true or false?

accouting true or false

Malale Werner the sentence or statement is true or false. F F 1. The manner of reporting cash flows from investing and financing activities will be different under the direct method as compared to the indirect method. 2. If the market rate of interest is 8% and a corporation's bonds bear interest at 7% the bonds will sell at a premium. T_ 3. If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will decrease as the bonds approach maturity. 4. The direct method of preparing the operating activities section of the statement of cash flows reports major classes of gross cash receipts and gross cash payments. T_ 5. When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard. 6. The acquisition costs of property, plant, and equipment should include all normal reasonable and necessary costs to get the asset in place and ready for use. 7. If 30,000 shares are authorized, 20,000 shares are issued, and 1,000 shares are held as treasury stock, a cash dividend of $1 per share would amount to $21,000. F_ 8. The day on which the board of directors of the corporation distributes a dividend is called the declaration date. T2_9. A cash flow per share amount should be reported on the statement of cash flows. T2__10. When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset. F2 11. After all noncash assets have been converted to cash and all liabilities paid, A, B, and C have capital balances of $15,000 (credit) $10,000 (debit), and $30,000 (credit). Thus, C's share of the cash to be distributed is $30,000 T2 12. If the parent company acquires 90% of the outstanding stock of a corporation, the remaining 10% of the subsidiary's stock is owned by outsiders who are referred to as the subsidiary company. - 13. The stock dividends distributable account is listed in the Paid-in Capital section of the balance sheet. T214. Factors which reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability T?_15. A partnership is subject to federal income taxes 16. Cash dividends are normally paid on shares of treasury stock to search O EL 99. 9 Styles 17. Issuing bonds to finance a company's operations (rather than issuing common stock). generally has an increasing positive impact on earnings per share than issuing common stock F 18. The statement of cash flows is an optional and not a required financial statement to be included in a corporation's annual report. 19. An equal stream of periodic payments is called an annuity F. 20. Like many taxes deducted from employee earnings, federal income taxes are subject to a maximum amount per employee per year. 21. Residual value is not relevant when calculating the annual depreciation expense using the double declining balance method (do not consider the calculation for the final year). 22. Cash flows from financing activities, as part of the statement of cash flows, include payments for dividends. 23. In computing the ratio of return on total assets, interest expense is to be added to net income in determining the numerator for this calculation 24. A 15% change in sales will result in a 15% change in net income. 25. On a common-size income statement, all items are stated as a percent of total assets or equities at year-end. 26. The declaration and issuance of a stock dividend would be reported on the statement of cash flows. 27. If nothing is stated, partnership income is to be divided in proportion to the individual partner's capital balance. 28. The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business. 29. Inventory turnover shows how many times the average inventory was sold during the year. 30. There is a loss on redemption of bonds when bonds are redeemed above their carrying value. 31. A large retained earnings account means that there is cash available to pay dividends 32. For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits 33. A defined contribution plan promises employees a fixed annual pension benefit 34. The amount of annual interest expense reported on the income statement will be more than the interest paid to bondholders if the bonds were originally sold at a discount 35. The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate