Question

Question 1.

Market conditions may force a company to issue its bonds at less than the face value of the bonds. The Discount on Bonds Payable account is used in this situation. This account

Select one:

a. is a contra liability account

b. is an expense account

c. is a liability account

d. is a contra asset account

Question 2.

Under the effective-interest method of amortization, interest expense each period can be calculated by multiplying the:

Select one:

a. face value of the bonds times the stated interest rate for the appropriate time period

b. face value of the bonds times the effective-interest rate for the appropriate time period

c. carrying value of the bonds times the effective-interest rate for the appropriate time period

d. carrying value of the bonds times the stated interest rate for the appropriate time period

Question 3.

Beyond the Boardroom Corporation sold used equipment with a book value of $25,000 for $29,000 cash. The indirect method statement of cash flows will reflect:

Select one:

a. an addition of $29,000 in the investing activities section and an addition of $4,000 in the operating activities section

b. an addition of $25,000 in the investing activities section and a deduction of $4,000 in the operating activities section

c. an addition of $25,000 in the investing activities section and an addition of $4,000 in the operating activities section

d. an addition of $29,000 in the investing activities section and a deduction of $4,000 in the operating activities section

Question 4.

The entry to record the payment of a cash dividend previously declared includes a:

Select one:

a. debit to Dividends Payable

b. debit to Retained Earnings

c. credit to Dividends Payable

d. credit to Retained Earnings

Question 5.

Under the indirect method of preparing a statement of cash flows, cash disbursed for the acquisition of a capital asset is:

Select one:

a. subtracted in the investing activities section

b. added in the financing activities section

c. subtracted in the operating activities section

d. added in the investing activities section

Question 6.

From a sustainability perspective, the most important section of a statement of cash flows is the

Select one:

a. operating activities

b. investing activities

c. financing activities

d. all of the sections are equally important

Question 7.

The declaration of a cash dividend

Select one:

a. increases shareholders' equity and reduces liabilities

b. increases liabilities and increases shareholders' equity

c. reduces assets and increases liabilities

d. increases liabilities and decreases shareholders' equity

Question 8.

On January 1, 2017, Balises Corporation's Retained Earnings account has a balance of $300,000. During 2014, cash dividends of $20,000 were declared and stock dividends with a market value of $40,000 were declared. Net income for 2017 amounted to $90,000. On June 30, 2017, Balises Corporation issued 5,000 shares of common shares at $10 per share. What is the balance in Retained Earnings appearing on the statement of shareholders' equity on December 31, 2017?

Select one:

a. $440,000

b. $380,000

c. $420,000

d. $330,000

Question 9.

The entry to record the issuance of 12,500 common shares at $2.50 per share includes a

Select one:

a. credit to Common Shares for $31,250

b. credit to Retained Earnings for $31,250

c. credit to Contributed Surplus for $31,250

d. debit to Retained Earnings for $31,250

Question 10.

Health & Wellness Corporation has had 7,500 shares of $3.00 cumulative preferred shares outstanding as well as 28,000 common shares issued at $10 outstanding since it was incorporated. During the first, second, and third years of operations, $15,000, $18,000, and $50,000 in dividends, respectively, were paid. The dividends paid to the common shareholders of Health & Wellness Corporation in year three amounted to

Select one:

a. $0

b. cannot be determined from the given information

c. $27,500

d. $15,500

Answer 1

Qns 1	Option A	is a contra liability account
Qns 2	Option C	carrying value of the bonds times the effective - interest
		rate for the appropriate time period'
Qns 3	Option D	An addition of $29000 in the investing Activities section
		and a deduction of $4000 in the operating activities section
Qns 4	Option A	Debit to dividend payable
Qns 5	Option A	Subtracted in The investing activities section
Qns 6	Option A	Operating Activities
Qns 7	Option D	increases liabilities and decreases shareholders' equity
Qns 8	Option D	330000
	Opening balance	300000
	Dividend		-20000
	stock dividend	-40000
	net income	90000
	closing balance	330000
Qns 9	Option A	Credit to common shares for $ 31250
Qns 10	Option D	$15,500
	Since $3 is fixed so total dividend liability is	67500
	total dividend paid in 3 years		83000
	dividend to common stock holders	15500