Accounting Final Exam

Front 1

A current liability is a debt that can reasonably be expected to be paid (or settled)

a. within one year, or the operating cycle, whichever is longer.

b. between 6 months and 18 months.
c. out of currently recognized revenues.

d. out of cash currently on hand.

Back 1

within one year, or the operating cycle, whichever is longer.

Front 2

Failure to record a liability will probably

result in an overstated net income.

result in overstated total liabilities and stockholder’s equity.

have no effect on net income.

result in understated total assets.

Back 2

result in an overstated net income.

Front 3

The interest charged on a $200,000 note payable, at the rate of 6%, on a 90-day note would be

a. $12,000.

b. $6,000.

c. $3,000.

d. $1,000.

Back 3

c. $3,000.

Front 4

A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $189,000, what is the amount of the sales taxes owed to the taxing agency?

a. $180,000.

b. $189,000.

c. $9,450.
d. $9,000.

Back 4

$9,450.

Front 5

Sales taxes collected by a retailer are reported as

contingent liabilities.

revenues.

expenses.

current liabilities.

Back 5

current liabilities.

Front 6

Gomez Corporation issues 800, 10-year, 8%, $1,000 bonds dated January 1, 2012, at 96. The journal entry to record the issuance will show a

debit to Cash of $800,000.

credit to Discount on Bonds Payable for $32,000.

credit to Bonds Payable for $768,000.

debit to Cash for $768,000.

Back 6

a debit tot cash for $768,00

Front 7

Which one of the following would not be considered an advantage of the corporate form of organization?

Limited liability of stockholders.

Separate legal existence.

Continuous life.

Government regulation.

Back 7

government regulation

Front 8

Par value

represents what a share of stock is worth.

represents the original selling price for a share of stock.

is established for a share of stock after it is issued.

is the value assigned per share in the corporate charter.

Back 8

is the value assigned per share in the corporate charter

Front 9

Alt Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

Common Stock $20,000 and Paid-in Capital in Excess of Stated Value

$8,000.

Common Stock $28,000.

Common Stock $20,000 and Paid-in Capital in Excess of Par Value $8,000.

Common Stock $20,000 and Retained Earnings $8,000.

Back 9

Common Stock $20,000 and Paid-in Capital in Excess of Par Value $8,000

Front 10

Tomlinson Packaging Corporation began business in 2010 by issuing 20,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2010 balance sheet, Tomlinson Packaging would report

Common Stock of $200,000.

Common Stock of $100,000.

Common Stock of $160,000.

Paid-in Capital of $150,000.

Back 10

common stock of $100,000

Front 11

The following data is available for BOX Corporation at December 31, 2012: Common stock, par $10 (authorized 30,000 shares) $200,000 Treasury stock (at cost $15 per share) $ 1,200

Based on the data, how many shares of common stock are outstanding?

a. 30,000.
b. 20,000.
c. 29,920.

d. 19,920.

Back 11

$19,920

Front 12

Treasury stock is

stock issued by the U.S. Treasury Department.

stock purchased by a corporation and held as an investment in its treasury.

corporate stock issued by the treasurer of a company.

a corporation’s own stock, which has been reacquired and held for future use.

Back 12

a corporation’s own stock, which has been reacquired and held for future use.

Front 13

Which of the following is not a right or preference associated with preferred stock?

The right to vote.

First claim to dividends.

Preference to corporate assets in case of liquidation.

T o receive dividends in arrears before common

dividends.

Back 13

the right to vote

Front 14

The date on which a cash dividend becomes a binding legal obligation is on the

declaration date.

date of record.

payment date.

last day of the fiscal year end.

Back 14

declaration date

Front 15

The effect of the declaration of a cash dividend by the board of directors is to

increase decrease

stockholders equity assets

assets liabilities

liabilities stockholders equity

Back 15

liabilities stockholders equity

Front 16

Contingent liabilities are

obligations from past transactions and dependent on future events.

estimated, based on past history.

recorded to properly match expenses with revenues.

all of the above.

Back 16

all of the above

Front 17

Which payroll tax is only paid by the employee?

Federal income tax

Federal unemployment tax

Social Security tax

Medicare tax

Back 17

federal income tax