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Accounting/Finance

1)In a statement of cash flow, the term cash includes:
A) only money on deposit in bank accounts(B)on bank accounts and cash on hand(C) bank accounts, cash on hand, and cash equivalents(D) bank accounts, cash on hand, and cash equivalents and marketable securities classified on current assets

2) The ownership of common stock in a corporation usually carries the following rights:
A)To vote for directors (B) To declare dividends (C) To share in a distribution of assets if the corporation is to be liquidate (D) both a and c

3)If the current assets are $90,000 and the current liabilities are $30,000 working capital will be
A)33.3% (B) 3:1 (C) $60,000 (D) $120,000

Carlyle, Co. had the following transaction during the month of August,2004
-Cash received from the bank loans was $5,000
-Dividends of $2,500 were paid to stockholders in cash.
-Revenues earned and received in cash amounted to $9,500
-Expenses incurred and paid were $7,000

4) Refer to the above data .What amount of net income will be reported on an income statement for the month of August, 2004?
A) $5,000 (B) $2,500 (C) $0 (D) $9,500

5) The field of accounting may best be describe as:
A) Recording the financial transactions of an economics entity.(B) Develop information in conformity with generally accepted accounting principle(C) The art of interpreting, measuring and describing economic activity(D) Developing the information required for the preparation of income tax return

During 2006, the cash flows related to Dodge Data Inc;s lending and borrowing activities are summarized as the follows:
Cash lent to borrowers..........................................$85,000
Payment to retire bonds payable...............................$175,000
Proceeds from borrowing at bank (note Payment) .........$105,000
Interest received from borrowers..............................$15,000
Interest payment made on bonds payable..................$20,000

6) Refer to above data .On the basis of the above information alone, what is Dodge data's net cash flow financing activities
A)$70,000 net cash used for financing activities(B) )$260,000 net cash used for financing activities (C) )$155,000 net cash used for financing activities(D )$245,000 net cash used for financing activities

8) The term accumulated depreciation, as used in accounting, is best defined as:
A) The portion of a plant asset recognized as expense since the asset was acquired(B) Funds (or cash) set aside to replace the assets being depreciation (C) Earning retained in business that will be used to purchase another asset when the present assets is depreciated.(D)An expense of doing business

9) The basic purpose of offering customer cash discount such as 2/10,n/30 is to:
A) Increase sales (B) reduce sales (C) Speed up collection of accounts receivable(D) Focus managements attention upon customers that fail to take advantage of all available cash discount

Shown below are selected data from the balance sheets of Available auto Parts, a retail store (collar amounts are in the thousand):
Cash.....................................................$75
Accounts received ...................................$275
Inventory..............................................$300
Total assets............................................$1,000
Current Liabilities....................................$250
Non Current Liabilities..............................$200

10) Refer to above data: the quick ratio is:
A) 5% (B) 1.4 to 1 (C) 20% (D) some other amount

11) Refer to the data above ,Working capital amounts to:
A) $400 (B) $350 (C) $575 (D) Some other amount

12) Refer to the above data. The current ratio is:
A)1.2 to 1 (B) less than 2 to 1 but not 1.2 to 1 (C) 2.6 to 1 (D) More than 2 to 1, but not 2.6 to 1

13) Concept of materiality :
A) Treats as material only those items that are greater than 2% or 3% of net income(B) Justifies ignoring the matching principle or the realization principle in certain circumstances (C) Affects only items reported income statement(D) Results in financial statement that are less useful to decision marker because many details have been omitted.

