Question 1

Dolly's Best issued 200 shares of its $10 common stock in exchange for used packaging equipment with a fair market value of $2,400. The entry to record the acquisition of the equipment would include a
A. debit to Equipment for $2,000.
B. debit to Paid-In Capital in Excess of Par for $400.*******
C. credit to Common Stock for $2,400.
D. debit to Equipment for $2,400.

Question 2

Soy.com has 100 shares of $100, 6% cumulative nonparticipating preferred stock, and 1,000 shares of $10 par value common stock outstanding. The company paid $2,000 cash dividends, including one-year dividends in arrears to preferred stockholders. Preferred stockholders received
A. $1,200.
B. $2,000.*******
C. $182.
D. $600.

Question 4

The articles of incorporation are submitted by the incorporators to the _______ for approval.
A. IRS
B. Office of the Secretary of State
C. Securities and Exchange Commission
D. governor of the state******

Question 5

Stockholders' investment appears in
A. Paid-In Capital.
B. Owner's Equity.*******
C. Retained Earnings.
D. Cash.

Question 6

If preferred dividends are limited to the stated rate of dividend, the preferred stock is
A. noncumulative.
B. cumulative.
C. participating.*******
D. nonparticipating.

Question 7

Rhubarb Corporation's outstanding stock is 100 shares of $100, 11% cumulative nonparticipating preferred stock, and 2,000 shares of $12 par value common stock. Rhubarb paid $1,600 cash dividends during the year. Common stockholders received
A. $0.
B. $500.
C. $2,500.
D. $1,100.*******

Question 8

When stock is exchanged for noncash assets,
A. debit the asset for prior book value and credit Common Stock for cash received.*******
B. debit assets for market value and credit Common Stock for par value; if needed, credit Paid-In Capital in Excess of Par.
C. debit assets for market value and credit Common Stock for market value.
D. debit assets for par value and credit Common Stock for par value.

Question 9

The ownership of a corporation consists of the
A. governing body.
B. officers of the corporation.******
C. stockholders.
D. board of directors.

Question 10

Dividends in arrears occur when the company doesn't pay dividends to
A. cumulative preferred stockholders.
B. noncumulative preferred stockholders.******
C. participating preferred stockholders.
D. nonparticipating common stockholders.

Question 11

The Logan Company issued 140 shares of its $12 par value stock for $14 per share. The entry to record the receipt of cash and issuance of the stock would include a
A. debit to Cash for $1,680 and a credit to Common Stock for $1,680.
B. debit to Cash for $1,960.
C. credit to Common Stock for $1,960.
D. debit to Discount on Common Stock for $280.*******

Question 12

If a bond is issued at a premium, the effective interest rate is most likely _______ the contract interest rate.
A. higher than******
B. lower than
C. the same as
D. Answer can't be determined based on information given.

Question 13

The statement of cash flows provides information about all of the following except _______ activities.
A. organizing
B. investing
C. operating******
D. financing

Question 14

Transactions involving the purchase and sale of fixed assets would be considered _______ activities.
A. buying and selling******
B. financing
C. operating
D. investing

Question 15

If bonds are sold between interest payment dates, the amount of cash the issuer receives is
A. more than the market value of the bonds.
B. less than the market value of the bonds.****
C. equal to the market value of the bonds.
D. equal to the face value of the bonds.

Question 16

On April 1, Braintree Corporation issued 10%, ten-year, $300,000 bonds at 106. The effective interest rate for these bonds is
A. 10%.******
B. 9.43%.
C. 4.7%.
D. 5%.

Question 17

When a bond issued at face value is retired, what is the journal entry?
A. Debit Bond Interest Expense; credit Cash
B. Debit Bonds Payable; credit Cash
C. Debit Cash; credit Bonds Payable******
D. Debit Cash; credit Bond Interest Expense

Question 18

When using the indirect method, which of the following would be included in the net cash flows from operating activities section of a cash flow statement?
A. Sales of plant, property and equipment*******
B. Making loans and paying out interest
C. Payment of interest and expenses
D. Issuing bonds and notes

Question 19

Assume the following account balances immediately after an interest payment date:
Bonds Payable
$100,000
Premium on Bonds Payable
5,000
If the bonds are retired immediately at a total cost of $104,000, what is the journal entry to record this event?

A.*********
Cash
104,000
Loss on Bond Retirement
1,000
Premium on Bonds Payable
5,000
Bonds Payable
100,000

B.
Bonds Payable
100,000
Premium on Bonds Payable
5,000
Cash
104,000
Gain on Bond Retirement
1,000

C.
Bonds Payable
100,000
Loss on Bond Retirement
9,000
Premium on Bonds Payable
5,000
Cash
104,000

D. None of the above.