Reference no: EM132977795

Questions -

Q1. A retail store increased the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the total receipts amounted to $630,000, what is the amount of the sales taxes owed to the taxing agency?

a. $30,000

b. $630,000

c. $600,000

d. $31,500

Q2. Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. The adjustment required if Sadowski Brick Company prepares financial statements on June 30 includes a(n)

a. Increase to Interest Expense and a decrease to Cash for $15,000

b. Increase to Interest Expense and to Interest Payable for $15,000

c. Decrease to Interest Payable and to Cash for $15,000

d. Decrease to Interest Payable and to Interest Expense for $15,000

Q3. If bonds are issued at a discount, it means that the

a. market interest rate is higher than the contractual interest rate

b. financial strength of the issuer is suspect

c. market interest rate is lower than the contractual interest rate

d. bondholder will receive effectively less interest than the contractual rate of interest

Q4. If bonds are issued at a premium, the stated interest rate is

a. too low to attract investors

b. higher than the market rate of interest

c. adjusted to a higher rate of interest

d. lower than the market rate of interest

Q5. Bond discount should be amortized to comply with

a. the revenue recognition principle

b. conservatism

c. the expense recognition principle

d. the historical cost principle

Q6. Liabilities are classified as current or long-term based on their

a. description

b. payment terms

c. due date

d. amount

Q7. Treasury shares plus outstanding shares equal

a. authorized stock

b. issued stock

c. distributable stock

d. unissued stock

Q8. Which of the following statements about treasury stock is true?

a. Companies acquire treasury stock to increase the number of shares outstanding

b. Purchasing treasury stock is done to eliminate hostile shareholder buyouts

c. Companies acquire treasury stock to decrease earnings per share

d. Few corporations have treasury stock

Q9. The carrying value of bonds will equal the market price

a. at the end of the fiscal period

b. on the date of issuance

c. at the close of every trading day

d. every six months on the date interest is paid

Q10. The net effects on the corporation of the declaration and payment of a cash dividend are to

a. decrease assets and decrease stockholders' equity

b. increase stockholders' equity and decrease liabilities

c. decrease liabilities and decrease stockholders' equity

d. increase assets and increase stockholders' equity