5. On October 1, 2015 Attra Inc. borrows $200,000 on a three-year note that requires the company to pay 6% interest on March 31 and September 30. On December 31, 2015, the adjusting entry to accrue interest on the note should debit:

A. interest expense and credit interest payable for $3,000

B. Interest payable and credit interest expense for $3,000

C. Interest expense and credit cash for $6,000

D. Interest expense and credit interest payable for $6,000

6. Your company issues $50,000 for one-year, 10% bonds at face value. The journal entry to record this transaction will include a debit to:

A. Cash and a credit to bonds payable for $50,000

B. Cash and a credit to bonds payable for $55,000

C. Cash for $55,000, credit to bonds payable for $50,000, and credit to interest payable for $5,000

D. Cash for $50,000, debit to interest expense for $5,000, and a credit to bonds payable for $55,000

7. Which one of the following accounts would not necessarily be classified as a current liability?

A. Accounts payable

B. Accrued liabilities

C. Contingent liabilities

D. Current portion of long-term debt.

8. Which of the following would not be considered a contingent liability?

A. Products sold with a warranty

B. Pending lawsuits

C. Frequent flyer miles earned by passengers

D. Cash received from advance ticket sales

9. A liability for dividends is recorded on the date of record

True

False

10. Contributed capital totals $30,000, retained earnings equals $65,000, treasury stock equals $18,000, and common stock equals $10,000. If the company does not have any accumulated other comprehensive income (loss), stockholders' equity, what is the total amount of stockholders' equity?

A. $113,000

B. $77,000

C. $123,000

D. $87,000

11. On the declaration date, the company:

A. debits dividends and credits dividends payable for the amount of the dividend.

B. debits dividends expense and credits cash for the dividend amount

C. debits dividends payable and credits cash for the dividend amount

D. establishes who will receive the dividend payment

12. Which of the following statements about dividends is not right?

A. Dividends represent a sharing of corporate profits with owners.

B. Both Stock dividends and cash dividends reduce retained earnings

C. cash dividends paid to stockholders reduce net income

D. Dividends are declared at the discretion of the board of directors

13. A cumulative dividends preference means that:

A. preferred stockholders are paid dividends before common stockholders are paid dividends for the current year only.

B. unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends.

C. preferred stockholders are paid their full fixed dividend rate each period as long as the company is in operation.

D. unpaid cash dividends to preferred stockholders must be replaced with stock dividends during the current period.

14. Jacks Company's purchase of 100 shares of Cord Inc. common stock would be reported as a financing activity on its statement of cash.

True

False

15. Depreciation Expense is not reported on the statement of cash flows when prepared using the direct method

True

False

16. Using the t-account approach to preparing the statement of cash flows, an increase in accounts payable would appear on the debit side of the cash account

True

False

17. Which of the following statements about the statement of cash flows is not right?

A. It does not replace the income instatement

B. It provides details as to how cash changed during a period

C. it provides information about cash receipt and cash payments over a period of time

D. it measures profitability

18. Which of the following is not included in the cash and cash equivalents amount reported on the balance sheet?

A. Money market funds

B. Checking accounts

C. Treasury bills

D. Notes receivable due in 90 days

19. During the year, the company recorded services provided to customers on account. What effect will this transaction have on the debt-to-assets and times interest earned ratios?

A. Debt-to-assets ratio will decrease and the times interest earned will increase

B. debt-to-asset ratio will increase and the times interest earned will not change

C. Both ratios will decrease

D. both ratios will increase.

20. John purchased 1 share of $10 par value common stock form Utah Corporation for $50 per share. John sold that share to Stan for $60 per share. As a result of the sale by John to Stan, Utah Corporation would:

A. debit cash and credit additional paid-in capital for $10

B. debit cash and credit common stock for $10

C. debit common stock and credit additional paid-in capital for $10

D. not debit or credit any of its accounts