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30 terms

Accounting

STUDY
PLAY
All of the following are advantages of issuing bonds rather than stock except
payment of bond interest is not required.
Deferred income taxes arise when
there is a discrepancy between financial reporting requirements and income tax filing requirements.
A bond with a face value of $1,000 has a current price quote of 99.00. This bond is selling for
$990.00
Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment is:
Mortgage Payable 500
Mortgage Interest Expense 5,000
Cash 5,500
The advantages of financial leverage accrue primarily to
stockholders.
The purpose of a statement of stockholders' equity is to
summarize the changes in the components of stockholders' equity for a period of time.
Carrying value
equals cost minus accumulated depreciation.
Which of the following assets is not subject to depreciation, depletion, or amortization?
Land
Dividends yield equals
dividends per share divided by market price per share.
Which of the following terms does not mean the same as the others?
Book value
The term used to describe the allocation of the cost of an intangible asset to the periods it benefits is
amortization.
Which of the following would not be an account in the general ledger of a corporation?
Dividends in Arrears
The cost of a long-term asset is expensed
as the asset benefits the company.
Shares of treasury stock are
issued shares that have been bought back by the corporation and are being held by the corporation.
Dividends in arrears are dividends on
cumulative preferred stock that have not been declared for some specified period of time.
If Willis Corporation has 80,000 shares of common stock authorized, 50,000 shares of common stock issued, and holds 2,000 shares of common stock as treasury stock, the total number of outstanding shares of Willis Corporation amounts to
48,000.
Outstanding shares of stock are
issued shares that are still in circulation.
A capital expenditure results in a debit to a(n)
asset account.
Use the following information to answer the question below.
The following accounts appear in the ledger of Sayre Corporation on December 31, 2010
Preferred Stock$30,000
Common Stock52,000
Additional Paid-in Capital, Preferred7,000
Additional Paid-in Capital, Common18,000
Retained Earnings40,000
A balance sheet prepared on December 31, 2010 , would report total stockholders' equity of
$147,000.
Which of the following statements is not descriptive of common stock?
Dividends paid are an expense for the issuing corporation.
Which of the following would be considered a capital expenditure?
Installation of a solar heating system
Which of the following income statement figures probably would be the best predictor of a corporation's future performance?
Income from continuing operations
Which of the following is an example of off-balance-sheet financing?
Leases
Shank Corporation uses a different depreciation method for its income tax return than it does for its income statement. Consequently, the corporation has a credit balance in its Deferred Income Taxes account. This balance should be classified as a
long-term liability.
Which of the following is not an advantage of issuing long-term debt?
The risk of becoming bankrupt is reduced.
Which of the following would have the least likelihood of being treated as an extraordinary item?
Gain or loss on sale of equipment
The preparation of a statement of stockholders' equity makes which other financial statement unnecessary?
Statement of retained earnings
The write-down of an asset will affect
both total assets and net income.
Which of the following is not a component of income from operations?
Extraordinary losses
The entry to record the issuance of bonds at a discount on an interest payment date should include a
debit to Cash for the face amount of the bonds minus the amount of discount.