SampleTest3-910Ll.12. Name: Class: Date: ID: A. Multiple Choice Identifi the choice that best completes the statement or answers the question.

Transcription

1 Class: Date: SampleTest3-910Ll.12 Multiple Choice Identifi the choice that best completes the statement or answers the question. 1. On June 8, Alton Co. issued an $80,000, 6%o, 120-day note payable on an overdue account payable to Seller Co. Assume that the fiscal year of Alton Co. ends June 30. Which of the following relationships is true? a. Alton is the creditor and credits Accounts Receivable b. Seller is the creditor and debits Accounts Receivable c. Seller is the borrower and credits Accounts Payable d. Alton is the borrower and debits Accounts Payable 2. Mobile Co. issued a $45,000, 60-day, discounted note to Guarantee Bank. The discount rate is 6%. At maturity, the borrower will pay: a. $45,450 b. $42,300 c. $45,000 d. $44, The j ournal entry a company uses to record the issuance of a discounted note for the purpose of borrowing funds for the business is a. debit Cash and Interest Expense; credit Notes Payable b. debit Cash and Interest Payable; credit Notes Payable c. debit Accounts Payable; credit Notes Payable d. debit Notes Payable; credit Cash 4. The total payroll of a business is usually significant for all the reasons below excedt a. employees are sensitive to payroll errors and irregularities b. payroll is subject to various federal and state regulations c. businesses find it difficult to develop and maintain good internal controls on the payroll system d. payroll and related payrolltaxes have a significant effect on the net income of most businesses 5. Which statement below is not a determinate in calculating the amount of federal income taxes withheld from an individuals pay? a. filing status b. types of earnings c. gross pay d. number of exemptions 6. Which of the following would be used to compute the federal income taxes to be withheld from an employee's earnings? a. FICA tax rate b. wage and tax statement c. FUTA tax rate d. wage bracket and withholding table

2 7. For which of the following taxes is there no ceiling on the amount of employee annual earnings subject to the tax? a. only Social Security tax b. only Medicare tax c. only unemployment compensation tax d. none ofthe above 8. An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked,46; federal income tax withheld, $300; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.IYo on maximum of $100,000; and Medicare tax rate,l.5o/o on all earnings. What is the net amount to be paid the employee? a. $1,470 b. $1, c. $1, d. $1, Payrolltaxes levied against employees become liabilities a. the first of the following month b. at the time the payroll is paid c. when earned by the employee d. at the end ofan accounting period 10. Which of the following are included in the employer's payroll taxes? a. SUTA taxes b. FUTA taxes c. FICA taxes d. all ofthe above 11. Each year there is a ceiling for the amount that is subject to all of the following except a. Social security tax b. Federal income tax c. federal unemploymentax d. state unemploymentax 12. Most employers are levied a tax on payrolls for a. sales tax b. medical insurance premiums c. federal unemployment compensation tax d. union dues 13. Payroll entries are made with data from the a. wage and tax statement b. employee's earning record c. employer's quarterly federal tax return d. payroll register

3 14. The employee earnings record would contain which column that the payroll register would probably not contain? a. deductions b. payment c. earnings d. cumulative earnings 15. The following totals for the month of June were taken from the payroll register of Arcon Company: Salaries expense $13,000 Social security and Medicare Taxes withheld 975 Income Taxes withheld 2,600 Retirement Savinss 500 Salaries subject to federal and state unemployment 4,000 taxes of6.2 percent The entry to record the accrual of employer's payrolltaxes would include a a. debit to Payroll Taxes Expense for $1,223 b. credit to Social Security and Medicare Tax Payable for $1,950 c. debit to Payroll Taxes Expense for $248 d. Debit to Payroll Tax Expense for $ The following totals for the month of April were taken from the payroll register of Magnum Company. Salaries $ I 0,000 FICA taxes withheld 850 Income taxes withheld 2,000 Medical insurance deductions 450 Unemployment Taxes 420 The entry to record accrual of employer's payroll taxes would include a a. debit to Payroll Tax Expense for $1,270. b. credit to FICA Taxes Payable for $ 1,700. c. credit to Payroll Tax Expense for $420. d. debit to Payroll Tax Expense for $2, Assume that social security taxes are payable at a 6oh rate on the first $ 100,000 of earnings and medicare taxes are payable at a 1.5Yo rate with no maximum earnings, and that federal and state unemployment compensation taxes total4.6% on the first $7,000 of earnings. If an employee, George Jones, earns $2,500 for the current week and Jones'year-to-datearnings before this week were $6,800, what is the total payroll taxes related to the current week? a. $ b. $ c. $ d. none ofthe above

