Accounting Practice Exam (4) - Part III

16 Questions | Total Attempts: 37

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Accounting Quizzes & Trivia

Again, Ms Sherry Ross at TxState prepared this! :)


Questions and Answers
  • 1. 
    Which one of the following would not be considered an advantage of the corporate form of organization?
    • A. 

      Limited liability of owners

    • B. 

      Separate legal existence

    • C. 

      Continuous life

    • D. 

      Government regulation

  • 2. 
    A corporation has the following account balances: Common stock, $1par value, $30,000; Paid-in Capital in Excess of Par Value, $700,000.  Based on this information, the
    • A. 

      Legal capital is $730,000.

    • B. 

      Number of shares issued are 30,000.

    • C. 

      Number of shares outstanding are 730,000

    • D. 

      Average price per share issued is $2.43

  • 3. 
    If Wayne Company issues 2,000 shares of $5 par value common stock for $160,000, the account
    • A. 

      Common Stock will be credited for $160,000

    • B. 

      Paid-In Capital in Excess of Par Value will be credited for $10,000

    • C. 

      Paid-In Capital in Excess of Par Value will be credited for $150,000

    • D. 

      Cash will be debited for $150,000

  • 4. 
    Which of the following represents the largest number of common shares?
    • A. 

      Treasury shares

    • B. 

      Issued shares

    • C. 

      Outstanding shares

    • D. 

      Authorized shares

  • 5. 
    The acquisition of treasury stock by a corporation
    • A. 

      Increases its total assets and total stockholders' equity

    • B. 

      Decreases its total assets and total stockholders' equity

    • C. 

      Has no effect on total assets and total stockholders' equity

    • D. 

      Requires that a gain or loss be recognized on the income statement

  • 6. 
    Which of the following is not a right or preference associated with preferred stock?
    • A. 

      The right to vote

    • B. 

      First claim to dividends

    • C. 

      Preference to corporate assets in case of liquidation

    • D. 

      To receive dividends in arrears before common stockholders receive dividends

  • 7. 
    The effect of the declaration of a cash dividend by the board of directors is to Increase / Decrease
    • A. 

      Stockholders' equity / Assets

    • B. 

      Assets / Liabilities

    • C. 

      Liabilities / Stockholders' equity

    • D. 

      Liabilities / Assets

  • 8. 
    The effect of a stock dividend is to 
    • A. 

      Decrease total assets and stockholders' equity

    • B. 

      Change the composition of stockholders' equity

    • C. 

      Decrease total assets and total liabilities

    • D. 

      Increase the book value per share of common stock

  • 9. 
    Stock dividends and stock splits have the following effects on retained earnings:         Stock Splits    Stock Dividends
    • A. 

      Increase / No Change

    • B. 

      No change / Decrease

    • C. 

      Decrease / Decrease

    • D. 

      No Change / No change

  • 10. 
    The acquisition of land by issuing common stock is
    • A. 

      A noncash transaction which is not reported in the body of a statement of cash flows

    • B. 

      A cash transaction and would be reported in the body of a statement of cash flows.

    • C. 

      A noncash transaction and would be reported in the body of a statement of cash flows.

    • D. 

      Only reported if the statement of cash flows is prepared using the direct method.

  • 11. 
    Financing activities involved
    • A. 

      Lending money

    • B. 

      Acquiring investments

    • C. 

      Issuing debt

    • D. 

      Acquiring long-lived assets

  • 12. 
    Investing activities include
    • A. 

      Collecting cash on loans made

    • B. 

      Obtaining cash creditors

    • C. 

      Obtaining capital from owners

    • D. 

      Repaying money previously borrowed

  • 13. 
    Meyer Company reported net income of $40,000 for the year.  During the year, accounts receivable increased by $14,000, accounts payable decreased by $6,000 and depreciation expense of $10,000 was recorded. Net cash provided by operating activities for the year is
    • A. 

      $30,000

    • B. 

      $70,000

    • C. 

      $38,000

    • D. 

      $40,000

  • 14. 
    Which of the following would be subtracted from net income using the indirect method?
    • A. 

      Depreciation expense

    • B. 

      An increase in accounts receivable

    • C. 

      An increase in accounts payable

    • D. 

      A decrease in prepaid expenses

  • 15. 
    In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as
    • A. 

      A subtraction from net income

    • B. 

      An addition to net income

    • C. 

      An addition to cash flow from investing activities

    • D. 

      A subtraction from cash flow from investing activities

  • 16. 
    A law firm received $2,000 cash for legal services to be rendered in the future.  The full amount was credited to the liability account Unearned Service Revenue.  If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause
    • A. 

      Expenses to be overstated

    • B. 

      Net income to be overstated

    • C. 

      Liabilities to be understated

    • D. 

      Revenues to be understated