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Understand Stockholders’ Equity: Classes of Capital Stock, be able to prepare the Stockholders’ EquityProperty, Plants, and Equipment / PPE (Capital Assets; ²ixed Assets). Understand journal entries for PPE and accumulated deprecia±on.

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Answers to the 30 multiple choice questions2 points each, 30 questions, for 60 point total
 Points
1 < please record 1)Which of the following represents the largest number of common shares?
2    answer herea.Treasury shares
3 b.Issued shares
4 c.Outstanding shares
5 d.Authorized shares
6 
7 2)Which of the following characteristics is considered to be an advantage of the corporate form of organization?
8 a.very low regulation
9 b.limited liability
10 c.The absence of a perpetual existence
11 < please record d.personal liability
12    answer here
13 3)The following data is available for Blaine Corporation at December 31, 2013:
14 Common stock, par $10 (authorized 25,000 shares)$200,000
15 Treasury Stock (at cost $15 per share)900
16 Based on the data, how many shares of common stock are outstanding?
17 a.25,000
18 b.20,000
19 c.24,940
20 d.19,940
21 
22 < please record 4)Treasury stock is
23    answer herea.stock issued by the U.S. Treasury Department.
24 b.stock purchased by a corporation and held as an investment in its treasury.
25 c.corporate stock issued by the treasurer of a company.
26 d.a corporation’s own stock which has been reacquired but not retired.
27 
28 5)Treasury stock should be reported in the financial statements of a corporation as a(n)
29 < please record a.investment.
30    answer hereb.liability.
c.deduction from total paid-in capital.
d.deduction from total paid-in capital and retained earnings.
6)Bonds payable should be disclosed on the balance sheet.
a.At their face value minus any unamortized premiums.
b.At their face value plus any unamortized premiums.
c.At their maturity value.
d.At their face value.
7)When the contract interest rate for a bond exceeds the effective interest rate of the bond, then:
a.The price of the bond will be equal to the future cash flow associated with the bond.
b.The bond will be issued at a premium.
c.The bond will be issued at a discout.
d.The face value of the bond will fluctuate over its life.
8)The date on which a cash dividend becomes a binding legal obligation is on the
a.declaration date.
b.date of record.
c.payment date.
d.last day of the fiscal year-end.
9)Which of the following categories/methods would be used to account for an investment, where the intent of the investment was primarily for short-term profits?
a.Trading securities
b.Available-for-sale securities
c.Equity method
d.Held to maturity securities
10)Which of the following is not a significant date with respect to dividends?
a.The declaration date
b.The incorporation date
c.The record date
d.The payment date
11)Dividends Payable is classified as a
a.long-term liability.
b.contra stockholders’ equity account to Retained Earnings.
c.current liability.
d.stockholders’ equity account.
12)The trading securities owned by a company are:
a.reported on the balance sheet as a contra-equity account.
b.reported on the balance sheet as a current asset.
c.reported on the balance sheet as a reduction of liabilities.
d.reported on the balance sheet as a noncurrent asset.
13)Which of the following are also called trade receivables?
a.Accounts receivable
b.Other receivables
c.Advances to employees
d.Income taxes refundable
14)Which of the following is not reported under additional paid-in capital?
(a)Paid-in capital in excess of par value.
(b)Treasury Stock
(c)Paid-in capital in excess of stated value.
(d)Paid-in capital from treasury stock.
15)Depreciation is a process of:
(a)valuation.
(b)cost allocation.
(c)cash accumulation.
(d)appraisal.
16)All of the following factors in computing depreciation are estimates except
a.cost.
b.residual value.
c.salvage value.
d.useful life.
17)The maturity value of a $60,000, 10%, 60-day note receivable dated July 3 is
a.$60,000
b.$61,000
c.$66,000
d.$70,000
18)The book value of an asset is equal to the
a.asset’s fair value less its historical cost.
b.blue book value relied on by secondary markets.
c.replacement cost of the asset.
d.asset’s cost less accumulated depreciation.
19)In computing depreciation, salvage value is
a.the fair value of a plant asset on the date of acquisition.
b.subtracted from accumulated depreciation to determine the plant asset’s depreciable cost.
c.an estimate of a plant asset’s value at the end of its useful life.
d.ignored in all the depreciation methods.
20)The best managed companies will have
a.no uncollectible accounts.
b.a very strict credit policy.
c.a very lenient credit policy.
d.some accounts that will prove to be uncollectible.
21)The units-of-activity method is generally not suitable for
a.airplanes.
b.buildings.
c.delivery equipment.
d.factory machinery.
22)Bad Debts Expense is considered
a.an avoidable cost in doing business on a credit basis.
b.an internal control weakness.
c.a necessary risk of doing business on a credit basis.
d.avoidable unless there is a recession.
23)A gain or loss on disposal of a plant asset is determined by comparing the
a.replacement cost of the asset with the asset’s original cost.
b.book value of the asset with the asset’s original cost.
c.original cost of the asset with the proceeds received from its sale.
d.book value of the asset with the proceeds received from its sale.
24)Receivables might be sold to
a.  lengthen the cash-to-cash operating cycle.
b  take advantage of deep discounts on the cash realizable value of receivables.
c.  generate cash quickly.
d.  finance companies at an amount greater than cash realizable value.
25)An asset which costs $29,800 and has accumulated depreciation of $8,000 is sold for $21,600. What amount of gain of loss will be recognized when the asset is sold?
a.A gain of $200.
b.A loss of $200.
c.A loss of $8,200.
d.A gain of $8,200.
26)On a balance sheet, natural resources may be described more specifically as all of the following except
a.land improvements.
b.mineral deposits.
c.oil reserves.
d.timberlands.
27)Depletion is
a.a decrease in market value of natural resources.
b.the amount of spoilage that occurs when natural resources are extracted.
c.the allocation of the cost of natural resources to expense.
d.the method used to record unsuccessful patents
28)An item is considered material if
a.it doesn’t costs a lot of money.
b.it is of a tangible good intended for re-sale.
c.it is likely to influence the decision of an investor or creditor.
d. the cost of reporting the item is greater than its benefits.
29)Identify the item below where the terms are not related.
a.Equipment-depreciation
b.Franchise-depreciation
c.Copyright-amortization
d.Oil well-depletion
30)From an internal control standpoint, the asset most susceptible to improper diversion and use is
a.prepaid insurance.
b.cash.
c.Equipment
d.Investments
 
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