Current liabilities are obligations due within:

• A.one month or within the company's normal operating cycle if it is shorter than one month.
• B.one year or within the company's normal operating cycle if it is longer than one year.
• C.one month or within the company's normal operating cycle if it is longer than one month.
• D.one year or within the company's normal operating cycle if it is shorter than one year.

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Question 2 of 30

Warranty expense should be recorded in the period:

• A.immediately following the period in which the product is sold.
• B.the product is paid for by the customer.
• C.the product is sold.
• D.the product sold is repaired or replaced.

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Question 3 of 30

Sales were $200,000. Warranty costs are estimated at 4% of sales. To account for the warranty, the company should record a debit to:

• A.No entry is required since the actual liability amount is not known.
• B.Sales for $8,000.
• C.Warranty Payable for $8,000.
• D.Warranty Expense for $8,000.

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Question 4 of 30

Company paid $960 cash to replace a part on machinery sold under warranty. To recognize the payment, which of the following are correct?

• A.Debit Warranty Payable and credit Cash
• B.Debit Equipment Expense and credit Cash
• C.Debit Parts Expense and credit Cash
• D.Debit Warranty Expense and credit Cash

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Question 5 of 30

The Salary Expense account is debited for:

• A.gross pay minus employee payroll liabilities.
• B.payroll tax liabilities only.
• C.gross pay only.
• D.gross pay plus employee payroll liabilities.

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Question 6 of 30

A company has a contingent loss that can be estimated and has a reasonably possible chance of occurrence. What reporting does the FASB require regarding this contingency?

• A.It should be accrued and reported on the financial statements.
• B.It should be put into a memo until the actual loss materializes.
• C.It should be reported in the notes to the financial statements.
• D.It should be accrued and reported on the financial statements and reported in the notes to the financial statements.

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Question 7 of 30

A bond issued at a price below its maturity or par value is sold at a discount.A. TrueB. FalseReset Selection

Question 8 of 30

A bond with a stated interest rate of 12% and a market rate of 14% was issued. As the bond matures:

• A.the Premium on Bonds Payable decreases.
• B.the Discount on Bonds Payable increases.
• C.the Premium on Bonds Payable increases.
• D.the Discount on Bonds Payable decreases.

A bond issued at a price below its maturity or par value is sold at a discount.A. TrueB. FalseReset Selection

Question 8 of 30

A bond with a stated interest rate of 12% and a market rate of 14% was issued. As the bond matures:

• A.the Premium on Bonds Payable decreases.

Question 9 of 30

The stated interest rate is also referred to as the:

• A.coupon rate.
• B.present value interest rate.
• C.effective interest rate.
• D.market interest rate.

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Question 10 of 30

The carrying value of a bond is equal to:

• A.Either the face value of the bond plus the premium or the face value of the bond less the discount on bond payable.
• B.Why are you asking me?!
• C.the face value of the bond plus the discount on bond payable.
• D.the face value of the bond less the premium on bond payable.

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Question 11 of 30

On a bond's maturity date, its carrying value will equal the:

• A.maturity value plus all interest payments.
• B.present value of the bonds on its issuance date.
• C.maturity value less all interest payments.
• D.face value.

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Question 12 of 30

Under the effective-interest method of amortization (hint: asking about the table calculations), the cash payment on each interest payment is calculated by multiplying the:

• A.carrying value of the bonds times the market interest rate for the appropriate time period.
• B.face value of the bonds times the stated interest rate for the appropriate time period.
• C.carrying value of the bonds times the stated interest rate for the appropriate time period.
• D.face value of the bonds times the market interest rate for the appropriate time period.

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Question 13 of 30

Under the effective-interest method of amortization( hint: asking about the table calculations), interest expense each period can be calculated by multiplying the:

• A.face value of the bonds times the stated interest rate for the appropriate time period.
• B.carrying value of the bonds times the market interest rate for the appropriate time period.
• C.carrying value of the bonds times the stated interest rate for the appropriate time period.
• D.face value of the bonds times the market interest rate for the appropriate time period.

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Question 14 of 30

Under the effective-interest method of amortization (hint: asking about the table calculations), the amount of discount amortized each interest period is equal to the:

• A.total discount, divided by the number of interest payments to be made.
• B.total amount of interest expense, divided by the number of interest payments to be paid.
• C.absolute value of the amount of interest expense less the cash paid.
• D.amount of interest expense plus the cash paid.

