Saint Leo MBA 560 mcq 4

Question

Saint Leo MBA 560 mcq 4

Question # 00003569 Posted By: neil2103 Updated on: 11/15/2013 09:16 AM Due on: 11/27/2013

Subject Finance Topic Finance Tutorials:

Question

Question 1.1.A current asset is a(n): (Points : 2)

asset that will be used in the operating activities of a business.
asset generated by the operations of a business within the past year.
asset that is expected to be used or converted to cash within one year or the operating
cycle, whichever is longer.
miscellaneous asset that is small in dollar amount.

Question 2.2.How does the amortization of the principal balance affect the amount of interest expense recorded each succeeding year? (Points : 2)

Has no effect on interest expense each succeeding year
Increases the amount of interest expense each succeeding year
Reduces the amount of interest expense each succeeding year
The effect depends on the interest rate

Question 3.3.Long-term debt would likely be used for which of the following? (Points : 2)

Acquisition of inventory
Paying premiums for insurance
Purchasing a building
Paying salaries

Question 4.4.Which of the following would notbe classified as a current asset? (Points : 2)

Marketable Securities
Equipment
Prepaid Expenses
Interest Receivable

Question 5.5.Which of the following items would be least likely to appear in the current liabilities section of a classified balance sheet? (Points : 2)

Accounts payable
Wages payable
Bonds payable
Interest payable

Question 6.6.On January 1, 2010, Hays Corporation arranged a $3,000 line of credit with the Barnett Bank. It agreed to accept the bank's offer of 1% above the prime rate with interest payments on December 31 of each year. All borrowings and payments on principal are to take place on January 1 of each year. Hays began its loan transactions with Barnett Bank by borrowing $1,000 on January 1, 2010. Which of the following answers shows the effect of this event on the financial statements?

Row	Assets	=	Liabilities	+	Equity	Revenue	-	Expenses	=	Net Inc.	Cash
One	1000	=	1000	+	NA	NA	-	NA	=	NA	1000 IA
Two	1000	=	NA	+	1000	1000	-	NA	=	1000	1000 IA
Three	1000	=	1000	+	NA	NA	-	NA	=	NA	1000 OA
Four	1000	=	1000	+	NA	NA	-	NA	=	NA	1000 FA

(Points : 2)

Row One
Row Two
Row Three
Row Four

Question 7.7.Borrowing by issuing a note payable is a(n): (Points : 2)

asset source transaction.
asset use transaction.
asset exchange transaction.
claims exchange transaction.

Question 8.8.Liquidity refers to a company’s ability to: (Points : 2)

sell inventory in a timely manner.
generate profits from operations.
repay liabilities in the long run.
generate cash flows to pay current liabilities.

Question 9.9.The Halogen Corporation issued a 5-year note payable on January 1, 2010 for $2,500. The interest rate is 5% and the annual payment of $578, due each December 31, includes both interest and principal. Which of the following correctly shows the effects of the December 31, 2011, payment?

Row	Assets	=	Liabilities	+	Equity	Revenue	-	Expenses	=	Net Inc.	Cash
One	(578)	=	(476)	+	(102)	NA	-	102	=	(102)	(476)FA/(102)OA
Two	578	=	578	+	NA	NA	-	NA	=	NA	578FA
Three	(578)	=	(578)	+	NA	NA	-	NA	=	NA	(578)FA
Four	(578)	=	(476)	+	(50)	NA	-	50	=	(50)	(476)FA/(50)OA

(Points : 2)

Row One
Row Two
Row Three
Row Four

Question 10.10.A contingent liability is: (Points : 2)

an unearned revenue.
a potential obligation, the existence, or amount of which depends on a future event.
an amount owed to a state or local government.
an amount related to an impairment loss on an intangible asset.

Question 11.11.Reissuance of treasury stock for cash is what kind of transaction? (Points : 2)

Asset source
Asset use
Asset exchange
Claims exchange

Question 12.12.Mitchell Company was authorized to issue 50,000 shares of common stock. The company issued 27,000 shares of stock and later purchased 5,000 shares of treasury stock. The number of outstanding shares of common stock is: (Points : 2)

45,000
28,000
22,000
17,000

Question 13.13.Which of the following terms designates the number of shares of a corporation’s stock currently held by stockholders? (Points : 2)

Outstanding shares
Authorized shares
Treasury stock
Issued shares

Question 14.14.Which form of business organization is established as a separate legal entity from its owners? (Points : 2)

Sole proprietorship
Corporation
Partnership
None of the above

Question 15.15.Which of the following terms designates the maximum number of shares a corporation may issue? (Points : 2)

Outstanding shares
Authorized shares
Treasury stock
Issued shares

Question 16.16.Purchase of treasury stock would be shown on the statement of cash flows as: (Points : 2)

an operating activity.
an investing activity.
a financing activity.
none of the above.

Question 17.17.Flynn Company issued 2,000 shares of $10 par value common stock at a market price of $16. As a result of this accounting event, total paid-in capital would: (Points : 2)

increase by $12,000.
be unaffected by the event.
increase by $32,000.
increase by $20,000.

Question 18.18.The issuance of a stock dividend will: (Points : 2)

not affect total equity.
increase retained earnings.
decrease total paid-in capital.
decrease net income.

Question 19.19.Grant Corporation declared a 2-for-1 stock split when it had 12,000 shares of $5 par value common stock outstanding. If the market price of the stock had been $20 a share before the split, the par value, number of shares, and approximate market value after the split would be:

Row	Par Value	No. of Shares	Market Value
One	$2.50	24,000	$10.00
Two	$2.50	24,000	$ 5.00
Three	$2.50	12,000	$10.00
Four	$5.00	24,000	$20.00

(Points : 2)

Row One
Row Two
Row Three
Row Four

Question 20.20.What kind of transaction is the declaration of a stock dividend? (Points : 2)

Asset source transaction
Claims exchange transaction
Asset use transaction
Asset exchange transaction

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