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Accounting
Q:
treasury stock should be reported in the financial statements of a corporation as a(n) a.investment b.liability c.deduction from total paid-in capital d.deduction from total paid-in capital and retained earnings
Q:
When using the percent of sales method of estimating uncollectibles, the entry to record bad debt expense includes a credit to Accounts Receivable. a. True b. False
Q:
a corporation purchases 10,000 shares of its own $10 par common stock for $25 per share, recording it at cost. what will be the effect on total stockholders equity? a.increase by $100,000 b.decrease by $250,000 c.increase by $250,000 d.decrease by $100,000
Q:
The maturity value of a note receivable is always the same as its face value. a. True b. False
Q:
a corporation purchases 30,000 shares of its own $20 par common stock for $35 per share, recording it at cost. what will be the effect on total stockholders equity? a.increase by $1,050,000 b.decrease by $600,000 c.decrease by $1,050,000 d.decrease by $600,000
Q:
Days’ sales in receivables is an estimate of the length of time the accounts receivable have been outstanding. a. True b. False
Q:
the acquisition of treasury stock by a corporation a.increases its total assets and total stockholders equity b.decreases its total assets and total stockholders equity c.has no effect on total assets and total stockholders equity d.requires that a gain or loss be recognized on the income statement
Q:
Receivables that are expected to be collected in cash in 18 months or less are reported in the Current Assets section of the balance sheet. a. True b. False
Q:
At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Credit sales for the period total $800,000. If bad debt expense is estimated at 1% of credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500. a. True b. False
Q:
treasury stock is a.stock issued by the u.s. treasury department b.stock purchased by a corporation and held as an investment in its treasury c.corporate stock issued by the treasurer of a company d.a corporations own stock, which has been reacquired and held for future use
Q:
Trade receivables occur when two companies trade or exchange notes receivable. a. True b. False
Q:
leary manufacturing corporation purchased 4,000 shares of its own previously issued $10 par common stock for $92,000. as a result of this event, a.learys common stock account decreased $40,000 b.learys total stockholders equity decreased $92,000 c.learys paid-in capital in excess of par value account decreased $52,000 d.all of the above
Q:
kaplan manufacturing corporation purchased 2,000 shares of its own previously issued $10 par common stock for $46,000. as a result of this event, a.kaplans common stock account decreased $20,000 b.kaplans total stockholders equity decreased $46,000 c.kaplans paid-in capital in excess of par value account decreased $26,000 d.all of the above
Q:
The interest on a 6%, 60-day note for $5,000 is $300. a. True b. False
Q:
the net effects on the corporation of the declaration and payment of a cash dividend are to a.decrease liabilities and decrease stockholders equity b.increase stockholders equity and decrease liabilities c.decrease assets and decrease stockholders equity d.increase assets and increase stockholders equity
Q:
The accounts receivable turnover measures the length of time in days it takes to collect a receivable. a. True b. False
Q:
No allowance account is used with the direct write-off method. a. True b. False
Q:
the board of directors of benson company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on july 15, 2012. the dividend is to be paid on august 15, 2012, to stockholders of record on july 31, 2012. the effects of the journal entry to record the payment of the dividend on august 15, 2012, are to a.decrease stockholders equity and decrease liabilities b.decease liabilities and decrease assets c.increase stockholders equity and increase liabilities d.increase stockholders equity and decrease assets
Q:
If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored. a. True b. False
Q:
the board of directors of benson company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on july 15, 2012. the dividend is to be paid on august 15, 2012, to stockholders of record on july 31, 2012. the correct entry to be recorded on august 15, 2012, will include a a.debit to cash dividends b.credit to cash dividends c.credit to dividends payable d.debit to dividends payable
Q:
a corporation records a dividend-related liability a.on the record date b.on the payment date c.when dividends are in arrears d.on the declaration date
Q:
When an account receivable that has been written off is subsequently collected, the account receivable must first be reinstated before recording the receipt of payment. a. True b. False
Q:
the effect of a stock dividend is to a.decrease total assets and stockholders equity b.change the composition of stockholders equity c.decrease total assets and total liabilities d.increase the book value per share of common stock
