1) Cash dividends on common stock are paid on the basis of the number of shares of common stock.

a. Authorized.

b. Issued.

c. Outstanding.

d. In the treasury

2) Net income is understated if, in the first year, estimated salvage value (which is > $0) is excluded from the

deprecation computation when using the:

	Straight-line Method	DDB method
a.	Yes	No
b.	Yes	Yes
c.	No	No
d.	No	Yes

3) Exchange transactions:

a. Have no effect on cash and are reported in a separate location on the statement of cash

flows.

b. Have no effect on cash and are not considered when a statement of cash flows is prepared.

c. Are shown as a simultaneous increase and decrease of cash on the face of the statement of

cash flows.

d. Are shown under both Investing and Financing activities on the face of the statement of

cash flow.

4) Which of the following criteria will most likely indicate that a lease is a finance lease? READ CLOSELY AND CAREFULLY

a) The lease transfers ownership of the property to the lessor.

b) The lease contains a purchase option.

c) The lease term is equal to or more that 80% of the estimated economic life of the leased property.

d) The total minimum lease payments (excluding executory costs) equal or exceed 90% of the fair market value of the leased property.

5) A depreciable asset has an estimated POSITIVE salvage value. At the end of its estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?

	Straight-line	Units of Production
a.	Yes	No
b.	Yes	Yes
c.	No	Yes
d.	No	No