26. A company had net income of $250,000. On January 1, there


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26. A company had net income of $250,000. On January 1, there were 12,000 shares of common stock outstanding. On May 1, the company issued an additional 9,000 shares of common stock. The company declared a $7,900 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company had an earnings per share of: (Points : 2) $13.45 $13.89 $11.53 $26.90 Amount cannot be determined as problem does not state if there are any dividends in arrears 27. Shamrock Company had net income of $30,000. On January 1, there were 8,000 shares of common stock outstanding. On April 1, the company issued an additional 2,000 shares of common stock. There were no other stock transactions. The company has an earnings per share of: (Points : 2) $3.75 $3.00 $3.33 $15.00 $3.16 28. A bond traded at 102 ½ means that: (Points : 2) The bond pays 2.5% interest The bond traded at $1,025 per $1,000 bond The market rate of interest is 2.5% The bonds were retired at $1,025 each 29. A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is. (Points : 2) $0 $33,750 $67,500 $750,000 $1,550,000 30. Which of the following statements is true? (Points : 2) Interest on bonds is tax deductible Interest on bonds is not tax deductible Dividends to stockholders are tax deductible Bonds do not have to be repaid 31. Net income divided by net sales is equal to the: (Points : 2) Return on total assets Profit margin Current ratio Total asset turnover Days’ sales in inventory 32. A company has sales of $5,417,000, a gross profit ratio of 35%, ending merchandise inventory of $201,425, and total current assets of $1,539,600. What is the days sales’ in inventory ratio for the year? (Points : 2) 6.10 20.88 26.15 22.67 15.77 33. Comparative financial statements in which each amount is expressed as a percentage of a base amount and in which the base amount is expressed as 100%, are called: (Points : 2) Comparative statements Common-size comparative statements General-purpose financial statements Base line statements Index statements 34. The comparison of a company’s financial condition and performance across time is known as: (Points : 2) Horizontal analysis Vertical analysis Political analysis Financial reporting Investment analysis 35. A company’s transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from: (Points : 2) Operating activities Investing activities Financing activities Direct activities Indirect activities 36. The ability to meet short-term obligations and to efficiently generate revenues is called: (Points : 2) Liquidity and efficiency Solvency Profitability Market prospects Creditworthiness 37. Wessen Company reports net income of $180,000 for the year ended December 31, 2010. It also reports $45,800 depreciation expense, $21,410 amortization expense and a $15,000 gain on the sale of machinery. Its comparative balance sheets reveal a $28,300 increase in accounts receivable, $20,400 decrease in accounts payable, $10,470 increase in prepaid expenses, and $33,140 decrease in wages payable. What is the net cash flows provided (used) by operating activities using the indirect method? (Points : 2) ($140,200) $133,490 $139,900 ($133,490) $78,300 38. The indirect method for the preparation of the operating activities section of the statement of cash flows: (Points : 2) Separately lists each major item of operating cash receipts Separately lists each major item of operating cash payments Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities Is required if the company is a merchandiser 39. A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing act

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