Question 1

1pts

If sales for the year totaled $3,000 and accounts receivable increased by $200 during the year, then cash collected from customers would be $2,800.

Group of answer choices

True

False

Question 2

Return on equity is used to help predict future stock prices.

Group of answer choices

True

False

Question 3

One reason preferred stock is called "preferred" is because preferred shareholders may have additional voting rights than common shareholders.

Group of answer choices

True

False

Question 4

Hamilton Corporation holds non-cumulative preferred stock. If Hamilton has not paid dividend to the preferred shareholders in 2 years, the preferred dividends are said to be "in arrears."

Group of answer choices

True

False

Question 5

Return on equity reflects the profitability of a business based on the size of the owners' claim to net assets.

Group of answer choices

True

False

Question 6

Oman Corporation issues one share of $200 par value 7% preferred stock $210 in cash. The annual dividend paid on this stock is $14.70.

Group of answer choices

True

False

Question 7

When treasury stock is reissued at a price lower than its original cost, retained earnings should be credited for the difference.

Group of answer choices

True

False

Question 8

Dividends received, like dividends paid, are classified under financing activities section of the statement of cash flow.

Group of answer choices

True

False

Question 9

Dividends paid on common stock are shared by all the stockholders proportionately.

Group of answer choices

True

False

Question 10

An increase in a liability connector account is a subtracted from net income when determining cash flows from operations using the indirect method.

Group of answer choices

True

False

Question 11

It is easier to establish a partnership than a corporation.

Group of answer choices

True

False

Question 12

No gain, loss, or other income effect is reported by an organization as a result of transactions occurring in its own stock.

Group of answer choices

True

False

Question 13

Unlike other financial statements, numbers presented on the statement of cash flows do not come directly from ending T-account balances found in a general ledger.

Group of answer choices

True

False

Question 14

1pts

To determine cash flows from investing activities, an accountant will usually start with the ledger balance of assets and liabilities (that are not operating) and investigate the individual transactions which occurred in the account during the year.

Group of answer choices

True

False

Question 15

Traditionally, corporations set the par value of stock at an arbitrarily high number.

Group of answer choices

True

False

Question 16

When rent expense for the year totals $90,000 and rent payable increases by $5,000 during the year, cash paid for rent will be $95,000.

Group of answer choices

True

False

Question 17

A manufacturing company purchases a copyright for a song, which it wishes to use in its new advertising campaign, is an example of an investing activity.

Group of answer choices

True

False

Question 18

Connector accounts are income statement accounts used to bridge the gap between accrual and cash accounting.

Group of answer choices

True

False

Question 19

1pts

Preppy Company purchased 400 shares for its treasury at $5 per share. It resold the shares for $8 per share. Preppy should report a gain on the reissuance.

Group of answer choices

True

False

Question 20

The issuance of a stock dividend by a corporation does not impact its assets or liabilities.

Group of answer choices

True

False

Question 21

1pts

Steve Company reported net income of $109,000 for 20X6. Taxes payable and prepaid rent had a beginning balance of $17,000 and $4,000 respectively. The ending balance of taxes payable and prepaid rent was $10,000 and $4,500 respectively. Determine Steve's cash flows from operating activities using the indirect method?

Group of answer choices

$116,500

$102,500

$109,000

$115,500

$101,500

Question 22

1pts

A company has 200,000 shares of authorized common stock and 40,000 shares outstanding on January 1, Year One. The company issues 10,000 more shares of common stock on April 1 and another 25,000 shares on July 1. Net income for the year is reported as $600,000. What is the earnings per share?

Group of answer choices

$8

$10

$12

$13

$7

Question 23

1pts

Rufus Corporation manufactures and sells bicycles. During the year, Rufus sold bicycles to customers and collected $8,000,000 in cash. Which type of activity does this transaction represents on a statement of cash flows?

Group of answer choices

Operating

Investing

Selling

Significant non-cash

Promotion

Question 24

1pts

A company ends Year One with 100,000 shares of common stock and 30,000 shares of preferred stock outstanding. Net income for the year is reported as $400,000. During the year, the company paid a $1 per share cash dividend on its common stock and a $2 per share cash dividend on its preferred stock. The number of preferred shares and common shares outstanding did not change during the year. Determine the company's basic earnings per share.

Group of answer choices

$2.13 per share

$2.50 per share

$3.40 per share

$4.00 per share

Question 25

1pts

Fredrick Corporation has 1,000 shares of $100 par value preferred stock outstanding with a dividend rate of 5 percent. In addition, the company has 20,000 shares of $1 par value common stock outstanding. Fredrick did not pay dividends in 2014, but is planning to pay a dividend of $18,000 in 2015. If the preferred stock is non-cumulative, what amount of the dividend will be distributed to the preferred shareholders in 2015?

Group of answer choices

$5,000

$10,000

$18,000

$9,000

Question 26

1pts

Other things being constant, the market price of a stock decreases on the:

Group of answer choices

date of declaration.

ex-dividend date.

date of payment.

date of balance sheet.

Question 27

1pts

Which of the following is true of a corporation?

Group of answer choices

A corporation does not file its own tax return.

A corporation is relatively quick and easy to start.

A corporation must have at least 10 owners.

A corporation can raise money through the sale of capital stock.

Question 28

1pts

Westlake Corporation reported net income of $30,000 for 20X2. The beginning balance of accounts receivable and accounts payable was $2,000 and $1,900 respectively. The ending balance of accounts receivable and accounts payable was $1,400 and $2,100 respectively. Determine Westlake's cash flows from operating activities using the indirect method?

Group of answer choices

$30,800

$28,200

$30,600

$30,000

Question 29

1pts

Which of the following would be an operating activity for a grocer?

Group of answer choices

Repaying a loan

Buying a vehicle for personal use

Selling a bag of sugar

Whitewashing the shop

Question 30

1pts

At the end of Year One, a company has 100,000 shares authorized and 22,000 shares issued and outstanding. The same company has 20,000 shares of authorized preferred stock and 7,000 shares issued and outstanding. The preferred stock has a $2 per share per year noncumulative dividend. The dividend is paid on the preferred stock in Year One. However, no dividend is paid in Year Two or Year Three. Assume no additional shares were issued during that period. What liability does the company report on its balance sheet as of December 31, Year Three?

Group of answer choices

$-0-

$14,000

$28,000

$116,000

Question 31

1pts

Which of the following is a reason for corporations to be more popular than ownership of proprietorships or partnerships?

Group of answer choices

Income is taxed only once when earned by the corporation.

Corporations enjoy the feature of mutual agency.

Incorporation is a relatively easy and quick process.

Shareholders have no personal liability for the debts of the corporation.

The owners need not file separate tax return for the entity.

Question 32

1pts

In the year 20X5, Finlay Company reported net income of $925,000. Net income includes loss on the sale of equipment of $21,000 and depreciation expense of $32,000. Accounts payable increased by $29,000 during the year. What amount of cash did the company generate from its operating activities?

Group of answer choices

$943,000

$965,000

$1,007,000

$949,000

Question 33

1pts

DreamWorks Corporation acquired a trademark in exchange for 3,000 shares of $1 par value common stock. Which of the following best describes this transaction?

Group of answer choices

Operating activity

Investing activity

Financing activity

Significant non-cash activity

Question 34

1pts

Which of the following is an example of cash equivalents?

Group of answer choices

Saving accounts

Bank drafts

Money orders

Treasury bills

Question 35

1pts

Lawrence Company reported the following account balances on its income statement: cost of goods sold$500,000, rent expense$48,000, and salary expense$75,000. During the year, prepaid rent went down by $10,000, accounts payable went down $22,000, salary payable went up $18,000, and inventory went up by $14,000. Determine the amount of cash paid for salaries.

Group of answer choices

$93,000

$57,000

$75,000

$18,000

Question 36

1pts

Fredrick Corporation has 1,000 shares of $100 par value preferred stock outstanding with a dividend rate of 5 percent. In addition, the company has 20,000 shares of $1 par value common stock outstanding. Fredrick did not pay dividends in Year One, but is planning to pay a dividend of $18,000 in Year Two. If the preferred stock is cumulative, what amount of the dividend will be distributed to the preferred shareholders in Year Two?

Group of answer choices

$5,000

$10,000

$18,000

$9,000

Question 37

1pts

Kenya Company reported net income of $83,000 for 2011. During the year, Kenya's rent payable increased by $2,000 and its accounts receivable increased by $5,000. Calculate Kenya's cash flows from operation using the indirect method.

Group of answer choices

$85,000

$81,000

$86,000

$80,000

$90,000

Question 38

1pts

The maximum number of shares which a company can issue over its life is its:

Group of answer choices

authorized shares.

treasury shares.

common shares.

outstanding shares.

Question 39

1pts

Lira Company reported the following account balances on its income statement: cost of goods sold$320,000, rent expense$30,000, and salary expense$90,000. During the year, prepaid rent went up by $5,000, accounts payable went down by $4,000, salary payable went up by $3,000, and inventory went down by $2,000. Determine the amount of cash paid for purchasing inventory during the year.

Group of answer choices

$322,000

$326,000

$318,000

$320,000

Question 40

1pts

Sewlyn Company incurred tax expense of $45,000 during 2016. Sewlyn reported taxes payable of $7,000 on 1/1/20X6 and taxes payable of $10,000 on 12/31/20X6. In reporting its statement of cash flows for the year, which of the following amounts should Sewlyn show as its cash paid for taxes?

Group of answer choices

$42,000

$35,000

$48,000

$55,000