14) Large stock dividends tend to:
A) Increase stock prices(B) Have no effect upon stock prices(C) keep stock prices down (D) describe total assets

15) Which of the following statements regarding liquidity and profitability is not true
A) If a business is unable to pay its debits as they come due, it is operating unprofitably(B) A business may be liquid, yet operate unprofitably for several years (C) A business may operate profitably, yet unable to meet its obligations (D) In order to survive in the long run, a business must both remain liquid and operate profitably
Shown below is information relating to the stockholders' equity of Amsterdam Corporation as of December 31,2005:

8% cumulative preferred stock,100 par 10,000
Shares authorized, 6,000 shares issue ......................$600,000
Common Stock, $5 par, 500,000 shares authorized.300,000
Shares issued and outstanding ........................1,500,000
Additional paid in capital; preferred stock..........60,000
Additional paid in capital; common stock...........1,600,000
Retain earnings..........................................790,000

Dividends have been declared and paid for 2005

16) Refer to the above data. The average issues price per share of Amsterdam's preferred stock was
A)$112 (B) $100 (C)$110 (D) $66

17) Refer to the data above . The total amount of Amsterdam's paid in capital at December 31,2005 is:
A) $2,100,000 (B) $790,000 (C) $3,760,000 (D)1,660,000

18) A company had 120,000 shares of common stock outstanding on January 1, and then sold 40,000 additional shares on March 30. Net income for the year was $280,000.What are the earning per share?
A)$2.33 (B) $3.00 (C) $1.87 (D) $1.17

On April 2, 2005 Empress, Inc acquired a new piece of filtering equipment. The cost of the equipment was $110,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 6 years.

19) Refer to the above information. Assume that in its financial statement Empress uses straight -line depreciation and rounds depreciation for fractional years to the nearest whole month .Depreciation recognized on this equipment in 2005 and 2006 will be:
A) $12,500 in 2005 and $16,667 in 2006 (B) $4,160 in 2005, and 16,667 in 2006(C) $3,750 in 2005, and $15,000 in 2006 (D) $11,250 in 2005 and $15,000 in 2006

20) Refer to the above information. Assume that in its financial statement Empress uses straight -line depreciation and the half -year convention .Depreciation recognized on this equipment in 2005 and 2006 will be:
A) $4,167 in 2005 and $16,667 in 2006 (B) $8,333 in 2005 and $16,667 in 2006 (C) $7,500 in 2005 and $15,000 in 2006(D) 3,750 in 2005 and $15,000 in 2006

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1)In a statement of cash flow, the term cash includes:
A) only money on deposit in bank accounts(B)on bank accounts and cash on hand(C) bank accounts, cash on hand, and cash equivalents(D) bank accounts, cash on hand, and cash equivalents and marketable securities classified on current assets

Answer: C is the right answer. Cash is the cash on hand at the time books are closed at the end of the fiscal year. This refers to all cash in checking, savings and short-term investment accounts.

2) The ownership of common stock in a corporation usually carries the following rights:
A)To vote for directors (B) To declare dividends (C) To share in a distribution of assets if the corporation is to be liquidate (D) both a and c

Answer: D is the right answer. Common share holders have both voting rights as well as own a share of the corporation if the company is liquidated (after all the debt holders are paid off)

3)If the current assets are $90,000 and the current liabilities are $30,000 working capital will be
A)33.3% (B) 3:1 (C) $60,000 (D) $120,000

Answer: Working Capital = Current Assets - Current Liabilities

Carlyle, Co. had the following transaction during the month of August,2004
-Cash received from the bank loans was $5,000
-Dividends of $2,500 were paid to stockholders in cash.
-Revenues earned and received in cash amounted to $9,500
-Expenses incurred and paid were $7,000

4) Refer to the above data .What amount of net income will be reported on an income statement for the month of August, 2004?
A) $5,000 (B) $2,500 (C) $0 (D) $9,500

Answer: Net Income = Revenue - Expenses - Dividends

5) The field of accounting may best be describe as:
A) Recording the financial transactions of an economics entity.(B) Develop information in conformity with generally accepted accounting principle(C) The art of interpreting, measuring and describing economic activity(D) Developing the information required for the preparation of income tax return

Answer: By definition of accounting

During 2006, the cash flows related to Dodge Data Inc;s lending and borrowing ...

Solution Summary

The solution answers and fully explains a lot of multiple choice questions related to accounting and/or finance.

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