Q:
If a promissory note is dishonored, the payee should still record interest revenue. a. True b. False
Q:
common stock dividends distributable is classified as a(n) a.asset account b.stockholders equity account c.expense account d.liability account
Q:
stock dividends and stock splits have the following effects on retained earnings:
Q:
The difference between the balance in Accounts Receivable and the balance in Allowance for Doubtful Accounts is called the net realizable value of the receivables. a. True b. False
Q:
of the four dividends types, the two most common types in practice are a.cash and scrip b.cash and property c.cash and stock d.property and stock
Q:
dividends are predominantly paid in a.scrip b.property c.cash d.stock
Q:
Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts. a. True b. False
Q:
which of the following is not a significant date with respect to dividends? a.the declaration date b.the incorporation date c.the record date d.the payment date
Q:
The equation for computing interest on an interest-bearing note is as follows: Interest = Maturity Value × Interest Rate × Time. a. True b. False
Q:
regular dividends are declared out of a.paid-in capital in excess of par value b.treasury stock c.common stock d.retained earnings
Q:
Of the two methods of accounting for uncollectible receivables, the allowance method makes use of an estimate of uncollectible receivables. a. True b. False
Q:
on the dividend record date a.a dividend becomes a current obligation b.no entry is required c.an entry may be required if it is a stock dividend d.dividends payable is debited
Q:
The party promising to pay a note at maturity is the maker. a. True b. False
Q:
which of the following statements regarding the date of a cash dividend declaration is not accurate? a.the dividend can be rescinded once it has been declared b.the corporation is committed to a legal, binding obligation c.the board of directors formally authorizes the cash dividend d.a liability account must be increased
Q:
Other receivables include nontrade receivables such as loans to company officers. a. True b. False
Q:
indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:
Q:
The accounts receivable turnover ratio is computed by dividing total sales by the average accounts receivable during the year. a. True b. False
Q:
which of the following statements about dividends is not accurate? a.dividends are generally reported quarterly as a dollar amount per share b.low dividends may mean high stock returns c.the board of directors is obligated to declare dividends d.payment of dividends from legal capital is illegal in many states
Q:
Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period. a. True b. False
Q:
ace inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at december 31, 2012. what is the annual dividend on the preferred stock? a.$60 per share b.$60,000 in total c.$6,000 in total d.$0.60 per share
Q:
Allowance for Doubtful Accounts is a liability account. a. True b. False
Q:
cab inc. has 1,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at december 31, 2012. what is the annual dividend on the preferred stock? a.$40 per share b.$4,000 in total c.$400 in total d.$0.40 per share
Q:
GAAP requires companies with a large amount of receivables to use the allowance method. a. True b. False
Q:
which of the following statements is not true about a 2-for-1 split? a.par value per share is reduced to half of what it was before the split b.total contributed capital increases c.the market price probably will decrease d.a stockholder with ten shares before the split owns twenty shares after the split
Q:
The due date of a 60-day note dated July 10 is September 10. a. True b. False
Q:
sizemore, inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at december 31, 2012. if the board of directors declares a $40,000 dividend, the a.preferred stockholders will receive 1/10th of what the common stockholders will receive b.preferred stockholders will receive the entire $40,000 c.$40,000 will be held as restricted retained earnings and paid out at some future date d.preferred stockholders will receive $20,000 and the common stockholders will receive $20,000
Q:
When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry. a. True b. False
Q:
denson, inc. has 10,000 shares of 8%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at december 31, 2012. there were no dividends declared in 2011. the board of directors declares and pays a $120,000 dividend in 2012. what is the amount of dividends received by the common stockholders in 2012? a.$0 b.$80,000 c.$120,000 d.$40,000
Q:
A primary difference between the direct write-off and allowance methods is whether or not bad debt is based on a percentage of sales. a. True b. False
Q:
