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Accounting
Q:
preferred stockholders generally do not have the right to vote for the board of directors.
Q:
preferred stock has contractual preference over common stock in certain areas.
Q:
the number of common shares outstanding can never be greater than the number of shares issued.
Q:
the journal entry to record the purchase of treasury stock will cause total stockholders equity to decrease by the amount of the cost of the treasury stock.
Q:
the cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders equity.
Q:
treasury stock is a contra stockholders equity account.
Q:
treasury stock is reported as an asset on the balance sheet because treasury stock may later be resold.
Q:
treasury stock should not be classified as a current asset.
Q:
the acquisition of treasury stock by a corporation increases total assets and total stockholders equity.
Q:
A note receivable due in 18 months is listed on the balance sheet under the caption a. Long-term liabilities b. Fixed assets c. Current assets d. Investments
Q:
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? a. Uncollectible Accounts Expense b. Allowance for Doubtful Accounts c. Accounts Receivable d. Interest Expense
Q:
the issuance of common stock affects both paid-in capital and retained earnings.
Q:
paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.
Q:
Jefferson uses the percent of sales method of estimating uncollectible receivables. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct regarding the entry to record estimated uncollectible receivables? a. Cash will be debited. b. Bad Debt Expense will be credited. c. Allowance for Doubtful Accounts will be credited. d. Accounts Receivable will be debited.
Q:
Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $300,000, the amount of the adjusting entry for the estimated uncollectible accounts receivable a. is $8,500 b. is $9,500 c. is $9,000 d. cannot be determined with the information given
Q:
for accounting purposes, stated value is treated the same way as par value.
Q:
the par value of common stock must always be equal to its market value on the date the stock is issued.
Q:
Two methods of accounting for uncollectible accounts are the a. direct write-off method and the allowance method b. allowance method and the accrual method c. allowance method and the net realizable method d. direct write-off method and the accrual method
Q:
as soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.
Q:
Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared? a. Cash 200 Interest Revenue 200 b. Interest Receivable 800 Interest Revenue 800 c. Interest Receivable 200 Interest Revenue 200 d. Notes Receivable 40,000 Cash 40,000
Q:
when no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.
Q:
Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If credit sales are $800,000, the amount of the adjusting entry for the estimate of the uncollectible accounts a. is $29,500 b. is $34,500 c. is $32,000 d. cannot be determined with the information given
Q:
when no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.
Q:
Allowance for Doubtful Accounts is classified as a(n) _____ account and has a normal _____ balance. a. owner's equity; credit b. contra asset; debit c. owner's equity; debit d. contra asset; credit
Q:
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of accounts receivable? a. $51,000 b. $289,000 c. $340,000 d. $391,000
Q:
a stockholder has the right to vote in the election of the board of directors.
Q:
Paper Company receives a $6,000, three-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note? a. Notes Receivable, Dame Company 6,000 Accounts Receivable, Dame Company 6,000 b. Notes Receivable, Dame Company 6,090 Accounts Receivable, Dame Company 6,090 c. Notes Receivable, Dame Company 6,090 Accounts Receivable, Dame Company 6,000 Interest Revenue 90 d. Notes Receivable, Dame Company 6,000Interest Revenue 90 Accounts Receivable, Dame Company 6,000 Interest Receivable 90
Q:
a corporation must be incorporated in each state in which it does business.
Q:
if a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.
Q:
The amount of the promissory note plus the interest earned on the due date is called the a. interest value b. maturity value c. face value d. issuance value
Q:
Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts a. liabilities decrease b. net income is unchanged c. total assets are unchanged d. total assets decrease
Q:
a corporation acts under its own name rather than in the name of its stockholders.
Q:
a corporation can be organized for the purpose of making a profit or it may be nonprofit.
Q:
An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a a. debit to Bad Debt Expense for $7,700 b. debit to Bad Debt Expense for $6,400 c. debit to Bad Debt expense for $5,100 d. credit to Allowance for Doubtful Accounts for $1,300
Q:
Notes or accounts receivable that result from sales transactions are often called a. nontrade receivables b. trade receivables c. merchandise receivables d. sales receivables
Q:
the tax laws can be a significant disadvantage of the corporate form of business.
