Saint leo mba560 week 4 multiple choice (Feb 01, 2014)

1.Which of the following would
notbe classified as a current asset? (Points : 2)

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2. 2.In accounting for a contingent liability, if the likelihood of
the obligation is possible, a company must: (Points : 2)

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3. 3.Long-term debt would likely be used for which of the
following? (Points : 2)

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4. 4.In accounting for a contingent liability, if the likelihood of
the obligation is probable but the amount cannot be estimated, a company
must: (Points : 2)

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5. 5.When does warranty cost appear on the statement of cash flows?
(Points : 2)

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6. 6.In accounting for a contingent liability, if the likelihood of
the obligation is probable and the amount can be estimated, a company must:
(Points : 2)

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7. 7.On January 1, 2010, Hays Corporation arranged a $3,000 line of
credit with the Barnett Bank. It agreed to accept the bank’s offer of 1%
above the prime rate with interest payments on December 31 of each year.
All borrowings and payments on principal are to take place on January 1 of
each year. Hays began its loan transactions with Barnett Bank by borrowing
$1,000 on January 1, 2010. Hays paid the first year’s interest payment on
December 31, 2010. Barnett Bank’s prime rate was 4 % for 2010. Which of the
following answers shows the effect of this event on the financial
statements?

(Points
: 2)

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8. 8.The Halogen Corporation issued a 5-year note payable on
January 1, 2010 for $2,500. The interest rate is 5% and the annual payment
of $578, due each December 31, includes both interest and principal. Which
of the following correctly shows the effects of the December 31, 2011,
payment?

(Points
: 2)

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9. 9.A contingent liability is: (Points : 2)

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10. 10.Quayle Company has been sued by a customer who claims injury
from use of Quayle’s product. The company’s lawyers and a consultant
believe the likelihood of a judgment against Quayle is remote. What should
Quayle do to account for this potential liability? (Points : 2)

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11. 11.Reissuance of treasury stock for cash is what kind of
transaction? (Points : 2)

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12. 12.Which of the following entities would have a “Paid-in
Capital in Excess” account in the equity section of the balance sheet?
(Points : 2)

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13. 13.The term “Retained Earnings” is best explained by
which of the following statements? (Points : 2)

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14. 14.Which form of business organization is established as a
separate legal entity from its owners? (Points : 2)

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15. 15.When a company purchases treasury stock: (Points : 2)

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16. 16.Mitchell Company was authorized to issue 50,000 shares of
common stock. The company issued 27,000 shares of stock and later purchased
5,000 shares of treasury stock. The number of outstanding shares of common
stock is: (Points : 2)

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17. 17.Flynn Company issued 2,000 shares of $10 par value common
stock at a market price of $16. As a result of this accounting event, total
paid-in capital would: (Points : 2)

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18. 18.Madison Company paid dividends of $3,000, $6,000, and
$10,000 during 2008, 2009, and 2010 respectively. The company had 500
shares of preferred stock outstanding with a $10 per share cumulative
dividend. The amount of dividends received by the common shareholders
during 2010 would be: (Points : 2)

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19. 19.Which of the following is a reason why a corporation may
choose not to pay cash dividends? (Points : 2)

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20. 20.Grant Corporation declared a 2-for-1 stock split when it had
12,000 shares of $5 par value common stock outstanding. If the market price
of the stock had been $20 a share before the split, the par value, number
of shares, and approximate market value after the split would be:

(Points
: 2)