2023 1 Accompanying the bank statement was a credit memo for a short term note collected by the | Assignments Online
2023 1 Accompanying the bank statement was a credit memo for a short term note collected by the | Assignments Online
Assignments Online 2023 Business Finance
1. Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company’s accounts?
debit Notes Receivable; credit Cash
debit Cash; credit Miscellaneous Income
debit Cash; credit Notes Receivable
debit Accounts Receivable; credit Cash
2. A bank reconciliation should be prepared
whenever the bank refuses to lend the company money.
to explain any difference between the company’s balance per books with the balance per bank.
when an employee is suspected of fraud.
by the person who is authorized to sign checks.
3. The debit recorded in the journal to reimburse the petty cash fund is to
Petty Cash
Accounts Receivable
Cash
various accounts for which the petty cash was disbursed
4. A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. This item would be included on the bank reconciliation as a(n)
addition to the balance per the company’s records
addition to the balance per the bank statement
deduction from the balance per the bank statement
deduction from the balance per the company’s records
5. The term “receivables” includes all
money claims against other entities.
merchandise to be collected from individuals or companies.
cash to be paid to creditors.
cash to be paid to debtors.
6. A 90-day, 12% note for $20,000, dated April 10, is received from a customer on account. If the note is discounted at 15% on May 20, the days in the discount period are
50
90
120
40
7. The amount of the promissory note plus the interest earned on the due date is called the
realizable value
maturity value
face value
net realizable value
8. A 90-day, 12% note for $20,000, dated September 10, is received from a customer on account. If the note is discounted at 15% on October 10, the due date is
December 9
December 10
December 11
December 8
9. A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of
$ 99,000
$107,000
$102,000
$109,000
10. An asset was purchased for $120,000 and originally estimated to have a useful life of 10 years with a residual value of $10,000. After two years of straight line depreciation, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate this year’s depreciation using the revised amounts and straight line method.
$25,000
$11,000
$24,000
$24,500
11. All leases are classified as either
capital leases or long-term leases
capital leases or operating leases
operating leases or current leases
long-term leases or current leases
12. The most widely used depreciation method is
straight-line
sum-of-the-years-digits
declining-balance
units-of-production
13. Notes may be issued
when assets are purchased
to creditor’s to temporarily satisfy an account payable created earlier
when borrowing money
all of the above
14. Most employers are required to withhold from employees for
both federal and state unemployment compensation
only federal unemployment compensation tax
only federal income tax
only state unemployment compensation tax
15. Which statement below is not a determinate in calculating the amount of federal income taxes withheld from an individuals pay?
filing status
types of earnings
gross pay
number of exemptions
16. Payroll taxes levied against employees become liabilities
the first of the following month
at the time the payroll is paid
when earned by the employee
at the end of an accounting period
17. Which of the following is not a right possessed by common stockholders of a corporation?
the right to vote in the election of the board of directors
the right to receive a minimum amount of dividends
the right to sell their stock to anyone they choose
the right to share in assets upon liquidation
18. The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?
Retained Earnings
Treasury Stock
Organizational Expenses
Common Stock
19. One of the main disadvantages of the corporate form is the
professional management
double taxation of dividends
charter
corporation must issue stock
20. The journal entry to issue 1,000,000 shares of $5 par common stock for $6.75 per share on January 2nd would be:
Jan 2
Dr Cash 6,750,000
Cr Common Stock 5,000,000
Cr Paid-In Capital in Excess of Par – C/S 1,750,000
Jan 2
Dr Cash 5,000,000
Cr Common Stock 5,000,000
Jan 2
Dr Cash 5,000,000
Dr Paid-In Capital in Excess of Par – C/S 1,750,000
Cr Common Stock 6,750,000
Jan 2
Dr Cash 1,000,000
Cr Common Stock 1,000,000
21. Which of the following statements is not true about a 2-for-1 split?
Par value per share is reduced to half of what it was before the split.
Total contributed capital increases.
The market price will probably decrease.
A stockholder with ten shares before the split owns twenty shares after the split.
22. The cumulative effect of the declaration and payment of a cash dividend on a company’s financial statements is to
decrease total liabilities and stockholders’ equity.
increase total expenses and total liabilities.
increase total assets and stockholders’ equity.
decrease total assets and stockholders’ equity.
23. Which of the following is not classified as paid-in capital on the balance sheet?
common Stock
common stock distributable
donated capital
treasury stock
24. 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.
25. Debenture bonds are
bonds secured by specific assets of the issuing corporation
bonds that have a single maturity date
issued only by the federal government
issued on the general credit of the corporation and do not pledge specific assets as collateral
26. A corporation issues for cash $15,000,000 of 8%, 30-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
The amount of annual interest paid to bondholders remains the same over the life of the bonds.
The amount of annual interest expense decreases as the bonds approach maturity.
The amount of annual interest paid to bondholders increases over the 30-year life of the bonds.
The carrying amount decreases from its amount at issuance date to $15,000,000 at maturity.
27. Bonds with a face amount $1,000,000, are sold at 106. The entry to record the issuance is
Dr Cash 1,000,000
Dr Premium on Bonds Payable 60,000
Cr Bonds Payable 1,060,000
Dr Cash 1,060,000
Cr Premium on Bonds Payable 60,000
Cr Bonds Payable 1,000,000
Dr Cash 1,060,000
Cr Discount on Bonds Payable 60,000
Cr Bonds Payable 1,000,000
Dr Cash 1,060,000
Cr Bonds Payable 1,060,000
28. One potential advantage of financing corporations through the use of bonds rather than common stock is
the interest on bonds must be paid when due
the corporation must pay the bonds at maturity
the interest expense is deductible for tax purposes by the corporation
a higher earnings per share is guaranteed for existing common shareholders
29. Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?
appropriation of retained earnings
acquisition of treasury stock
declaration of stock dividends
issuance of long-term debt
30. Cash paid for equipment would be reported in the statement of cash flows in
the cash flows from operating activities section
the cash flows from financing activities section
the cash flows from investing activities section
a separate schedule
31. The statement of cash flows may be used by management to
assess the liquidity of the business
assess the major policy decisions involving investments and financing
determine dividend policy
do all of the above
32. If a gain of $9,000 is incurred in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is (Points : 3)
$46,000
$9,000
$55,000
$64,000
33. Which one of the following below would not be classified as an operating activity?
interest expense
income taxes
payment of dividends
selling expenses
34. Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?
purchase of noncurrent assets
purchase of treasury stock
discarding an asset that had been fully depreciated
payment of cash dividends
35. On the statement of cash flows, the cash flows from financing activities section would include
receipts from the sale of investments
payments for the acquisition of investments
receipts from a note receivable
receipts from the issuance of capital stock
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