Balance Sheet and Cash

Topics: Balance sheet, Generally Accepted Accounting Principles, Stock Pages: 10 (1847 words) Published: August 28, 2013
2006 Summer ACCT102 L1 Quiz 2

NAME: STUDENT ID: Mark: Multiple Choice Questions (10 marks):
1. On December 1, Martin Company signed a $5,000 3-month 6% note payable, with the principle plus interest due on March 1 of the following year. What amount of interest expense is accrued at December 31 on the note? ( B ) A)$0

E) $300

2. During 2000, Tito Corporation had revenues of $99,000 and expenses of $64,000. Dividends of $14,000 were paid during the year and additional stock was issued for $10,700. If total assets and total liabilities on January 1, 2000, were $65,000 and $28,000, respectively, how much is owners' equity on December 31, 2000? ( A ) A. $68,700

B. $54,700
C. $40,700
D. $31,700
E. $32,700

3. A company sold $12,000 worth of computers with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: ( C ) A)Consider the warranty expense a remote liability and not disclose since the rate is only 2%. B)Recognize warranty expense at the time the warranty work is performed. C)Recognize warranty expense and liability in the year of the sale. D)Consider the warranty expense a prepaid expense.

E) Recognize warranty liability when the company purchases the computers.

4.The statement of cash flows is: ( C )

A)Another name for the statement of financial position. B)A financial statement that presents information about changes in equity during a period. C)A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities. D)A financial statement that lists the types and amounts of assets, liabilities, and equity of a business on a specific date. E) A financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period.

5. A short-term note payable: ( A )
A)Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer. B)Is a contingent liability.

C)Is an estimated liability.
D)Is not a liability until the due date.
E)Cannot be used to extend the payment period for an account payable.

6. Which of the following items is reported on the statement of cash flows under financing activities?

A)Declaration of a cash dividend.
B)Payment of a cash dividend.
C)Declaration of a stock dividend.
D)Payment of a stock dividend.
E)Stock split.

Answer: B

7. Long-term investments include:

A)Investments in bonds and stocks that are not marketable. B)Investments in marketable stocks that are intended to be converted into cash in the short-term. C)Investments in marketable bonds that are intended to be converted into cash in the short-term. D)Only investments readily convertible to cash.

E)Investments intended to be converted to cash within one year.

Answer: A

8. Adidas issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is true?

A)Adidas must pay $200,000 at maturity and no interest payments. B)Adidas must pay $206,948 at maturity and no interest payments. C)Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each. D)Adidas must pay $206,948 at maturity plus...
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