Multiple choice questions on balance sheet and financial ratios.
1.The term "receivables" refers to
a.amounts due from individuals or companies.
b.merchandise to be collected from individuals or companies.
c.cash to be paid to creditors.
d.cash to be paid to debtors.
2.Ratios are used as tools in financial analysis
a.instead of horizontal and vertical analyses.
b.because they can provide information that may not be apparent from inspection of the individual components of the financial statements.
c.because even single ratios by themselves are quite meaningful.
d.because they are prescribed by GAAP.
3.The debt to total assets ratio measures the percentage of the total assets provided by creditors.
4.Dividends may be declared and paid in cash or stock.
5.A detailed stockholders\' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.
6.Which one of the following would not be considered an advantage of the corporate form of organization?
a.Limited liability of stockholders
b.Separate legal existence
c.Continuous life
d.Government regulation
7.Which of the following factors does not affect the initial market price of a stock?
a.The company\'s anticipated future earnings
b.The par value of the stock
c.The current state of the economy
d.The expected dividend rate per share
8.Specialty Packaging Corporation began business in 2007 by issuing 20,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2007 balance sheet, Specialty Packaging would report
a.Common Stock of $200,000.
b.Common Stock of $100,000.
c.Common Stock of $160,000.
d.Paid-in Capital of $150,000.
9.Current liabilities are due
a.but not receivable for more than one year.
b.but not payable for more than one year.
c.and receivable within one year.
d.and payable within one year.
10.In a recent year Dillon Corporation had net income of $130,000, interest expense of $20,000, and tax expense of $30,000. What was Dillon Corporation\'s times interest earned ratio for the year?
a. 6.5
b.7.5
c.8
d.9