Unit 5 : Unit 5: Reporting and Analyzing Current Liabilities,


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Unit 5 : Unit 5: Reporting and Analyzing Current Liabilities, Long-Term Liabilities and Equity – Quiz Time Remaining: Question 1. 1. Stock that was reacquired by the company and is still held by the issuing corporation is called:(Points : 2) Capital stock Treasury stock Redeemed stock Preferred stock Question 2. 2. Bonds with a par value of less than $1,000 are known as:(Points : 2) Junk bonds Baby bonds Callable bonds Unsecured bonds Convertible bonds Question 3. 3. The carrying value of a long-term note payable:(Points : 2) Is computed as the future value of all remaining future payments, using the market rate as interest Is the face value of the long-term note less the total of all future interest payments Is computed as the present value of all remaining future payments, discounted using the market rate of interest at the time of issuance Is computed as the present value of all remaining interest payments, discounted using the note’s rate of interest Decreases each time period the discount on the note is amortized Question 4. 4. 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 Bonds always decrease return on equity Question 5. 5. Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:(Points : 2) Convertible bonds Sinking fund bonds Callable bonds Serial bonds Junk bonds Question 6. 6. A company’s board of directors’ votes to declare a cash dividend of $0.75 per share. The company has 15,000 shares authorized, 10,000 issued and 9,500 shares outstanding. The total amount of the cash dividend is:(Points : 2) $375 $4,125 $7,125 $7,500 $11,250 Question 7. 7. Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is called:(Points : 2) Noncumulative preferred stock Participating preferred stock Callable preferred stock Cumulative preferred stock Convertible preferred stock Question 8. 8. Owners of preferred stock often do not have:(Points : 2) Ownership rights to assets of the corporation Voting rights Preference to dividends The right to sell their stock on the open market Preference to assets at liquidation Question 9. 9. A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:(Points : 2) A debit to Organization Expenses for $3,000 A debit to Organization Expenses for $5,000 A credit to Common Stock for $5,000 A credit to Contributed Capital in Excess of Par Value, Common Stock for $5,000 A debit to Contributed Capital in Excess of Par Value, Common Stock for $2,000 Question 10. 10. A company issues at 9% bonds at par with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. How much total cash interest is received on April 1 by the bond issuer?(Points : 2) $750 $5,250 $1,500 $3,000 $6,000 Question 11. 11. A corporation’s distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:(Points : 2) Stock dividend Stock subscription Premium on stock Discount on stock Treasury stock Question 12. 12. If an issuer sells a bond at any other date than the interest payment date:(Points : 2) This means the bond sells at a premium This means the bond sells at a discount The issuing company will report a loss on the sale of the bond The issuing company will report a gain on the sale of the bond The buyer normally pays the issuer the purchase price plus any interest accrued since the prior interest payment date Question 13. 13. A premium on common stock:(Points : 2) I…

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