1. The cost of a product warranty should be included as an expense in the (Points : 2)

• period the cash is collected for a product sold on account.
• future period when the cost of repairing the product is paid.
• period of the sale of the product.
• future period when the product is repaired or replaced.

2. The market interest rate related to a bond is also called the

• stated interest rate.
• effective interest rate.
• contract interest rate.
• straight-line rate.

3. Which statement below is NOT a reason for a corporation to buy back its own stock?

• Resale to employees
• Bonus to employees
• For supporting the market price of the stock
• To increase the shares outstanding

4. Payroll taxes levied against employees become liabilities

• the first of the following month.
• at the time the liability for the employee's wages is paid.
• when earned by the employee.
• at the end of an accounting period.

5. The primary purpose of a stock split is to

• increase paid-in capital.
• reduce the market price of the stock per share.
• increase the market price of the stock per share.
• increase retained earnings.

6. Stockholders' equity

• is usually equal to cash on hand.
• includes paid-in capital and liabilities.
• includes retained earnings and paid-in capital.
• is shown on the income statement.

7. Most employers are required to withhold from employees for

• both federal and state unemployment compensation.
• only federal unemployment compensation tax.
• only federal income tax.
• only state unemployment compensation tax.

8. If a corporation issues only one class of stock, it is called

• common stock.
• treasury stock.
• no-par stock.
• preferred stock.

9. Gross earnings for a payroll period less payroll deductions are referred to as

• overtime pay.
• bonus pay.
• gross pay.
• take-home pay.

10. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

• 5,000
• 35,000
• 45,000
• 55,000