ACCT 6272 EXAM Part 2, 20 Questions. NEED IN 3 HOURS!

Question 21

  1. Assume the following shares outstanding:
    Preferred stock, 6%, $50 par value, cumulative, 1,000 shares with dividends in
    arrears 3 years, for 2016, 2017, and 2018. Common stock, $100 par value, 2,000
    shares. Total dividends declared in 2019 were $50,000. The total amount of
    dividends to which common stockholders are entitled is

$62,000.

$50,000.

$45,000.

$38,000.

1.5 points  

Question 22

  1. On December 15, 2013, the board of directors of Cross Corporation declared a cash dividend, payable on January 8, 2014 of $.80 per share on the 2,000,000 common shares outstanding. On December 15, 2013, Cross Corporation should

not prepare a journal entry because the event had no effect on the corporation’s financial position until 2014.

decrease retained earnings $1.6 million and increase expenses $1.6 million.

decrease retained earnings $1.6 million and  increase liabilities by $1.6 million.

decrease cash $1.6 million and decrease retained earnings $1.6 million.

1.5 points  

Question 23

  1. A company reported total stockholders’ equity of $340,000 on its balance sheet dated December 31, 2014. During the year ended December 31, 2015, the company reported net income of $40,000, declared and paid a cash dividend of $8,000, declared and distributed a 10% stock dividend with a $10,000 total market value, purchased treasury stock costing $12,000, and issued additional common stock for $60,000. What is total stockholders’ equity as of December 31, 2015?

$432,000.

$410,000.

$444,000.

$420,000.

1.5 points  

Question 24

  1. Shares of stock eligible for dividends are:

the number of shares of authorized.

the number of shares issued.

the number of shares outstanding.

the number of treasury shares.

1.5 points  

Question 25

  1. When a stock split is executed,

retained earnings is decreased and contributed capital is increased.

capital in excess of par value is decreased and retained earnings is increased.

the number of shares outstanding increases while the par value of each share decreases.

the number of shares outstanding decreases while the par value of each share increases.

1.5 points  

Question 26

  1. Which of the following is NOT a right or preference associated with preferred stock?

The right to vote

First claim to dividends

Prefepreference to corporate assets in case of liquidation

To rrreceive dividends in arrears before common stockholders receive dividends if the preferred dividends are cumulative

1.5 points  

Question 27

  1. The effect of a stock dividend is to

Decrease total assets and total stockholders’ equity

Decrease retained earnings and increase common stock

Decrease total assets and total liabilities

Increase par value per share of common stock

1.5 points  

Question 28

  1. Bison Corp. purchased 15,000 shares of its $2 par common stock at a cost of $12 per share on April 30, 2006. The stock was originally issued at $10 per share. The entry to record the purchase of the stock should include a debit to

Common Stock for $30,000.

Treasury Stock for $30,000.

Common Stock for $180,000.

Treasury Stock for $180,000.

1.5 points  

Question 29

  1. In 2012, MILL Corporation borrowed $90,000, paid dividends of $26,000, issued $12,000 shares of stock for $20 per share, purchased land for $25,000 and received dividends of $10,000. Net income was $120,000 and depreciation for the year totaled $11,000. Accounts receivable increased by $10,000. How much should be reported as net cash provided by operating activities by the indirect method?

$121,000

$115,000

$131,000

$420,000

1.5 points  

Question 30

  1. Activities that obtain cash needed to launch and sustain a company are

Financing activities.

Income activities

Marketing activities

Investing activities

1.5 points  

Question 31

  1. A cash inflow from financing activities includes

proceeds from selling investments in equity securities of another company.

proceeds from selling equipment.

proceeds from issuance of bonds payable.

receipt of interest payments.

1.5 points  

Question 32

  1. Which of the following statements about cash flows from operating activities, in a statement of cash flows prepared under the indirect method, is correct?

An increase in prepaid rent would be subtracted from net income.

An increase in salaries payable would be subtracted from net income.

An increase in cash would be added to net income.

Depreciation expense would be subtracted from net income.

1.5 points  

Question 33

  1. Darwin Company, a manufacturer, has provided the following information pertaining to its recent year of operation:
     
    • Net income, $200,000
    • Accounts receivable increased $18,000
    • Prepaid insurance increased $7,000
    • Depreciation expense was $25,000
    • Loss on sale of a building was $22,000
    • Wages payable increased $14,000
    • Unearned revenue decreased $21,000

    Using the indirect method, how much was Darwin’s net cash provided by operating activities?

$227,000.

$215,000.

$171,000.

$257,000.

1.5 points  

Question 34

  1. Canadian Beer reported equipment sold for $222 million cash and new equipment purchased $1,515 million cash. The equipment sold had a net book value of $150 million. Cash flow from investing activities would show.

An inflow of $222 million and outflow of $1,515 million.

An inflow of $222 million and outflow of $150 million

Cash paid for equipment of $1,293 million

A net outflow of $1,365 million

1.5 points  

Question 35

  1. KAJ Incorporated purchased a machine costing $100,000 by paying $20,000 and
    signing an $80,000 note payable. How would this transaction be reported within the cash flow from investing activities section of the cash flow statement?

An outflow of $20,000.

An outflow of $80,000.

An outflow of $100,000.

It would have no effect.

1.5 points  

Question 36

  1. Which of the following transactions is not a direct use of cash?

Acquisition of inventory for cash.

Exchanges of bonds payable for land.

Purchase of treasury stock with cash.

Cash dividend paid.

1.5 points  

Question 37

  1. Betty Corporation reported the following information for 2010:

Net income

$10,000

Total assets

16,000

Total stockholders’ equity

8,000
  1. What is Betty’s debt-to-equity ratio?

2

1.25

1.0

3.0

1.5 points  

Question 38

  1. Which of the following events will likely increase a company’s ROA?

Increase spending on research and development.

Increase sales price by 10% and gross profit by $50,000

Increase CEO compensation

Issue two million shares of common stock to the public

1.5 points  

Question 39

  1. Thomas Company had income before interest and taxes of $120,000. Interest expense for the period was $17,000 and income taxes amounted to $28,500. The average stockholders’ equity was $680,000. Thomas’ return on equity (ROE) is closest to:

17.56%

15.15%

13.46%

10.96%

1.5 points  

Question 40

  1. Agnes Company reported the following data:

Quick assets

$55,000

Current assets

150,000

Total liabilities

300,000

Average net receivables

12,600

Beginning inventory

38,000

Long-term liabilities

200,000

Net credit sales

126,000

Cost of goods sold

84,000

Ending inventory

46,000
  1. What was the current ratio?

0.5

1.5

2.5

0.75

ACCT 6272 EXAM Part 2.docx