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Select the letter of the term each statement best describes.
a. authorized shares
b. issued shares
c. outstanding shares
d. par value
e. additional paid-in capital
f. retained earnings
g. cumulative feature
h. participating feature
i. callable stock
j. treasury stock
k. retirement of stock
l. dividend payout ratio
m. stock dividend
n. stock split
o. market value per share
p. convertible stock
q. book value per share
When the stock of a corporation is repurchased with no intention to reissue at a later
date.
The record used to accumulate monetary information for each individual asset, liability,
stockholders' equity, revenue, and expense item is a(an)
a. Account
b. General Journal
c. General Ledger
d. Chart of Accounts
Which of the following statements is true when using the indirect method of preparing
the operating activities section of the statement of cash flows?
a. Inventory decreases are subtracted from net income.
b. Inventory increases are subtracted from net income.
c. Inventory increases are added to net income.
d. None of the above.
Compound interest is a repeated calculation of the interest on the principal over certain
periods of time.
a. True
b. False
All of the following accounts have normal credit balances except
a. Accounts Payable
b. Common Stock (Capital Stock)
c. Investments
d. Service Revenue
Presented below are selected data from the financial statements of Provost Corp.
The dividend payout ratio for 2016 is
a. 1.8%
b. 30.0%
c. 36.3%
d. 38.0%
Captain Lewis, Inc. purchased equipment at the beginning of 2014 for $60,000. In
addition, Captain Lewis' paid $2,000 for delivery of the equipment to its plant and
$1,000 for installation of the equipment. The equipment has an estimated residual value
of $7,000 and an estimated life of 7 years or 70,000 hours of operation. Captain Lewis'
is looking at alternative depreciation methods for the equipment. Calculate the
following: A. The depreciation expense for the year 2014 using the straight-line
depreciation method. B. The total accumulated depreciation at December 31, 2015,
using the units-of-production depreciation method. Assume that the equipment is
operated for 15,000 hours in 2014 and 12,000 hours in 2015. C. The book value of the
equipment at December 31, 2014, using the double-declining-balance depreciation
method. D. Which of the above methods is considered accelerated? E. What are the
advantages of using an accelerated depreciation method as compared to the straight-line
method for lowering taxes early in the life of the equipment?
Comparing one company with another in the same industry should cause no problems
since companies in the same industry are required to use the same GAAP.
a. True
b. False
If current assets amount to $62,000, total assets $350,000, current liabilities $31,000,
and total liabilities $125,000, then the current ratio is
a. 0.5 to 1
b. 2.0 to 1
c. 2.8 to 1
d. 3.0 to 1
All of the following statements are true except:
a. U.S. standards do not require a classified balance sheet.
b. IFRS require companies to present classified balance sheets.
c. Under IFRS, an unclassified balance sheet based on the order of liquidity is
acceptable only when it provides more reliable information than a classified one.
d. U.S. standards require a classified balance sheet with liabilities in order by size or by
order of liquidity.
Dividend yield ratio
a. Market price per share
b. Net sales
c. Average inventory outstanding
d. Interest expense, net of tax
e. Common dividends per share
f. Preferred dividends per share
g. Weighted average number of common shares outstanding
h. Total stockholders' equity
Which one of the following is not one of the three activities included in the definition
of accounting?
a. Communicating
b. Identifying
c. Measuring
d. Operating
Why is stockholders' equity viewed as a residual amount?
From an ethical standpoint, if various alternatives are available to report a transaction,
what are some of the questions an accountant should ask about the alternatives?
Why are adjustments often necessary after the reconciliation of a bank account?
Heather Valley Company has the following amounts in the Stockholders' Equity
category of the balance sheet at
December 31, 2015:
Montana City Company began business on January 1, 2015. The corporate charter
authorized issuance of 500 shares of $1 par value common stock and 400 shares of $4
par value, 3% cumulative preferred stock. What is the maximum amount that can be
reported on the balance sheet for Common Stock and Preferred Stock, respectively, if
all of the stock is issued?
Under themethod, an increase in inventory is shown as an adjustment to net income in
the operating activities category of the cash flow statement.
