The SEC’s operating costs are supported through
A.tax revenues of the federal government.
B.registration fees charged to issuers offering securities to the public.
C.fees paid by stock exchanges.
D.fees paid by stock brokers.
E.fees paid by accounting firms that practice before the SEC.
The return on investment measure is also referred to as:
A.Net margin.
B.Return on equity.
C.Return on debt.
D.Return on assets.
In which section of a statement of cash flows would the payment of cash dividends be
reported?
A.Financing activities.
B.Operating activities.
C.Purchasing activities.
D.Investing activities.
Which of the following statements is false regarding a country’s legal system?
A.The two major types of legal systems are common law and codified Roman law.
B.Common law originated in the Roman jus civile.
C.Code law countries tend to have more statutes governing a wider range of human
activity.
D.Accounting law is rather general in code law countries.
E.A nongovernmental organization is more likely to develop in a common law country
than in a code law country.
Indicate whether each of the following statements about retained earnings is true or
false.
_______ a) A dividend paid to stockholders decreases retained earnings.
_______ b) Issuing common stock for cash increases retained earnings.
_______ c) The amount of net income for a period must equal retained earnings.
_______ d) The purchase of a truck decreases retained earnings.
_______ e) The amount of net income for a period increases retained earnings.
Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments
of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed
to (1) interest of 10% of the beginning capital balance each year, (2) annual
compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss
in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was
$150,000 in 2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use
every month during 2012 and 2013.
What was Cleary’s total share of net income for 2013?
A.$34,420.
B.$75,540.
C.$65,540.
D.$70,040.
E.$61,420.
All of the following items are liabilities with priority except:
A.Obligations arising between the date an order of relief is issued and the date of final
realization of assets.
B.Employee claims for contributions to benefit plans earned more than 180 days
preceding the filing of a petition, limited to $12,475 per individual.
C.Government claims for unpaid taxes.
D.Claims for the return of deposits made by customers to acquire property or services,
which were never delivered or provided by the debtor, limited to $2,775.
E.Claims for administrative expenses in preserving and liquidating the company.
Which of the following costs is not considered to be a period cost?
A.Warehousing costs
B.Depreciation of delivery vehicles
C.Salaries paid to company executives
D.Freight paid on a purchase of raw materials
Anton believes his company’s overhead costs are driven (affected) by the number of
machine hours because the production process is heavily automated. During the period,
the company produced 3,000 units of Product A requiring a total of 100 machine hours
and 2,000 units of Product B requiring a total of 25 machine hours. What allocation rate
should be used if the company incurs overhead costs of $10,000?
A.$2 per unit
B.$2 per machine hour
C.$80 per unit
D.$80 per machine hour
Costs associated with holding inventory often include:
A.theft, damage, and obsolescence.
B.financing.
C.warehouse space.
D.supervision.
E.All of these.
Indicate whether each of the following statements about markets is true or false.
_______ a) Financial resources can be provided to a business by investors and
creditors.
_______ b) Conversion agents are the businesses that transform resources into products
that satisfy consumer desires.
_______ c) Physical resources include the labor of the production workers.
_______ d) Resource owners purchase their resources from conversion agents.
_______ e) Consumers are the main providers of resources in any market.
Benson Company received cash of $1,000,000 from issuing common stock. As a result
of this transaction, the company’s debt to equity ratio will:
A.Decrease.
B.Increase.
C.Remain the same.
D.Cannot be determined.
The prospectus part of a registration contains all except which of the following?
A.financial statements for the issuing company audited by an independent CPA along
with appropriate supplementary data.
B.an explanation of the intended use of the proceeds to be generated by the sale of the
new securities.
C.a description of the risks associated with the securities.
D.a description of the business and the properties owned by the company.
E.additional data concerning expenses of issuance.
The Miller Company reported gross sales of $850,000, sales returns and allowances of
$15,000 and sales discounts of $5,000. The company has total assets of $500,000, of
which $250,000 is property, plant, and equipment. What is the company’s asset turnover
ratio?
A.3.32 times
B.1.67 times
C.1.66 times
D.1.7 times
P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who
share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively,
when they agree to admit C for a 20% interest.
C contributes $38,000 to the partnership and the bonus method is used. What amount
will be credited for C’s beginning capital balance?
A.$20,000
B.$25,000
C.$27,600
D.$32,600
E.$38,000
La Paz Company engaged in the following transactions during 2012, its first year in
operation: (Assume all transactions are cash transactions)
1) Acquired $3,000 cash from issuing common stock.
2) Borrowed $2,200 from a bank.
3) Earned $3,100 of revenues.
4) Incurred $2,400 in expenses.
5) Paid dividends of $400.
La Paz Company engaged in the following transactions during 2013:
1) Acquired an additional $500 cash from the issue of common stock.
2) Repaid $1,300 of its debt to the bank.
3) Earned revenues, $4,500.
4) Incurred expenses of $2,750.
5) Paid dividends of $640.
The amount of retained earnings on La Paz’s 2012 balance sheet was
A.$3,100.
B.$2,700.
C.$300.
D.$700.
Which one of the following requires the registration of mutual funds that engage in
investing and trading in securities?
A.The Securities Act of 1933
B.The Securities Exchange Act of 1934
C.The Investment Company Act of 1940
D.The Foreign Corrupt Practices Act of 1977
E.The Sarbanes-Oxley Act of 2002