The Balance Sheet Format F3

25 Questions | By Amphib2007 | Updated: Mar 21, 2022 | Attempts: 402

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1.

Total equity is calculated by adding owner contributions and:
- A.
  
  Earnings
- B.
  
  Bankers
- C.
  
  Creditors
- D.
  
  Liabilities
2.

Lonnie has just purchased 50 shares of $3 par value stock from JML Corporation. He paid a total of $275 for the shares. How much will JML recognize as “Additional paid-in capital” from the sale?
- A.
  
  $275
- B.
  
  $0
- C.
  
  $125
- D.
  
  $150
3.

The ratio that is computed by taking total liabilities and dividing them by total assets is called the:
- A.
  
  Reinvested assets ratio
- B.
  
  Debt to equity ratio
- C.
  
  Quick ratio
- D.
  
  Debt ratio
4.

The balance sheet is also known as:
- A.
  
  Statement of financial condition
- B.
  
  Statement of financial position
- C.
  
  Statement of cash flows
- D.
  
  Answers a and b are both correct.
5.

The balance sheet format which places assets on the left side and liabilities and owners’ equity on the right is called the:
- A.
  
  Report form
- B.
  
  Correct form
- C.
  
  Bookkeeping form
- D.
  
  Account form
6.

The balance sheet format that is the most popular is the:
- A.
  
  Report form
- B.
  
  Account form
- C.
  
  Investor form
- D.
  
  No one balance sheet form is more popular than another.
7.

Which one of the following items is classified as a liability on the balance sheet?
- A.
  
  Cash
- B.
  
  Land
- C.
  
  Note payable
- D.
  
  Common stock
8.

A bond that is sold without a pledge of collateral is known as a(n):
- A.
  
  Commercial bond
- B.
  
  Debenture bond
- C.
  
  Consumer bond
- D.
  
  Indenture bond
9.

The balance sheet element identified as the residual interest in the assets of an entity that remains after deducting its liabilities is called:
- A.
  
  Equity
- B.
  
  Assets
- C.
  
  Cash flows
- D.
  
  Liabilities
10.

A company invests in a new building and equipment to manufacture a new product. In the statement of cash flows, this activity would be considered a(n):
- A.
  
  Expansion activity
- B.
  
  Operating activity
- C.
  
  Investing activity
- D.
  
  Financing activity
11.

The basic rules management uses to conduct the corporation’s business are called the:
- A.
  
  Articles of incorporation
- B.
  
  Annual report
- C.
  
  Corporate charter
- D.
  
  Corporate bylaws
12.

Total stockholders’ equity is a combination of __________ and ___________.
- A.
  
  Retained earnings; reinvested earnings
- B.
  
  Common stock; preferred stock
- C.
  
  Contributed capital; retained earnings
- D.
  
  Common stock; treasury stock
13.

You buy a used pickup truck for $10,000. You pay $3,500 in cash and borrow the rest of the money from a bank. Using the accounting equation, how much do you still owe for the truck?
- A.
  
  $3,500
- B.
  
  $6,500
- C.
  
  $0
- D.
  
  $10,000
14.

When deciding whether to purchase stock, the economic decision-making question that can be answered with certainty is:
- A.
  
  How much will I be paid?
- B.
  
  When will I be paid?
- C.
  
  Will I be paid?
- D.
  
  None of these questions can be answered with certainty.
15.

In the statement of cash flows, activities that are associated with a company’s borrowing of funds and amounts received from the sale of its own stock are called:
- A.
  
  Financing activities
- B.
  
  Operating activities
- C.
  
  Investing activities
- D.
  
  Continuing activities
16.

The balance sheet represents a “snapshot” of the assets, liabilities, and owners’ equity of a company for:
- A.
  
  One month
- B.
  
  One day
- C.
  
  One year
- D.
  
  Any time period of the accountant’s choosing
17.

A balance sheet must follow the accounting equation to stay in balance. There are two ways to present a balance sheet. When a balance sheet is shown in a vertical format, it is in the:
- A.
  
  Report form
- B.
  
  Correct form
- C.
  
  Investor form
- D.
  
  Account form
18.

The rate of interest printed on a bond that is used to calculate the bond’s interest payments is called the:
- A.
  
  Contract rate
- B.
  
  Coupon rate
- C.
  
  Effective rate
- D.
  
  Stated rate
19.

The cost of borrowing money is knows as:
- A.
  
  Principal
- B.
  
  Interest
- C.
  
  Time
- D.
  
  Rate
20.

Which right or benefit below is not a characteristic of preferred stock?
- A.
  
  Voting rights
- B.
  
  Preferred stockholders are not owners of the corporation
- C.
  
  Preferred stockholders receive their dividend before common stockholders
- D.
  
  If the corporation goes out of business, preferred stockholders receive their distribution of assets before common stockholders
21.

Par value:
- A.
  
  Has a great deal of meaning for common stockholders since dividends are often based on par value
- B.
  
  Is a requirement of any newly formed corporation issuing stock
- C.
  
  Is meaningless when issuing preferred stock because legally such stock can never have a par value
- D.
  
  May be important for preferred stock because dividends are often stated as a percentage of par value
22.

XYZ Industries has just declared a dividend on preferred stock. The stock has a par value of $100 and a stated dividend rate of 7%. If the company has 4,000 shares outstanding, the dividend per share will be:
- A.
  
  $70
- B.
  
  $2,800
- C.
  
  $100
- D.
  
  $7
23.

A balance sheet that has only one equity account that contains the owner's name in the title indicates that this firm is most likely a:
- A.
  
  Sole proprietorship
- B.
  
  Limited partnership
- C.
  
  Corporation
- D.
  
  Partnership
24.

Ratios cover four main areas of financial concern: profitability, efficiency, liquidity, and solvency. Ratios that look at how a company is financed and its prospects for making payments to creditors and owners are:
- A.
  
  Efficiency ratios
- B.
  
  Liquidity ratios
- C.
  
  Profitability ratios
- D.
  
  Solvency ratios
25.

The ownership interest in a company is known as:
- A.
  
  Net assets
- B.
  
  Net worth
- C.
  
  Equity
- D.
  
  All these answers are correct.