Q:
the sale of shares in a corporation by one stockholder to another affects the total capital of the corporation.
Q:
the liability of a stockholder is usually limited to the stockholders investment in the corporation.
Q:
When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when a. a customer's account becomes past due b. an account becomes bad and is written off c. a sale is made d. management estimates the amount of uncollectibles
Q:
a corporation is not an entity that is separate and distinct from its owners.
Q:
which of the following statements is not considered a disadvantage of the corporate form of organization? a.additional taxes b.government regulations c.limited liability of stockholders d.separation of ownership and management
Q:
which of the following statements concerning taxation is accurate? a.partnerships pay state income taxes but not federal income taxes b.corporations pay federal income taxes but not state income taxes c.corporations pay federal and state income taxes d.only the owners must pay taxes on corporate income
Q:
On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry for the collection of the note should include a a. credit to Notes Receivable for $20,300 b. debit to Interest Receivable for $300 c. credit to Interest Revenue for $300 d. debit to Notes Receivable for $20,000
Q:
When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in its general journal? a. Bad Debt Expense 500 Allowance for Doubtful Accounts 500 b. Bad Debt Expense 500 Accounts Receivable—Bob Smith 500 c. Cash 300Allowance for Doubtful Accounts 200 Accounts Receivable—Bob Smith 500 d. Cash 500 Accounts Receivable—Bob Smith 500
Q:
the ability of a corporation to obtain capital is a.enhanced because of limited liability and ease of share transferability b.less than a partnership c.restricted because of the limited life of the corporation d.about the same as a partnership
Q:
The amount for which a promissory note is written is called the a. realizable value b. maturity value c. face value d. proceeds
Q:
the officer that is generally responsible for maintaining the cash position of the corporation is the a.controller b.treasurer c.cashier d.internal auditor
Q:
a corporate board of directors does not generally a.select officers b.formulate operating policies c.declare dividends d.execute policy
Q:
The direct write-off method of accounting for uncollectible accounts a. emphasizes balance sheet relationships b. is often used by small companies and companies with few receivables c. emphasizes cash realizable value d. emphasizes the matching of expenses with revenues
Q:
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? a. Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 b. Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 c. Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22,000 d. Bad Debt Expense 65,000 Allowance for Doubtful Accounts 65,000
Q:
if an investment firm underwrites a stock issue, the a.risk of being unable to sell the shares stays with the issuing corporation b.corporation obtains cash immediately from the investment firm c.investment firm has guaranteed profits on the sale of the stock d.issuance of stock is likely to be directly to creditors
Q:
which of the following factors does not affect the initial market price of a stock? a.the companys anticipated future earnings b.the par value of the stock c.the current state of the economy d.the expected dividend rate per share
Q:
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? a. Uncollectible Accounts Expense b. Accounts Receivable c. Allowance for Doubtful Accounts d. Interest Expense
Q:
the term residual claim refers to a stockholders right to a.receive dividends b.share in assets upon liquidation c.acquire additional shares when offered d.exercise a proxy vote
Q:
Which of these statements is not true? a. Current assets are normally reported in order of their liquidity. b. Disclosures related to receivables are reported in the financial statement notes. c. Cash and cash equivalents are the first items reported under Current Assets. d. All receivables that are expected to be realized in cash beyond 265 days are reported in the Noncurrent Assets section.
