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Question 1
A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a
corporation is organized for the purpose of making a profit.
corporation is subject to more federal and state government regulations.
corporation’s temporary accounts are closed at the end of the accounting period.
corporation is an accounting economic entity.
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Question 2
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The following data is available for Blaine Corporation at December 31, 2012:
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Common stock, par $10 (authorized 25,000 shares)
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$200,000
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Treasury Stock (at cost $15 per share)
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900
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Based on the data, how many shares of common stock are outstanding?
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19,940
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24,940
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| 25,000 |
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20,000
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Question 3
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On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event,
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Collins’ Paid-in Capital in Excess of Par account increased $600,000.
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Collins’ total stockholders’ equity was unaffected.
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Collins’ Stock Dividends account increased $1,800,000.
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All of the above.
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Question 4
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Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock
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is reduced to $20 per share.
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remains the same.
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is reduced to $2 per share.
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is reduced to $5 per share.
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Question 5
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A major disadvantage resulting from the use of bonds is that
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taxes may increase.
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earnings per share may be lowered.
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interest must be paid on a periodic basis.
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bondholders have voting rights.
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Question 6
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Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
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$16,000 loss
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$5,600 loss
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$16,000 gain
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$5,600 gain
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Question 7
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Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be
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$479,600.
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$476,000.
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$475,600.
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$480,000.
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Question 8
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Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company’s investment in Dark will increase Wise’s net income by
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$6,000.
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$60,000.
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$66,000.
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$80,000.
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Question 9
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If an investor owns less than 20% of the common stock of another corporation as a long-term investment,
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no dividends can be expected.
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it is presumed that the investor has relatively little influence on the investee.
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it is presumed that the investor has significant influence on the investee.
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the equity method of accounting for the investment should be employed.
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Question 10
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Reporting investments at fair value is
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a conservative approach because only losses are recognized.
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applicable to both debt and stock securities.
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applicable to debt securities only.
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applicable to stock securities only.
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Question 11
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Available-for-sale securities are classified as
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short-term investments only.
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long-term investments only.
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either short-term or long-term investments.
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current assets only.
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Question 12
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Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows? 1. Declaration and payment of a cash dividend during the period. 2. Net income for the period.
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Neither 1 nor 2.
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Both 1 and 2.
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Question 13
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Hark Inc. had cash sales of $400,000 and credit sales of $1,100,000. The accounts receivable balance increased $25,000 during the year. How much cash did Hark receive from its customers during the year?
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$725,000
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$1,500,000
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$1,475,000
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$1,075,000
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Question 14
The statement of cash flows is prepared from all of the following except
comparative balance sheets.
the current income statement.
selected transaction data.
the adjusted trial balance.
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Question 15
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Corgan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $290,000, prepaid expenses increased $20,000, and accrued expenses payable increased $30,000. Cash payments for operating expenses were
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$240,000.
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$280,000.
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$300,000.
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$340,000.
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