Question 1

The current portion of long-term debt will appear in the balance sheet under the heading:

	A.	Long-term Liabilities.
	B.	Other Debt.
	C.	Current Liabilities.
	D.	Intermediate-term Liabilities.

2 points

Question 2

When using the percentage of sales method of estimating uncollectible accounts, any existing balance in the Allowance for Uncollectible Accounts account is ignored as long as the account has a credit balance after adjustment.

True

False

2 points

Question 3

When a note is dishonored, the payee will make an entry that includes a credit to:

	A.	Cash.
	B.	Interest Payable.
	C.	Notes Receivable.
	D.	Accounts Receivable.

2 points

Question 4

When a company collects sales taxes from customers, the amount of taxes collected represents a revenue.

True

False

2 points

Question 5

In May 2012, Byers Co. wrote off the $700 account of Sam Slow as uncollectible. In December 2012, Slow sent a check for $500 and a memo saying he could not pay the remaining balance. Assuming Byers Co. uses the allowance method, the entry (entries) that should be made on its books as a result of the collection and note is (are):

A.

Cash	500
Accounts Receivable (Slow)		500

B.

Cash	500
Uncollectible Accounts Expense		500

C.

Cash	500
Accounts Receivable (Slow)	200
Allowance for Uncollectible Accounts		700

D.

Accounts Receivable (Slow)	500
Allowance for Uncollectible Accounts		500
Cash	500
Accounts Receivable (Slow)		500

2 points

Question 6

The interest rate on notes receivable and notes payable is generally stated in annual terms.

True

False

2 points

Question 7

The major subdivisions of liabilities on the balance sheet are:

	A.	payroll, contingent, and long-term.
	B.	accrued and estimated.
	C.	current and long-term.
	D.	current, estimated, and contingent.

2 points

Question 8

Net accounts receivable represents the estimated collectible receivables.

True

False

2 points

Question 9

Maxwell issued to Prentice Co., a $2,400, 90-day, 12 percent note for the purchase of goods. The journal entry needed on Prentice Company's books at the time of sale is:

A.

Notes Receivable	2,472
Sales		2,400
Interest Revenue		72

B.

Notes Receivable	2,400
Interest Revenue	72
Sales		2,472

C.

Notes Receivable	2,400
Sales		2,400

D.

Notes Receivable	2,436
Sales		2,436

2 points

Question 10

Credit card companies absorb the loss from uncollectible accounts.

True

False

2 points

Question 11

In June 2012, after trying to collect a $1,200 receivable from Ed Bundy, the Grinch Company wrote off the amount as uncollectible. Two months later, Bundy sent a check for $600. Collection of the remaining $400 is doubtful. Assuming the Grinch Company uses the allowance method, which of the following entries should it make upon receipt of the $600 check?

A.

Accounts Receivable	600
Allowance for Uncollectible Accounts		600
Cash	600
Accounts Receivable		600

B.

Cash	1,200
Accounts Receivable		1,200

C.

Accounts Receivable	1,200
Allowance for Uncollectible Accounts		1,200

D.

Cash	600
Accounts Receivable		600

2 points

Question 12

When product warranty expenses are estimated, an expense is debited and a liability is credited.

True

False

2 points

Question 13

The faster a company collects receivables, the more liquid the receivables are and the higher their quality.

True

False

2 points

Question 14

When Retained Earnings is debited in a journal entry, a deficit exists.

True

False

2 points

Question 15

As owners of a corporation, stockholders have a right to elect the:

	A.	officers of the corporation.
	B.	board of directors of the corporation.
	C.	treasurer of the corporation.
	D.	president of the corporation.

2 points

Question 16

Preferred stock is usually preferred as to:

	A.	voting rights.
	B.	dividends and to assets in liquidation.
	C.	assets in liquidation only.
	D.	management rights.

2 points

Question 17

Earnings per share (EPS) is calculated based entirely on the total number of common shares authorized and issued.

True

False

2 points

Question 18

When a statement of stockholders' equity is prepared, it replaces the statement of retained earnings.

True

False

2 points

Question 19

The number of outstanding shares of stock is the:

	A.	number issued and currently held by stockholders.
	B.	number authorized but not yet issued.
	C.	number issued to the original incorporates.
	D.	total number issued.

2 points

Question 20

On July 6, 2012, the board of directors of the Hanson Corporation declared a cash dividend of $10 per share on 60,000 shares of outstanding common stock, payable September 1, 2012, to stockholders of record on August 10, 2012. The entry to record the declaration of this dividend is:

A.

Retained Earnings	600,000
Cash		600,000

B.

Retained Earnings-Dividends	600,000
Retained Earnings		600,000

C.

Retained Earnings	600,000
Common Stock		600,000

D.

Retained Earnings	600,000
Dividends Payable		600,000

2 points

Question 21

Treasury stock is stock that:

	A.	has never been issued.
	B.	must be offered to existing stockholders first in amounts proportional to their shareholdings of the issuer's stock.
	C.	is apportioned to cover special projects such as the construction of a new building.
	D.	has been issued but was reacquired by the corporation.

2 points

Question 22

The par value of a share of common stock is:

	A.	the amount at which, according to some state laws, the share must be first issued.
	B.	a changing amount which varies according to earnings and losses of the issuing corporation.
	C.	the amount for which the stock can be sold in the market.
	D.	generally of little significance, being merely a nominal and arbitrary amount printed on a stock certificate.

2 points

Question 23

The presence of a Dividends Payable account among the current liabilities in a balance sheet indicates a dividend has been declared but not paid.

True

False

2 points

Question 24

All the following are advantages of the corporate form of organization except:

	A.	easy transfer of ownership.
	B.	professional management.
	C.	unlimited liability.
	D.	continuous existence.

2 points

Question 25

The amount of prior unpaid dividends is only important if the preferred stock is:

	A.	noncumulative and convertible.
	B.	noncumulative.
	C.	noncumulative and callable.
	D.	cumulative.

2 points

Question 26

In The Profit's A Stein Meats Receivables Video clip, how much money does Stein Meats have in the bank to pay their bills?

	$30,000
	$300,000
	$500,000
	$4 million

2 points

Question 27

In The Profit's A Stein Meats Receivables Video clip, Stein Meats has negative equity, meaning they owe more than they own.

True

False

2 points

Question 28

In The Profit's A Stein Meats Receivables Video clip, what is the main reason that Stein Meats is struggling financially?

	They don't sell enough meat.
	They extend credit to their customers and don't collect from them.
	Employees are stealing.
	They owe too much to the bank.

2 points

Question 29

In The Profit's A Stein Meats Receivables Video clip, Jamie, Marcus' Portfolio Manager, uncovers that Stein Meats owes how much in liabilities?

	$500,000
	$7.8 million
	$4 million
	$2 million

2 points

Question 30

In The Profit's A Stein Meats Receivables Video clip, how much revenue does Stein Meats do annually?

	$18 million
	$4 million
	$50 million
	$1 million

2 points

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