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Question 15 of 30

Company issued a $500,000 face value bond, with a stated interest rate of 12% on 1/1/2020. The bond is a 3-year bond that pays interest quarterly. When the bond issued, the market interest rate was 8%. This bond would issue for (the cash received):

• A.$500,010
• B.$552,875
• C.$551,526
• D.$500,008

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Question 16 of 30

Company issued a $500,000 face value bond, with a stated interest rate of 12% on 1/1/2020. The bond is a 3-year bond that pays interest quarterly. When the bond issued, the market interest rate was 8%. On the date of issuance, the bond had a:

• A.premium of $52,875
• B.discount of 1 million dollars (read with Dr. Evil voice)
• C.premium of $51,526
• D.premium of $10

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Question 17 of 30

Company issued a $500,000 face value bond, with a stated interest rate of 12% on 1/1/2020. The bond is a 3-year bond that pays interest quarterly. When the bond issued, the market interest rate was 8%. The first interest payment journal entry would include a:

• A.debit to interest expense for $11,057.50
• B.credit to interest expense for $15,000.30
• C.debit to cash for $15,000
• D.credit to premium on bond payable for $3,942.50

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Question 18 of 30

Company issued a $500,000 face value bond, with a stated interest rate of 12% on 1/1/2020. The bond is a 3-year bond that pays interest quarterly. When the bond issued, the market interest rate was 8%. The 9th interest payment journal entry would include a:

• A.debit to cash for $15,000
• B.I like kittens
• C.You are asking about the 9th row of the table, seriously?!
• D.credit to cash for $15,000

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Question 19 of 30

Which of the following isnotan advantage of forming a corporation as opposed to organizing as a partnership or proprietorship?

• A.Limited taxation.
• B.Corporation is a separate legal entity distinct from its owners.
• C.Limited liability of stockholders.
• D.Ease of transferring ownership.

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Question 20 of 30

Shareholder rights may include:

• A.right to a proportionate share of dividends.
• B.all of these.
• C.right to a proportionate share of assets in the event of a liquidation.
• D.right to vote for managers of the corporation.

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Question 21 of 30

Corporation issues 300 shares of $5 par value common stock for $35 per share. This transaction will include a credit to Common Stock for:

• A.$1,500 and a credit to Paid-in Capital for $9,000.
• B.$10,500.
• C.$1,500 and a Gain on Issue of Common Stock for $9,000.
• D.$1,000 and a credit to Retained Earnings for $4,000.

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Question 22 of 30

Treasury stock is a (n):

• A.asset account.
• B.liability account.
• C.contra-asset account.
• D.contra-equity account.

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Question 23 of 30

Treasury stock accounts for the difference between:

• A.authorized shares and outstanding shares.
• B.issued shares and preferred shares.
• C.issued shares and authorized shares.
• D.outstanding shares and issued shares.

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Question 24 of 30

The entry to record the sale of 8,000 shares of treasury stock that cost $10 per share for $14 per share includes a:

• A.debit to debit to Retained Earnings for $80,000.
• B.credit to Paid-in Capital from Treasury Stock transactions for $32,000.
• C.credit to Paid-in Capital in Excess of Par ValueCommon for $32,000.
• D.debit to Treasury stock for $112,000.

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Question 25 of 30

A dividend becomes a legal liability of the corporation on the:

• A.declaration date.
• B.distribution date.
• C.payment date.
• D.record date.

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Question 26 of 30

On the Date of Payment, the payment of a cash dividend:

• A.reduces liabilities and reduces assets.
• B.increases liabilities and increases assets.
• C.increases stockholders' equity and reduces liabilities.
• D.reduces stockholders' equity and reduces assets.

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Question 27 of 30

Before a company can pay dividends to the common stockholders, the owners of cumulative preferred stock must receive:

• A.all dividends in arrears, but not the current year's dividends.
• B.the current year's dividends, but not dividends in arrears.
• C.neither the current year's dividends nor dividends in arrears.
• D.all dividends in arrears plus the current year's dividends.

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Question 28 of 30

Stock dividends:

• A.are distributions of cash to the stockholders.
• B.reduce the total assets of the corporation.
• C.have no effect on total stockholders' equity.
• D.increase the total liabilities of the corporation and decrease the total stockholders' equity.

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Question 29 of 30

The value of a small stock dividend is computed as:

• A.par value times the number of shares to be distributed.
• B.liquidation value times the number of shares to be distributed.
• C.current market value times the number of shares to be distributed.
• D.book value times the number of shares to be distributed.

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Question 30 of 30

A stock split:

• A.increases assets and decreases equity.
• B.increases Common Stock and decreases Paid-in Capital.
• C.has no effect on total equity.
• D.decreases Retained Earnings and increases Paid-in Capital.