Question 1.

Under the effective-interest method of amortizing bond premiums, the interest expense recorded for each semi-annual interest payment

Select one:

a. is equal to the carrying value of the bond times the contract rate of interest for each semi-annual interest period

b. will equal the amount of cash paid for each semi-annual interest payment

c. is at the same percentage of the bond's carrying value for every interest payment

d. will increase over the life of the bond

Question 2.

The number of shares currently in the hands of shareholders is the same as the number of shares

Select one:

a. outstanding

b. authorized

c. issued

d. proposed by the board of directors

Question 3.

Under ASPE all of the following might appear as adjustments to net income under the operations section on an indirect method statement of cash flows except:

Select one:

a. an increase in Accounts Receivable

b. depreciation expense

c. gain on sale of capital assets

d. payment of dividends

Question 4.

A $1,500 bond quoted at 98 1/2 is selling for

Select one:

a. $1,518

b. $1,492

c. $1,478

d. $1,500

Question 5.

On an indirect method statement of cash flows, a gain on the sale of capital assets is:

Select one:

a. reflected in the investing activities section

b. added to net income

c. reflected in the financing activities section

d. deducted from net income

Question 6.

Cassidy Lake Corporation sold some of its used equipment for $65,000. The indirect method statement of cash flows shows an addition to net income of $6,000. The accumulated depreciation on the equipment to date of sale was $63,000. The original cost of the equipment was:

Select one:

a. $122,000

b. $69,000

c. $71,000

d. $134,000

Question 7.

What effect does an investment of cash in a corporation have on the corporation's balance sheet?

Select one:

a. It increases assets and increases liabilities

b. It increases assets and decreases shareholders' equity

c. It increases assets and increases shareholders' equity

d. It increases assets and decreases liabilities

Question 8.

Bonds with a face value of $100,000 were sold at an effective rate of 10% to yield cash proceeds in excess of $100,000. It is apparent the bonds had a:

Select one:

a. stated rate greater than 10%

b. market rate less than 10%

c. market rate greater than 10%

d. stated rate less than 10%

Question 9.

Which of the following activities creates revenues and expenses in a company's major line of business?

Select one:

a. financing activities

b. investing activities

c. operating activities

d. warehousing activities

Question 10.

On an indirect method statement of cash flows, a decrease in inventory would be:

Select one:

a. reflected in the investing activities section

b. added to net income

c. netted against any decreases in accounts payable

d. deducted from net income