4 18. A disadvantage ofthe corporate form ofbusiness entity is a. mutual agency for stockholders b. unlimited liability for stockholders c. corporations are subject to more governmental regulations d. the ease of transfer of ownership 19. Which one of the following would no! be considered an advantage of the corporate form of organization? a. Governmentregulation b. Separate legal existence c. Continuous life d. Limited liability of stockholders 20. The ability of a corporation to obtain capital is a. less than a partnership. b. about the same as a partnership. c. restricted because of the limited life of the corporation. d. enhanced because of limited liability and ease of share transferability. 21. Which of the following accounts below is reported in the paid-in capital/stockholders'equity section of the corporate balance sheet? a. Cash b. Stock Dividends c. OrganizationalExpenses d. Preferred Stock 22. Menitt Company acquired a building valued at $190,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $ 15 per share. At what amount should the building be recorded by Menitt Company? a. $60,000 b. $ 180,000 c. $ 190,000 d. $10, The authorized stock ofa corporation a. must be recorded in a formal accounting entry. b. only reflects the initial capital needs of the company. c. is indicated in its by-laws. d. is indicated in its charter. 24. If common stock is issued for an amount greater than par value, the excess should be credited to a. Retained Earninss. b. Cash. c. Legal Capital. d. Paid-in Capital in Excess of Par Value.

5 25. Nexis Corp. issues 1,000 shares of $ 15 par value common stock at $25 per share. When the transaction is recorded, credits are made to: a. Common Stock $15,000 and Paid-in Capital in Excess of Par Value $10,000, b. Common Stock $25,000 and Retained Earnings $15,000. c. Common Stock $15,000 and Paid-in Capital in Excess of Stated Value $10,000. d. Common Stock $25, On January l, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February l,20xx, Swenson purchased 3,000 shares oftreasury stock for $21 per share and later sold the treasury shares for $24 per share on March l, 20xx. The j ournal entry to record the purchase of the treasury shares on February I, 20xx, would include a a. credit to Treasury Stock for $63,000. b. debit to Treasury Stock for $63,000. c. debit to a loss account for $9,000 d. credit to a gain account for $9, The date on which a cash dividend becomes a binding legal obligation is on the a. declaration date. b. date ofrecord. c. payment date. d. last day ofthe fiscal year end. 28. How is treasury stock shown on the balance sheet? a. as an asset b. as a decrease in stockholders'equity c. as an increase in stockholders'equity d. treasury stock is not shown on the balance sheet 29. The excess ofsales price oftreasury stock over its cost should be credited to a. Treasury Stock Receivable b. Premium on Capital Stock c. Paid-In Capital from Sale of Treasury Stock d. lncome from Sale of Treasury Stock 30. A corporation purchased 1,000 shares of its $5 par common stock at $ 10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? a. $0 b. $5,000 c. $2,500 d. $10, In which section of the balance sheet would Treasury Stock be reported? a. Fixed assets b. Long-termliabilities c. Stockholders'equity d. Intansible assets

6 32. In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported? a. other expense on income statement b. intangible asset on balance sheet c. stockholders'equity on balance sheet d. other income on income statement 33. Which of the following amounts should be disclosed in the stockholders'equity section of the balance sheet? a. the number of shares of common stock outstanding b. the number of shares of common stock issued c. the number of shares of common stock authorized d. all ofthe above 34. Retained earnings a. is the same as contributed capital b. cannot have a debit balance c. changes are summarized in the retained earnings statement d. over time will have a direct relationship with the amount of cash on hand if the corporation is profitable 35. Which of the following would result in a credit to retained earnings? a. a net loss for the period b. an understatement of an expense in a prior period c. a stock split d. an understatement of a revenue in the prior period 36. Investors who are most interested in the dividend yield are those who invest for a. market price appreciation b. current income flow c. both market price appreciation and current income flow d. neither market price appreciation or current income flow 37. Dividend yield is most often computed on a. all common stock b. all preferred stock c. both common and preferred stock d. only common stock sold above par 38. A corporation has 50,000 shares of$28 par value stock outstanding that has a current market value of$150. If the corporation issues a 4-for-l stock split, the market value of the stock will fall to approximately a. $7 b. $112 c. $37.50 d. $600

