MGA 306 Final Exam CORRECT 100%
Which of the following is not a characteristic of a liability?
a. it represents a probable future sacrifice of economic benefit
b. it must be satisfied within a one-year period
c. it results from a past transaction(s) or event(s)
d. it arises from a present obligation - ANSWERb. it must be satisfied within a one-year
period
What is the financial impact when cash from a customer is received before a company
has provided a good or service?
a. assets and liabilities increase
b. liabilities and revenues increase
c. assets and shareholders' equity increase
d. assets and revenues increase - ANSWERa. assets and liabilities increase
True of False. Preferred shares usually have preferential rights over common stock
related to dividends and liquidating distribtutons. - ANSWERTrue
Which of the following statements about cash dividends is true?
a. the declaration of a dividend creates a liability on the date of record
b. shareholders must own shares on the date of payment to receive the dividend
c. the liability for a dividend is created on the date declaration
d. shareholders on the date of declaration automatically get the dividend - ANSWERc.
the liability for a dividend is created on the date declaration
True or False. A reissuance of treasury stock at a price lower than what it was
purchased for results in a loss on the income statement. - ANSWERFalse
If a company purchases 40% of the outstanding voting shares of another entity, how will
it account for this investment?
a. as a passive investment
b. by consolidating the investee's financial statements into their own
c. using the equity method
d. this transaction does not affect the financial statements - ANSWERc. using the equity
method
A company issues bonds with a coupon rate of 5% when the rate for bonds of similar
risk is 4%. The company's bonds were:
a. sold at a discount
b. sold at a premium
c. sold at par - ANSWERSold at a premium
Which of the following items is not a component of contributed capital?
a. preferred stock
Which of the following is not a characteristic of a liability?
a. it represents a probable future sacrifice of economic benefit
b. it must be satisfied within a one-year period
c. it results from a past transaction(s) or event(s)
d. it arises from a present obligation - ANSWERb. it must be satisfied within a one-year
period
What is the financial impact when cash from a customer is received before a company
has provided a good or service?
a. assets and liabilities increase
b. liabilities and revenues increase
c. assets and shareholders' equity increase
d. assets and revenues increase - ANSWERa. assets and liabilities increase
True of False. Preferred shares usually have preferential rights over common stock
related to dividends and liquidating distribtutons. - ANSWERTrue
Which of the following statements about cash dividends is true?
a. the declaration of a dividend creates a liability on the date of record
b. shareholders must own shares on the date of payment to receive the dividend
c. the liability for a dividend is created on the date declaration
d. shareholders on the date of declaration automatically get the dividend - ANSWERc.
the liability for a dividend is created on the date declaration
True or False. A reissuance of treasury stock at a price lower than what it was
purchased for results in a loss on the income statement. - ANSWERFalse
If a company purchases 40% of the outstanding voting shares of another entity, how will
it account for this investment?
a. as a passive investment
b. by consolidating the investee's financial statements into their own
c. using the equity method
d. this transaction does not affect the financial statements - ANSWERc. using the equity
method
A company issues bonds with a coupon rate of 5% when the rate for bonds of similar
risk is 4%. The company's bonds were:
a. sold at a discount
b. sold at a premium
c. sold at par - ANSWERSold at a premium
Which of the following items is not a component of contributed capital?
a. preferred stock
