1. The date on which a liability is recorded for a dividend payment is the:
a. Date of declaration
b. Date of record
c. Ex-dividend date
d. Date of payment
e. Date of distribution
2. Which of the following types of stock may a corporation sell to the public?
a. Treasury
b. Preferred
c. Common
d. Both a and b
e. All of the above
3. Rufus Corporation manufactures and sells bicycles. During the year, Rufus sold bicycles to customers and collected $8,000,000 in cash. What type of classification is this transaction?
a. Operating activities
b. Investing activities
c. Financing activities
d. Significant non-cash transaction
e. None of the above
4. Rufus Corporation manufactures and sells bicycles. During the year, Rufus sold $500,000 worth of its $1 par value common stock to the public. What type of classification is this transaction?
a. Operating activities
b. Investing activities
c. Financing activities
d. Significant non-cash transaction
e. None of the above
5. Finlay Company reported net income of $925,000 last year. Included in that figure is a loss on the sale of equipment of $21,000 and depreciation expense of $32,000. In addition, accounts payable increased by $29,000 during the year. What amount of cash did this company generate from its operating activities?
a. $943,000
b. $965,000
c. $1,007,000
d. $949,000
e. $907,000
6. Each share of common stock is printed with the minimum amount an owner must leave in the business known as its:
a. Fair value
b. Par value
c. Current value
d. Market value
e. Historical value
7. Which of the following is not true concerning treasury stock?
a. Holding treasury stock causes a company's number of shares issued and number of shares outstanding to be different.
b. Dividends are not paid on treasury stock.
c. Treasury stock is a reduction to stockholders' equity.
d. A company might repurchase its own stock to lower its stock price.
e. Treasury stock is recorded at the cost of the stock on the date it was repurchased.
8. Olsen Company sells paper products to restaurants and stores across the country. Recently Olsen purchased a new machine for $100,000 by paying cash of $20,000 and signing a note payable for the remainder. How is this transaction reported on the statement of cash flows?
a. Financing activity - outflow of $100,000
b. Financing activity - outflow of $20,000
c. Operating activity - inflow of $20,000
d. Investing activity - outflow of $100,000
e. Investing activity - outflow of $20,000
9. A company has 200,000 shares of authorized common stock and 40,000 shares outstanding on January 1, Year One. The company issues 10,000 more shares of common stock on April 1 and another 25,000 shares on July 1 for a total of 75,000. The company had net income for Year One of $600,000. What was its earnings per share?
a. $8
b. $10
c. $12
d. $13
e. $7
10. Goins Company began the year with a notes payable balance of $29,000. During the year, Goins borrowed an additional $10,000 and repaid $3,000 of the original amount. It also paid interest of $2,000. Which of the following correctly reports the inflows and outflows from financing activities relating to notes payable?
a. Inflows: $10,000; Outflows: $3,000
b. Inflows: $12,000; Outflows: $3,000
c. Inflows: $10,000; Outflows: $5,000
d. Inflows: $12,000; Outflows: $5,000
e. Inflows: $10,000; Outflows: $2,000
11. Which of the following is a disadvantage of incorporation?
a. A corporation cannot sell capital stock to raise money.
b. The income of a corporation can be double taxed.
c. Owners of corporations are liable for the business' debts.
d. Corporations cease to exist when an owner passes away.
e. An owner must file for incorporation in every state in which it wishes to operate.
12. Lira Company has an income statement that shows cost of goods sold of $320,000, rent expense of $30,000, and salary expense of $90,000. During the year, prepaid rent went up $5,000, accounts payable went down $4,000, salary payable went up $3,000, and inventory went down $2,000. Which of the following is the cash paid for salaries?
a. $93,000
b. $87,000
c. $86,000
d. $90,000
e. $92,000
13. The number of shares which a company may sell over its life is its:
a. Authorized shares
b. Treasury shares
c. Common shares
d. Outstanding shares
e. Issued shares
14. Merlin Corporation reported revenue of $95,000 for 20X9. Accounts receivable on 1/1/X9 were $20,000 and accounts receivable on 12/31/X9 were $14,000. Which of the following would be the amount of cash Merlin collected from customers during 20X9?
a. $89,000
b. $95,000
c. $115,000
d. $81,000
e. $101,000
15. The income of Minion Corporation is taxed at a 40% rate. Dividends are taxed at a rate of 15%. During 20X7, Minion earned income of $100,000 and paid taxes on it. It distributed the remainder in its entirety to its owner. Once the owner has paid tax on the dividend, how much money remains?
a. $40,000
b. $6,000
c. $9,000
d. $34,000
e. $51,000