1 What is true if bonds are issued when the stated rate of interest is more than the
market rate of interest?
(A.) The bonds will sell at as discount
(B.) The bonds will sell at their face value
(C.) The bonds will sell at a premium
(D.) The bonds cannot be sold
2 Our company issued bonds that had a face value of $20,000,000 at 102. What
effect
does this have on the Cash account?
(A.) Cash is not affected
(B.) Cash is increased by $20,400,000
(C.) Cash is increased by $20,000,000
(D.) Cash is decreased
3 Cash was used to purchase a building. How is this shown on the
statement of cash flows?
(A.) cash outflow from financing activities
(B.) cash outflow from investing activities
(C.) cash outflow from operating activities
(D.) cash inflow from investing activities
4 Our company issued common stock with a par value of $13.
As a result,
(A.) The market value on the date of issue was $13 per share
, (B.) The dividend for this stock is $13 per year
(C.) Stockholders' equity is decreased
(D.) The Common Stock account is increased by $13 times
the number of shares we issued.
5 Given:
Number of shares authorized 900,000
Number of shares issued 115,000
Number of shares outstanding 100,000
Net income for the year $70,000
Market price per share $10
How many treasury shares does the company have?
(A.) 785,000
(B.) 800,000
(C.) 15,000
(D.) some other amount
6 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
merchandise inventory decreases during the year?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
,7 The following numbers appear in the financial statements
Total assets, $200,000
Total Liabilities, $150,000
Total current assets, $30,000
Total current liabilities, $10,000
What is the amount of the current ratio?
(A.) 1.33
(B.) 0.33
(C.) 0.75
(D.) 3.00
8 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
we have depreciation expense on the income statement?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
9 Our company borrowed $350,000 by issuing a six-year installment note.
Where is this shown in the statement of cash flows?
(A.) Operating activities
(B.) Investing activities
(C.) Financing activities
(D.) nowhere
, 10 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
accounts payable decreases during the year?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
11 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
accounts receivable increased during the year?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
12 What is true if bonds are issued when the market rate of interest is less than the
stated rate of interest?
(A.) The bonds will sell at as discount
(B.) The bonds will sell at their face value
(C.) The bonds will sell at a premium
(D.) The bonds cannot be sold
13 Which of the following is NOT shown on the statement of cash
market rate of interest?
(A.) The bonds will sell at as discount
(B.) The bonds will sell at their face value
(C.) The bonds will sell at a premium
(D.) The bonds cannot be sold
2 Our company issued bonds that had a face value of $20,000,000 at 102. What
effect
does this have on the Cash account?
(A.) Cash is not affected
(B.) Cash is increased by $20,400,000
(C.) Cash is increased by $20,000,000
(D.) Cash is decreased
3 Cash was used to purchase a building. How is this shown on the
statement of cash flows?
(A.) cash outflow from financing activities
(B.) cash outflow from investing activities
(C.) cash outflow from operating activities
(D.) cash inflow from investing activities
4 Our company issued common stock with a par value of $13.
As a result,
(A.) The market value on the date of issue was $13 per share
, (B.) The dividend for this stock is $13 per year
(C.) Stockholders' equity is decreased
(D.) The Common Stock account is increased by $13 times
the number of shares we issued.
5 Given:
Number of shares authorized 900,000
Number of shares issued 115,000
Number of shares outstanding 100,000
Net income for the year $70,000
Market price per share $10
How many treasury shares does the company have?
(A.) 785,000
(B.) 800,000
(C.) 15,000
(D.) some other amount
6 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
merchandise inventory decreases during the year?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
,7 The following numbers appear in the financial statements
Total assets, $200,000
Total Liabilities, $150,000
Total current assets, $30,000
Total current liabilities, $10,000
What is the amount of the current ratio?
(A.) 1.33
(B.) 0.33
(C.) 0.75
(D.) 3.00
8 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
we have depreciation expense on the income statement?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
9 Our company borrowed $350,000 by issuing a six-year installment note.
Where is this shown in the statement of cash flows?
(A.) Operating activities
(B.) Investing activities
(C.) Financing activities
(D.) nowhere
, 10 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
accounts payable decreases during the year?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
11 Our company uses the indirect method in preparing
the statement of cash flows. What do we do if
accounts receivable increased during the year?
(A.) add the amount to net income
(B.) subtract the amount from net income
(C.) show this in investing activities
(D.) show this in financing activities
12 What is true if bonds are issued when the market rate of interest is less than the
stated rate of interest?
(A.) The bonds will sell at as discount
(B.) The bonds will sell at their face value
(C.) The bonds will sell at a premium
(D.) The bonds cannot be sold
13 Which of the following is NOT shown on the statement of cash
