Accounting True and False Questions

1. Corporate income is double taxed.

Question 1 options:

	True
	False

2.Corporate income is distributed to stockholders through stock dividends.

Question 2 options:

	True
	False

3. Non-cumulative preferred stock has the right to receive the regular dividend before any common stock dividends can be paid.

Question 3 options:

	True
	False

4. When no par stock is issued, the entire proceeds are credited to the common stock account and there is no additional paid in capital.

Question 4 options:

	True
	False

5. EPS is commonly used by stockholders to compare performance against history, projections, and other companies within the industry.

Question 5 options:

	True
	False

6. A corporation that investors believe has high potential growth and profitability will sell at a lower PE ratio than other companies with less comparative potential growth or profitability.

Question 6 options:

	True
	False

7. The conversion of bonds into common stock, at the option of the holder, will not affect the total stockholders equity balance.

Question 7 options:

	True
	False

8. Investors who are most interested in the rapid rise of a companys market stock price, probably do not want a high dividend yield.

Question 8 options:

	True
	False

9. A stock dividend declared creates a liability at the time of declaration and a cash dividend declared does not create a liability until paid.

Question 9 options:

	True
	False

10.A 15% change in sales will result in a 15% change in net income.

Question 10 options:

	True
	False

11. A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000 and $222,500 of inventories. Current liabilities are $225,000. The current ratio is 2.5 to 1.

Question 11 options:

	True
	False

12. Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Question 12 options:

	True
	False

13. Inventory turnover shows how many times the average inventory was sold during the year.

Question 13 options:

	True
	False

14. The number of days' sales in inventory is a good measure of how much inventory a company has compared to its sales activity.

Question 14 options:

	True
	False