QUESTION 2

Which of the following would be included in the entry to record the payment of a previously declared dividend of $.25 per share on 12,500 shares of common stock?

Retained earnings would be debited for $3,125. Cash would be debited for $3,125. Dividends payable would be credited for $3,125. Dividends payable would be debited for $3,125.

3 points

QUESTION 3

The Sonesta Company uses the indirect method for the statement of cash flows. In 2013, they purchased equipment for $10,000 cash. Which of the following statements is TRUE?

$10,000 would be shown as a negative cash flow in the operating activities section. $10,000 would be shown as a negative cash flow in the investing activities section. $10,000 would be shown as a positive cash flow in the investing activities section. $10,000 would be shown as a positive cash flow in the financing activities section.

3 points

QUESTION 4

On which of the following dates do dividends become a liability of a corporation?

On the declaration date On the date of record At the end of the fiscal year On the payment date

3 points

QUESTION 5

On July 1, 2013, Avery Services issued a 4% long-term note payable for $10,000. It is payable over a 5-year term in $2,000 principal installments on July 1 of each year. Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period. What happens on July 1, 2014?

Avery pays out $400 of interest only. Avery pays out $400 of interest plus $2,000 of principal. Avery pays out $2,000 of principal only. Avery pays out the $200 of interest that was accrued at year-end.