ACCT 211 Quiz 4 Accounting for Long-Term Liabilities, Reporting of Corporate solutions answers

ACCT 211 Quiz 4 Accounting for Long-Term Liabilities, Reporting of Corporate Activities and Cash Flow solutions answers 

 

Posting is the transfer of journal entry information to the ledger.

 

Cash paid for inventory is an operating activity.

 

The reporting of investing activities is identical under the direct method and indirect method.

 

The net cash amount provided by operating activities is identical under both the direct and indirect methods.

 

Information to prepare the statement of cash flows comes from three sources: (1) comparative balance sheets, (2) the current income statement, and (3) additional information.

 

When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

 

When preparing the operating activities section of the statement of cash flows using the indirect method, depreciation expense is subtracted from net income.

 

Stocks that pay large cash dividends on a regular basis are called:

 

All stock dividends are recorded at par value, so there would never be a credit to the paid-in capital in excess of par value account.

 

Payments on an installment note include the accrued interest expense plus part of the amount borrowed (the principal).

 

Bonds issued in the names and addresses of their holders are called:

 

Callable bonds reduce the bondholder's risk by requiring the issuer to set assets aside to repay the debt in a sinking fund.

 

The carrying (book) value of a bond at the time it is issued is always equal to its par value.

 

Accrued revenues at the end of one accounting period result in cash receipts in a future period.

 

Corporations are subject to income taxes and must estimate their income tax liability when preparing financial statements.

 

A gain or loss is recorded for exchanges of plant assets with commercial substance.

 

If the end of an accounting period occurs between the signing of a note payable and its maturity date, interest expense should not be accrued until the note is paid.

 

Debt guarantees are usually disclosed in the financial statement notes as a contingent liability

 

Which of the following events would cause a bank to reduce a depositor's account?

 

A company had total sales of $600,000, net sales of $550,000, and an average accounts receivable, net of $88,000. Its accounts receivable turnover equals:

 

Corporations are subject to income taxes and must estimate their income tax liability when preparing financial statements.

 

Accrued revenues at the end of one accounting period result in cash receipts in a future period.

 

The Merchandise Inventory account balance at the beginning of the current period is equal to the amount of ending Merchandise Inventory from the previous period.

 

The understatement of the ending inventory balance causes:

 

A company issues 8% bonds with a par value of $90,000 at par on January 1. The market rate on the date of issuance was 7%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bondholder(s) is:

 

On January 1, a company issues bonds dated January 1 with a par value of $740,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $719,000. The journal entry to record the first interest payment using straight-line amortization is:

 

Which interest rate column should be used from a present value or future value table for 8% interest compounded quarterly?

 

A company issued 7%, 15-year bonds with a par value of $480,000 that pay interest semiannually. The market rate on the date of issuance was 7%. The journal entry to record each semiannual interest payment is:

 

Adonis Corporation issued 10-year, 7% bonds with a par value of $160,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $171,906 in cash proceeds. Which of the following statements is true?

 

On January 1, Parson Freight Company issues 7.5%, 10-year bonds with a par value of $4,100,000. The bonds pay interest semiannually. The market rate of interest is 8.5% and the bond selling price was $3,821,402. The bond issuance should be recorded as:

 

A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is:

 

The carrying (book) value of a bond at the time it is issued is always equal to its par value.

 

Morgan Company issues 10%, 20-year bonds with a par value of $850,000 that pay interest semiannually. The amount paid to the bondholders for each semiannual interest payment is.

 

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 26,000 shares authorized, 12,600 shares issued, and 10,400 shares of common stock outstanding. The journal entry to record the dividend declaration is:

 

Callable bonds reduce the bondholder's risk by requiring the issuer to set assets aside to repay the debt in a sinking fund.

 

Payments on an installment note include the accrued interest expense plus part of the amount borrowed (the principal).

 

Bonds issued in the names and addresses of their holders are called:

 

Sinking fund bonds:

 

A corporation sold 19,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

 

Mayan Company had net income of $35,670. The weighted-average common shares outstanding were 8,700. The company has no preferred stock. The company's basic earnings per share is:

 

A company issued 70 shares of $100 par value common stock for $8,500 cash. The journal entry to record the issuance is:

 

Stocks that pay large cash dividends on a regular basis are called:

 

All stock dividends are recorded at par value, so there would never be a credit to the paid-in capital in excess of par value account.

 

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share. The entry to record this transaction would be:

 

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

 

Jordan’s net income for the year ended December 31, Year 2 was $187,000. Information from Jordan’s comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.

 

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

 

A machine with a cost of $131,000 and accumulated depreciation of $86,000 is sold for $50,500 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

 

A machine with a cost of $140,000, accumulated depreciation of $90,000, and current year depreciation expense of $19,500 is sold for $44,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

 

A company's income statement showed the following: net income, $140,000 and depreciation expense, $34,800. The company's current assets and current liabilities showed the following changes: accounts receivable decreased $11,000; merchandise inventory increased $21,200; and accounts payable increased $5,000. Calculate the net cash provided or used by operating activities.

 

In preparing a company's statement of cash flows using the indirect method, the following information is available:

Net cash provided by operating activities was:

 

When preparing the operating activities section of the statement of cash flows using the indirect method, depreciation expense is subtracted from net income.

 

A machine with a cost of $130,000, accumulated depreciation of $85,000, and current year depreciation expense of $17,000 is sold for $40,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

 

When preparing a statement of cash flows using the indirect method, which of the following is correct?

 

When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

 

The payment of cash dividends never changes the balance of retained earnings.

 

The net cash amount provided by operating activities is identical under both the direct and indirect methods.

 

Information to prepare the statement of cash flows comes from three sources: (1) comparative balance sheets, (2) the current income statement, and (3) additional information.

 

Russell Company collected cash of $400 immediately after providing consulting services to a client. Which of the following general journal entries will Russell Company make to record this transaction?

 

Cash paid for inventory is an operating activity.

 

The reporting of investing activities is identical under the direct method and indirect method.

 

Gloria Catering provided $1,000 of catering services and billed its client for the amount owed. Determine the general journal entry that Gloria Catering will make to record this transaction.

 

A company had $304,000 of accounts payable on September 30 and $265,000 on October 31. If total purchases on credit during October were $562,000, then the company paid $601,000 cash on accounts payable during October.

 

Posting is the transfer of journal entry information to the ledger.

 

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

 

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

 

At year-end, a trial balance showed total credits exceeding total debits by $5,450. This difference could have been caused by: