1. The reason investors buy bonds is to _______.

a) exercise voting rights in a company

b) own controlling interest in the company

c) receive dividend payments

d) earn interest

2. The following information is from the balance sheet of Tutor Corporations as of December 31, 2015.

Preferred Stock, $100 par ($360,000)

Paid - in Capital in Excess of Par - preferred ($30,000)

Common stock, $1 par ($122,000)

Paid - in capital excess of par- common ($316,000)

Retained earnings ($91,900)

Total Stockholders' Equity ($919,900)

What was the total paid - in capital as of December 31, 2015?

a) $828,000

b) $676,000

c) $798,000

d) $919,900

3. A certain contingent liability was evaluated at year - end, and considered to have a remote possibility of becoming an actual liability. If the accountant decided not to report it on the balance sheet or in the notes to the financial statement, what effect would this have on the financial reporting of the company?

a) the information about the transaction would be inadequately disclosed in the notes

b) the liabilities on the balance sheet would be understated

c) there would be no effect

d) the net income of the company would be understated

4.The net income of Vista Camera Services is $29,000. The beginning and ending stockholders' equity balances were $34,000 and $55,000, respectively. The company issued no common stock. Calculate the amount of dividends.

a) $18,000

b) $60,000

c) $8,000

d) $5,000

5.Steve, an employee of Panache Inc., had gross salary for May of $15,000. The entire amount is under the OASDI limit of $110,100, and thus subject yo FICA. He is also subject to federal income tax at a rate of 20%. Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA - OASDI tax of 4.2% and FICA - medicare tax of 1.45%)

a) debit to Cash for $11,153

b) debit to Employee income tax payable of $11,153

c) debit to FICA tax payable of $11,153

d) credit to Cash for $11,153

6. The principal amount is $92,000, the stated rate is 10%, and the term of the bond is 8 years. The bond pays interest semiannually. At the time of the issue, the market rate is 8%. What is the present value of the bond at the market rate?

a) $48,999

b) $53,599

c) $95,128

d) $102,727