period of the sale of the product.
Correct Answer: period of the sale of the product.
Question
9 1 out of 1 points
During the first year of operations, a company granted warranties on its products.
The estimated cost of the product warranty liability at the end of the year is
$12,750. The product warranty expense of $12,750 should be recorded in the
year the related product sale is made.
Selected Answer: True
Correct Answer: True
Question
10 1 out of 1 points
If the market rate of interest is 6% and a corporation’s bonds bear interest at 7%,
the bonds will sell at a discount.
Selected Answer: False
Correct Answer: False
Question 0 out of 1 points
11
An employee receives an hourly rate of $27, with time and a half for all hours
worked in excess of 40 during a week. Payroll data for the current week are as
follows: hours worked, 46; federal income tax withheld, $350; cumulative
earnings for year prior to current week, $99,700; social security tax rate, 6.0%
on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is
the gross pay for the employee?
Selected Answer: $873.77
Correct Answer: $1,323.00
Question
12 1 out of 1 points
Federal unemployment compensation taxes that are collected by the federal
government are not paid directly to the unemployed but are allocated among the
states for use in state programs.
Selected Answer: True
Correct Answer: True
Question
13 1 out of 1 points
The par value per share of common stock represents
Selected
Answer:
the monetary amount assigned to each share of stock in the
articles of incorporation.
Correct
Answer:
the monetary amount assigned to each share of stock in the
articles of incorporation.
Question
14 1 out of 1 points
What options does a business have when financing operations?
Selected Answer: Both debt financing and equity financing
Correct Answer: Both debt financing and equity financing
Question
15 1 out of 1 points
Earnings per common share is one factor that influences the decision to use debt
financing or equity financing.
Selected Answer: True
Correct Answer: True
Question
16 1 out of 1 points
Current liabilities are
Selected Answer: due and payable within one year.
Correct Answer: due and payable within one year.
Question
17 1 out of 1 points
The two main sources of stockholders’ equity are investments contributed by
stockholders and net income retained in the business.
Selected Answer: True
Correct Answer: True
Question
18 1 out of 1 points
For the year that just ended, a company reports net income of $1,500,000. There
are 500,000 shares authorized, 300,000 shares issued, and 250,000 shares of
common stock outstanding. What is the earnings per share?
Selected Answer: $6.00
Correct Answer: $6.00
Question
19 1 out of 1 points
If 20,000 shares are authorized, 14,000 shares are issued, and 500 shares are
held as treasury stock, a cash dividend of $1 per share would amount to
$13,500.
Selected Answer: True
Correct Answer: True
Question
20 1 out of 1 points
FICA tax becomes a liability to the federal government at the time the
employees are paid.
Selected Answer: True
Correct Answer: True
Question
21 1 out of 1 points
A corporation has 50,000 shares of $100 par value stock outstanding. If the
corporation issues a 4-for-1 stock split, the number of shares outstanding after
the split will be
Selected Answer: 200,000 shares.
Correct Answer: 200,000 shares.
Question
22 1 out of 1 points
If $1,000,000 of 10% bonds are issued at 98 3/4, the amount of cash received
from the sale is
Selected Answer: $987,500.
Correct Answer: $987,500.
Question
23 1 out of 1 points
The amount of capital paid in by the stockholders of the corporation is called
legal capital.
Selected Answer: False
