1.The accounting concept or principle applied when the cost of short-term marketable securities is adjusted to market value is:

Select one:

a. objectivity.

b. matching revenue and expense.

c. original cost.

d. consistency.

2 - With respect to the write-off of an uncollectible account receivable against the allowance for bad debts, a sound system of internal control would require:

Select one:

a. the write-off be approved by two employees.

b. an investigation of why credit was extended to this customer in the first place.

c. a lawsuit to be initiated to recover the uncollectible amount.

d. the write-off to be made within six months after the date of sale.

3 -The principal reason for converting a customer's account receivable to a note receivable is:

Select one:

a. the note receivable earns interest and the account receivable does not.

b. the receivable is less likely to have to be written off as uncollectible.

c. working capital is immediately increased.

d. the customer is more likely to continue purchasing the company's products.

4 -A magazine publisher has an account called "Unearned Subscription Revenue." The transaction that causes the balance of this account to decrease is:

Select one:

a. cash is received from new subscribers.

b. magazines are printed for the publisher.

c. magazines are mailed to subscribers.

d. subscriptions are sold to new subscribers.

5 -Southern Company's accountant failed to accrue as of 12/31/13 some employee fringe benefit program expenses that were incurred in 2013 and that will be paid in 2014. The result of this omission is to:

Select one:

a. overstate the current ratio at 12/31/13 and overstate ROI and ROE for the year ended 12/31/13.

b. overstate the current ratio at 12/31/13 and understate ROI and ROE for the year ended 12/31/13.

c. understate the current ratio at 12/31/13 and understate ROI and ROE for the year ended 12/31/13.

d. not affect the current ratio at 12/31/13 but to overstate ROI and ROE for the year ended 12/31/13.

6 - When a supplier makes a downward adjustment in the amount owed by a creditor, the creditor will:

Select one:

a. reduce the amount of the account payable to the supplier, and decrease an asset such as inventory.

b. increase the amount of the account payable to the supplier, and decrease an asset such as inventory.

c. reduce the amount of the account payable to the supplier, and increase cash.

d. reduce the amount of the account payable to the supplier, and decrease cash.

7 - If the market price of a bond exceeds its face amount:

Select one:

a. the coupon rate is less than the market interest rate.

b. the coupon rate is more than the market interest rate.

c. the company's ROI and working capital have been increasing over time.

d. the maturity rate has been declining.

8 - Current maturities of long-term debt:

Select one:

a. reflect overdue installments of bonds payable.

b. are classified with long-term debt.

c. represent cash that has been set aside for debt payments due within a year.

d. permit a more accurate determination of working capital.

9 - The declaration of a cash dividend by the directors results in:

Select one:

a. a decrease in cash and a decrease in retained earnings.

b. a decrease in retained earnings and an increase in current liabilities.

c. a decrease in net income and a decrease in cash.

d. a decrease in net income and an increase in current liabilities.

10 - Braco has 40,000 shares of $100 par value common stock outstanding, and 10,000 shares in the treasury. The number of additional shares that would be issued in a 5% stock dividend is:

Select one:

a. 500.

b. 1,000.

c. 2,000.

d. 2,500.

11 - When common stock has a par value:

Select one:

a. the liability of the stockholders is limited to the par value.

b. there will probably be additional paid-in capital on the balance sheet.

c. the market value of the stock will be higher than if there is no par value.

d. the paid-in capital will equal the par value of the number of shares issued.

12 - The term preemptive right pertains to which of the following?

Select one:

a. The Board of Directors rights in liquidation.

b. Present shareholders' right to purchase shares from any additional share issuances.

c. Present shareholders' right to purchase treasury shares when reissued.

d. Preferred stockholders' right to dividends.

13 - Which of the Following is an accurate statement regarding a statement of cash flows?

Select one:

a. Only cash items that affect the income statement are included.

b. Only material cash items that affect the income statement are included.

c. All material operating, investing, and financing activities are included.

d. Immaterial financing activities that affect cash do not need to be included.

14 -Revenue may be recognized:

Select one:

a. from the sale of a company's own common stock.

b. if a company trades inventory at its usual selling price for newspaper advertising.

c. if management believes the market value of land held for future development has increased during the year.

d. in 2013 from the sale of subscriptions of a magazine to be published in 2014.