Question 1
When using the percentage of sales method of estimating uncollectible accounts, any existing balance in the Allowance for Uncollectible Accounts account is ignored as long as the account has a credit balance after adjustment.
True
False

Question 2
In counting the days of interest on a note, the day the money is borrowed is omitted, but the day it is paid back is counted.
True
False

Question 3
Credit card companies absorb the loss from uncollectible accounts.
True
False

Question 4
Both a company's credit terms and collection policies affect accounts receivable turnover.
True
False

Question 5
Generally, the older the account receivable, the lower the probability of collection.
True
False

Question 6
When a company collects sales taxes from customers, the amount of taxes collected represents a revenue.
True
False

Question 7
When a note is dishonored, the payee should debit Accounts Receivable for the maturity value of the note.
True
False

Question 8
When a note is dishonored, the payee will make an entry that includes a credit to:
A. Accounts Receivable.
B. Cash.
C. Notes Receivable.
D. Interest Payable.

Question 9
Maxwell issued to Prentice Co., a $2,400, 90-day, 12 percent note for the purchase of goods. The journal entry needed on Prentice Company's books at the time of sale is:
A. Notes Receivable 2,472
Sales 2,400
Interest Revenue 72

B. Notes Receivable 2,400
Sales 2,400

C. Notes Receivable 2,436
Sales 2,436

D. Notes Receivable 2,400
Interest Revenue 72
Sales 2,472

Question 10
In estimating uncollectible accounts for a period, the percentage of sales method is the simplest method.
True
False

Question 11
The interest rate on notes receivable and notes payable is generally stated in annual terms.
True
False

Question 12
When a note is dishonored, the payee will make an accounting entry that includes a debit to Notes Receivable.
True
False

Question 13
An example of a contingent liability is:
A. accounts payable.
B. federal excise tax payable.
C. salaries payable.
D. potential loss from a lawsuit.

Question 14
The preemptive right refers to a stockholder's right to receive dividends when they are declared by the board of directors.
True
False

Question 15
The date of record (of dividends) is the date established by the board of directors to determine who will receive a dividend.
True
False

Question 16
One of the most basic rights of the stockholder is the right to vote at stockholders' meetings in person or by proxy.
True
False

Question 17
The market value of a stock depends on a number of factors, including investors' expectations regarding the future performance of a corporation.
True
False

Question 18
When Retained Earnings is debited in a journal entry, a deficit exists.
True
False

Question 19
Which of the following statements regarding earnings per share is correct?
A. Earnings per share and book value per share are equal.
B. Earnings per share is calculated for all shares of stock that have been issued by the corporation.
C. Only one earnings per share figure will appear on the income statement for each period.
D. Earnings per share is equal to net income divided by the weighted-average number of common shares outstanding if the corporation has no preferred stock outstanding.

Question 20
Treasury stock is stock that:
A. is apportioned to cover special projects such as the construction of a new building.
B. has been issued but was reacquired by the corporation.
C. must be offered to existing stockholders first in amounts proportional to their shareholdings of the issuer's stock.
D. has never been issued.

Question 21
The price-earnings ratio is computed by dividing the current market price per share of common stock by earnings per share.
True
False

Question 22
The charter is the contract between the state and the incorporators which gives the corporation its separate legal existence.
True
False

Question 23
The three significant cash dividend dates are the date of declaration, date of record, and date of payment.
True
False

Question 24
Which of the following is a characteristic of a corporation?
A. Separate legal existence
B. Shareholders may enter into a contract on behalf of the corporation
C. Difficult transferability of ownership because of widely scattered ownership
D. Full liability of owners to corporate creditors

Question 25
The three significant cash dividend dates are (in order) the dates of:
A. declaration, record, and payment.
B. record, distribution, and payment.
C. declaration, record, and distribution.
D. declaration, distribution, and payment.

Question 26
In The Profit's A Stein Meats Receivables Video clip, Jamie, Marcus' Portfolio Manager, uncovers that Stein Meats owes how much in liabilities?
$500,000
$7.8 million
$4 million
$2 million

Question 27
In The Profit's A Stein Meats Receivables Video clip, it is easy to collect monies from customers who are past due.
True
False

Question 28
In The Profit's A Stein Meats Receivables Video clip, what is the main reason that Stein Meats is struggling financially?
They don't sell enough meat.
They extend credit to their customers and don't collect from them.
Employees are stealing.
They owe too much to the bank.

Question 29
In The Profit's A Stein Meats Receivables Video clip, how much money does Stein Meats have in the bank to pay their bills?
$30,000
$300,000
$500,000
$4 million

Question 30
In The Profit's A Stein Meats Receivables Video clip, how much revenue does Stein Meats do annually?
$18 million
$4 million
$50 million
$1 million