Multiple choice questions on fundamentals of accounting.
1.The primary accounting standard-setting body in the United States is the
Securities and Exchange Commission.
Accounting Principles Board.
Financial Accounting Standards Board.
Internal Revenue Service.
2. Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the
working capital method.
3. Which of the following would not be included in the operating activities section of a Statement of cash flows?
Cash inflows from returns on loans (i.e., interest)
Cash inflows from returns on equity securities (i.e., dividends)
Cash outflows to governments for taxes
Cash outflows to reacquire treasury stock
4. Harne Manufacturing declared an 10% stock dividend when it had 150,000 shares of $5 par value common stock outstanding. The market price per common share was $15 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to
Retained Earnings of $225,000.
Paid-in Capital in Excess of Par for $150,000.
Common Stock for $225,000.
Retained Earnings for $75,000.
5. The statement of cash flows is a(n)
required supplemental financial statement.
required basic financial statement.
optional basic financial statement.
optional supplementary statement.
6. Koon Corporation has the following stock outstanding:
6% Preferred, $100 Par
Common Stock, $50 Par
No dividends were paid the previous 2 years. If Koon declares $400,000 of dividends in the current year, how much will preferred stockholders receive if the preferred stock is cumulative?
7. Fison Corp. purchased 15,000 shares of its $2 par common stock at a cost of $12 per share on April 30, 2006. The stock was originally issued at $10 per share. The entry to record the purchase of the stock should include a debit to
Common Stock for $30,000.
Treasury Stock for $30,000.
Common Stock for $180,000.
Treasury Stock for $180,000.
8. A Discount on Bonds Payable account
is a contra account to Bonds Payable.
will cause interest expense to be less than cash interest payable.
is increased over the life of the bond until it equals the bond’s face value.
is an adjunct account to Bonds Payable.
9. If the market rate of interest is lower than the stated rate, bonds will sell at an amount
equal to face value.
not determinable from the given information.
lower than face value.
higher than face value.
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