Q:
Given the following information, compute the accounts receivable turnover.Cash $150,000Accounts receivable, beginning of year $18,000Sales 135,000Accounts receivable, end of year 22,000 a. 6.75 b. 7.50 c. 6.13 d. 6.82
Q:
if a stockholder cannot attend a stockholders meeting, he may delegate his voting rights by means of a(n) a.absentee ballot b.proxy c.certified letter d.telegram
Q:
if no-par stock is issued without a stated value, then a.the par value is automatically $1 per share b.the entire proceeds are considered to be legal capital c.there is no legal capital d.the corporation is automatically in violation of its state charter
Q:
On the balance sheet, the amount shown for Allowance for Doubtful Accounts is equal to the a. uncollectible accounts expense for the year b. total of the accounts receivable written off during the year c. total estimated uncollectible accounts as of the end of the year d. sum of all accounts that are past due
Q:
which one of the following is not an ownership right of a stockholder in a corporation? a.to vote in the election of directors b.to declare dividends on the common stock c.to share in assets upon liquidation d.to share in corporate earnings
Q:
Days' sales in receivables a. is an estimate of the length of time the receivables have been outstanding b. measures the number of times the receivables turn over each year c. is credit sales divided by average receivables d. is not meaningful and therefore is not used
Q:
A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is a. $10,000 b. $10,150 c. $10,900 d. $9,100
Q:
which of the following phrases is not descriptive of the corporate form of business? a.professional management b.double taxation on distributed earnings c.unlimited liability d.continuous existence
Q:
a disadvantage of the corporate form of business is a.its status as a separate legal entity b.continuous existence c.government regulation d.ease of transfer of ownership
Q:
The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivable are uncollectible. Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of a. $110 b. $640 c. $530 d. $750
Q:
a disadvantage of the corporate form of organization is a.professional management b.tax treatment c.ease of transfer of ownership d.lack of mutual agency
Q:
the authorized stock of a corporation a.only reflects the initial capital needs of the company b.is indicated in its by-laws c.is indicated in its charter d.must be recorded in a formal accounting entry
Q:
a corporation has the following account balances: common stock, $1 par value, $60,000; paid-in capital in excess of par value, $2,700,000. based on this information, the a.legal capital is $2,760,000 b.number of shares issued is 60,000 c.number of shares outstanding is 2,760,000 d.average price per share issued is $4.60
Q:
Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be a. debit Allowance for Doubtful Accounts; credit Accounts Receivable b. debit Accounts Receivable; credit Notes Receivable c. debit Bad Debt Expense; credit Allowance for Doubtful Accounts d. debit Bad Debt Expense; credit Accounts Receivable
Q:
the term legal capital is a descriptive term for a.stockholders equity b.par value c.residual equity d.market value
Q:
What is the type of account and normal balance of Allowance for Doubtful Accounts? a. contra asset; credit b. asset; debit c. asset; credit d. contra asset; debit
Q:
par value a.represents what a share of stock is worth b.represents the original selling price for a share of stock c.is established for a share of stock after it is issued d.is the value assigned per share in the corporate charter
Q:
Selling receivables a. can shift some of the risk to the buyer b. delays the receipt of cash c. occurs when an account becomes uncollectible d. results in bad debt expense
Q:
the par value of a stock a.is legally significant b.reflects the most recent market price c.is selected by the sec d.is indicative of the worth of the stock
Q:
Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account a. affects only income statement accounts b. is not an acceptable practice c. affects only balance sheet accounts d. affects both balance sheet and income statement accounts
Q:
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: a.common stock $20,000 and paid-in capital in excess of stated value $8,000 b.common stock $28,000 c.common stock $20,000 and paid-in capital in excess of par value $8,000 d.common stock $20,000 and retained earnings $8,000
Q:
The journal entry for a note received from a customer to replace an account is a. debit Notes Receivable; credit Accounts Receivable b. debit Accounts Receivable; credit Notes Receivable c. debit Cash; credit Notes Receivable d. debit Notes Receivable; credit Notes Payable
Q:
if norben company issues 2,000 shares of $5 par value common stock for $140,000, the account a.common stock will be credited for $140,000 b.paid-in capital in excess of par value will be credited for $10,000 c.paid-in capital in excess of par value will be credited for $130,000 d.cash will be debited for $130,000
Q:
Current assets are usually listed in order a. of the due date b. of the size c. alphabetically d. of liquidity
Q:
the amount of stock that may be issued according to the corporations charter is referred to as the a.authorized stock b.issued stock c.unissued stock d.outstanding stock