brewer inc. has 3,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at december 31, 2012, and december 31, 2011. the board of directors declared and paid a $9,000 dividend in 2011. in 2012, $36,000 of dividends are declared and paid. what are the dividends received by the preferred stockholders in 2012? a.$21,000 b.$18,000 c.$15,000 d.$12,000
Q:
Other (nontrade) receivables that are not expected to be collected within one year are reported in the Investments section of the balance sheet. a. True b. False
Q:
watson, inc. has 5,000 shares of 6%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at december 31, 2012. there were no dividends declared in 2010. the board of directors declares and pays a $50,000 dividend in 2011 and in 2012. what is the amount of dividends received by the common stockholders in 2012? a.$10,000 b.$30,000 c.$50,000 d.$0
Q:
Companies may sell their receivables, which is often the case when a company issues its own credit card. a. True b. False
Q:
berman inc. has 4,000 shares of 8%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at december 31, 2011, and december 31, 2012. the board of directors declared and paid a $12,000 dividend in 2011. in 2012, $48,000 of dividends are declared and paid. what are the dividends received by the common stockholders in 2012? a.$28,000 b.$24,000 c.$20,000 d.$16,000
Q:
Small companies can use either the direct write-off method or the allowance method. a. True b. False
Q:
When using the direct write-off method of accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible. a. True b. False
Q:
the board of directors must assign a per share value to a stock dividend declared that is a.greater than the par or stated value b.less than the par or stated value c.equal to the par or stated value d.at least equal to the par or stated value
Q:
Both accounts receivable and notes receivable represent claims that are expected to be collected in cash. a. True b. False
Q:
corporations generally issue stock dividends in order to a.increase the market price per share b.exceed stockholders dividend expectations c.increase the marketability of the stock d.decrease the amount of capital in the corporation
Q:
When a note is written to settle an open account, no entry is necessary. a. True b. False
Q:
a stockholder who receives a stock dividend would a.expect the market price per share to increase b.own more shares of stock c.expect retained earnings to increase d.expect the par value of the stock to change
Q:
The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible. a. True b. False
Q:
when stock dividends are distributed, a.common stock dividends distributable is decreased b.retained earnings is decreased c.paid-in capital in excess of par value is debited if it is a small stock dividend d.no entry is necessary if it is a large stock dividend
Q:
The maturity value of a 12%, 60-day note for $5,000 is $5,600. a. True b. False
Q:
a small stock dividend is defined as a.less than 30% but greater than 25% of the corporations issued stock b.between 50% and 100% of the corporations issued stock c.more than 30% of the corporations issued stock d.less than 20-25% of the corporations issued stock
Q:
the per share amount normally assigned by the board of directors to a large stock dividend is a.the market value of the stock on the date of declaration b.the average price paid by stockholders on outstanding shares c.the par or stated value of the stock d.zero
Q:
When accounting for uncollectible receivables and using the percentage of sales method, the matching concept is violated. a. True b. False
Q:
the per share amount normally assigned by the board of directors to a small stock dividend is a.the market value of the stock on the date of declaration b.the average price paid by stockholders on outstanding shares c.the par or stated value of the stock d.zero
Q:
The balance in Allowance for Doubtful Accounts at the end of the year includes the total of all accounts written off since the beginning of the year. a. True b. False
Q:
identify the effect the declaration of a stock dividend has on the par value per share and book value per share.
Q:
which of the following show the proper effect of a stock split and a stock dividend?
Q:
The direct write-off method records bad debt expense when an account is determined to be uncollectible. a. True b. False
Q:
The balance of Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet. a. True b. False
Q:
a stock split will a.have no effect on retained earnings b.increase total paid-in capital c.increase the total par value of the stock d.have no effect on the par value per share of stock
Q:
. In computing the maturity date of a note, the date the note is issued is included but the due date is omitted. a. True b. False
Q:
which of the following statements is not true about a 2-for-1 stock split? a.the market value of the stock will probably decrease b.a stockholder with 5 shares before the split owns 10 shares after the split c.par value per share is reduced to half of what it was before the split d.total paid-in capital increases
Q:
When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable. a. True b. False