7 39. Which of the following statements is not true about a 2-for-l split? a. Par value per share is reduced to half of what it was before the split. b. Total contributed capital increases. c. The market price will probably decrease. d. A stockholder with ten shares before the split owns twenty shares after the split. 40. A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $150. lf the corporation issues a 5-for-1 stock split, the market value of the stock will fall to approximately: a. $25 b. no chansed c. $) d. $ Which of the following is not one of the four basic financial statements? a. balance sheet b. statement of cash flows c. statement of changes in financial position d. income statement 42. A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under a. investingactivities b. financing activities c. noncash investing and financing activities d. operatingactivities 43. The statement of cash flows may be used by management to a. assess the liquidity of the business b. assess the major policy decisions involving investments and financing c. determine dividend policy d. do all ofthe above 44. Cash dividends of $85,000 were declared during the year. Cash dividends payable were $10,000 and $15,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is a. $90,000 b. $80,000 c. $95,000 d. $75, In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is a. added to net income. b. deducted from net income. c. ignored because it does not affect cash. d. not reported on a statement of cash flows.

8 Sample Test ll 12 Answer Section MULTIPLE CHOICE L ANS: D PTS: 1 DIF: Easy OBJ: ANS: C PTS: I DIF: Moderate OBJ: ANS: A PTS: I DIF: Easv OBJ: ll ANS: C PTS: I DIF: Easv OBJ: ANS: B PTS: 1 DIF: Easy OBJ: ll ANS: D PTS: I DIF: Easv OBJ: ll ANS: B PTS: I DIF: Easv OBJ: ANS: B PTS: I DIF: Moderate OBJ: 1l ANS: B PTS: I DIF: Easv OBJ: ll ANS: D PTS: 1 DIF: Easy OBJ: ll-02 ll. ANS: B PTS: I DIF: Easv OBJ: ll ANS: C PTS: I DIF: Easy OBJ: NAT: AACSB Analytic I AICPA BB-Legal 13. ANS: D PTS: I DIF: Easy OBJ: NAT: AACSB Analyic IAICPA FN-Measurement 14. ANS: D PTS: I DIF: Easy OBJ: ANS: A PTS: I DIF: Moderate OBJ: ANS: A PTS: I DIF: Moderate OBJ: ll ANS: B PTS: I DIF: Moderate OBJ: ll ANS: C PTS: I DIF: EasY OBJ: NAT: AACSB Analytic I AICPA BB-Industry 19. ANS: A PTS: I DIF: EasY OBJ: NAT: AACSB Analytic I AICPA BB-Legal 20. ANS: D PTS: I DIF: EasY OBJ: NAT: AACSB Analytic I AICPA BB-Industry

9 21. ANS: D PTS: I DIF: Easy OBJ: ANS: B PTS: 1 DIF: Easy OBJ: ANS: D PTS: I DIF: Easy OBJ: ANS: D PTS: I DIF: Easy OBJ: ANS: A PTS: 1 DIF: Easy OBJ: ANS: B PTS: I DIF: Moderate OBJ: ANS: A PTS: I DIF: Easy OBJ: ANS: B PTS: I DIF: Easy OBJ: ANS: C PTS: I DIF: Easy OBJ: ANS: A PTS: I DIF: Easy OBJ: NAT: AACSB Analy'tic I AICPA FN-Measurement 31. ANS: C PTS: 1 DIF: Easy OBJ: ANS: C PTS: 1 DIF: Easy OBJ: ANS: D PTS: I DIF: Easy OBJ: ANS: C PTS: I DIF: Easy OBJ: ANS: D PTS: I DIF: Easy OBJ: ANS: B PTS: I DIF: Easy OBJ: NAT: AACSB Analytic IAICPA BB-Industry 37. ANS: A PTS: I DIF: Easy OBJ: ANS: C PTS: 1 DIF: Easy OBJ: ANS: B PTS: I DIF: Moderate OBJ: ANS: D PTS: I DIF: Moderate OBJ: NAT: AACSB Anallic I AICPA FN-Measurement 41. ANS: C PTS: I DIF: Easy OBJ: NAT: AACSB Analytic IAICPA FN-Reporting 42. ANS: B PTS: I DIF: Easy OBJ: ANS: A PTS: I DIF: Easy OBJ: NAT: AACSB Analvtic IAICPA FN-Measurement

10 44. ANS: B PTS: I DIF: Easy OBJ: ANS: B PTS: 1 DIF: Moderate OBJ: NAT: AACSB Analvtic I AICPA FN-Measurement