27. A bank statement a. lets a depositor know the financial position of the bank as of a certain date. b. is a credit reference letter written by the depositor's b c. is a bill from the bank for services rendered. s bank. d. shows the activity which increased or decreased the depositor's account balance. 28. Which one of the following would not cause a bank to debit a depositor's account? a. Bank service charge b. Collection of a note receivable c. Wiring of funds to other locations d. Checks marked NSF 29. The relationship between current liabilities and current assets is a. useful in determining income. b. useful in evaluating a company's liquidity. c. called the matching principle. d. useful in determining the amount of a company's long-term debt. 30. Most companies pay current liabilities a. out of current assets. b. by issuing interest-bearing notes payable. c. by issuing stock. d. by creating long-term liabilities. 31. Sales taxes collected by a retailer are recorded by 32. a. crediting Sales Taxes Revenue. b. debiting Sales Taxes Expense. c. crediting Sales Taxes Payable. d. debiting Sales Taxes Payable. Unearned Rental Revenue is a. a contra account to Rental Revenue. b. a revenue account. c. reported as a current liability. d. debited when rent is received in advance. 33. A typical organization chart showing delegation of authority would show 34. a. stockholders delegating to the board of directors. b. the board of directors delegating to stockholders. c. the chief executive officer delegating to the board of directors. d. the controller delegating to the chief executive officer. The officer who is generally responsible for maintaining the cash position of the corporation is the a. controller. b. treasurer. c. cashier. d. internal auditor. || 35. a. The chief accounting officer in a corporation is the treasurer. b. president. c. controller. 36. 37. d. vice-president of finance. The term residual claim refers to a stockholders' right to a. receive dividends. b. share in assets upon liquidation. c. acquire additional shares when offered. d. exercise a proxy vote. Which of the following factors does not affect the initial market price of a stock? a. The company's anticipated future earnings b. The par value of the stock c. The current state of the economy d. The expected dividend rate per share 38. Short-term investments are listed on the balance sheet immediately below 39. a. cash. b. inventory. c. accounts receivable. d. prepaid expenses. Short-term stock investments should be valued on the balance sheet at a. the lower of cost or fair value. b. the higher of cost or fair value. c. cost. d. fair value. 40. In recognizing a decline in the fair value of short-term stock investments, an unrealized loss account is debited because a. management intends to realize this loss in the near future. b. the securities have not been sold. c. the stock market is volatile. d. management cannot determine the exact amount of the loss in value. 41. The Market Adjustment account a. is set up for each security in the company's portfolio. b. relates to the entire portfolio of securities held by the company. c. is closed at the end of each accounting period. d. appears on the income statement as Other Expenses and Losses. 42. If a parent company acquires a wholly owned subsidiary at an amount greater than the book value, the excess should be a. allocated to expense on the date of acquisition. b. allocated to identifiable assets to the extent of their fair values, with any remainder allocated to goodwill. callocated to goodwill, with any remainder allocated to the identifiable assets. d. set up as a liability to the controlling interest. 43. The statement of cash flows 44. a. must be prepared on a daily basis. b. summarizes the operating, financing, and investing activities of an entity. c. is another name for the income statement. d. is a special section of the income statement. If a company reports a net loss, it a. may still have a net increase in cash. b. will not be able to pay cash dividends. c. will not be able to get a loan. d. will not be able to make capital expenditures. 45. The acquisition of land by issuing common stock is 46. a. a noncash transaction which is not reported in the body of a statement of cash flows. b. a cash transaction and would be reported in the body of a statement of cash flows. c. a noncash transaction and would be reported in the body of a statement of cash flows. d. only reported if the statement of cash flows is prepared using the direct method. Wilton Company reported net income of $50,000 for the year. During the year, accounts receivable decreased by $7,000, accounts payable increased by $3,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is a. $40,000. b. $65,000. c. $49,000. d. $45,000. 47. Buster Company reported a net loss of $6,000 for the year ended December 31, 2011. During the year, accounts receivable increased $14,000, merchandise inventory decreased $10,000, accounts payable decreased by $20,000, and depreciation expense of $10,000 was recorded. During 2011, operating activities a. used net cash of $20,000. b. used net cash of $28,000. c. provided net cash of $28,000. d. provided net cash of $18,000. 48. The category that is generally considered to be the best measure of a company's ability to continue as a going concem is a. cash flows from operating activities. b. cash flows from investing activities. c. cash flows from financing activities. d. usually different from year to year. 49. Which of the following transactions does not affect cash during a period? a. Write-off of an uncollectible account b. Collection of an accounts receivable c. Sale of treasury stock d. Exercise of the call option on bonds payable 50. Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $150,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a. $150,000. b. $155,000. c. $185,000. d. $145,000