Question 1.

Warranty expense should be recorded in the period

Select one:

a. the product is sold

b. that the product sold is repaired or replaced

c. that the product is paid for by the customer

d. immediately following the period in which the product is sold

Question 2.

Share capital is also known as:

Select one:

a. retained earnings

b. contributed capital

c. total shareholders' equity

d. common shareholders' equity

Question 3.

Retained Earnings had a balance on January 1, 2017, and December 31, 2017, respectively, of $234,500 and $411,000. Net income for the year was $199,500 and the only other event affecting Retained Earnings was the declaration of dividends. The total payments for dividends was:

Select one:

a. $376,000

b. $0

c. $176,500

d. $23,000

Question 4.

Following is the shareholders' equity section of the balance sheet of the Everslim Company Share capital: The preferred shares are currently selling for $102.25 per share and the common shares are currently selling for $11.50 per share. The total share capital after the distribution of a $66,000 dividend is

Select one:

a. $550,000

b. $817,000

c. $150,000

d. $400,000

Question 5.

Assets received in exchange for the issuance of stock should be recorded at:

Select one:

a. fair market value as determined by a good-faith estimate from independent appraisers

b. book value prior to the issuance

c. historical cost

d. historical cost less accumulated amortization taken to date

Question 6.

Under the indirect method of preparing a statement of cash flows, a decrease in the balance in the Accounts Receivable account during the year is:

Select one:

a. subtracted in the financing activities section

b. added in the operating activities section

c. subtracted in the operating activities section

d. added in the investing activities section

Question 7.

The amount of cash dividends declared during the period and the amount of cash dividends paid during the period are reflected in the:

Select one:

a. statement of shareholders' equity and income statement, respectively

b. cash flow statement and statement of shareholders' equity, respectively

c. income statement and cash flow statement, respectively

d. statement of shareholders' equity and the cash flow statement, respectively

Question 8.

Phosphoric Company reported capital assets, net of accumulated depreciation, on January 1, 2017, at $645,000 and $732,500 on December 31, 2017. The income statement showed depreciation of $48,300 and a $5,600 loss on sale of capital assets. Phosphoric Company acquired $213,000 of capital assets during the year. The proceeds from the sale of capital assets were:

Select one or more:

a. $89,900

b. $71,600

c. $77,200

d. $125,500

Question 9.

The cash proceeds received from issuing a bond are less than the face value of the bond. It is apparent that the bond was issued at

Select one:

a. par value

b. a discount

c. a premium

d. face value

Question 10.

Stock dividends

Select one:

a. reduce the total assets of the corporation

b. increase the total liabilities of the corporation, and decrease the total shareholders' equity

c. are distributions of cash to the shareholders

d. have no effect on total shareholders' equity

Question 11.

Following is the shareholders' equity section of the balance sheet of the Everslim Corporation: The balance in the Common Shares account after the distribution of a 15% common stock dividend is:

Select one:

a. $747,500

b. $801,125

c. $650,000

d. $1,150,125

Question 12.

Before a company can pay dividends to the common shareholders, the owners of cumulative preferred shares must receive

Select one:

a. the current year's dividend, but not dividends in arrears

b. dividends in arrears, but not the current year's dividends

c. all dividends in arrears plus the current year's dividend

d. neither the current year's dividends nor dividends in arrears