The Maturity Date Note Receivable

1.        The maturity date of a note receivable: (Points : 2)

a.       Is the day of the credit sale

b.      Is the day the note was signed

c.       Is the day the note is due to be paid

d.      Is the date of the first payment

e.      Is the last day of the month

2.       Most employees and employers are required to pay: (Points : 2)

a.       Local payroll taxes

b.      State payroll taxes

c.       Federal payroll taxes

d.      Both B and C only

e.      Local, state and federal payroll taxes

3.       Sales taxes payable: (Points : 2)

a.       Is an estimated liability

b.      Is a contingent liability

c.       Is a current liability for retailers

d.      Is a business expense

e.      Is a long-term liability

4.       Pepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year. Coke's turnover was 9.3 for this year and 9.3 for last year. These results imply that: (Points : 2)

a.       Coke has the better turnover for both years

b.      Pepsi has the better turnover for both years

c.       Coke's turnover is improving

d.      Coke's credit policies are too loose

e.      Coke is collecting its receivables more quickly than Pepsi in both years

5.       Depreciation: (Points : 2)

a.       Measures the decline in market value of an asset

b.      Measures physical deterioration of an asset

c.       Is the process of allocating to expense the cost of a plant asset

d.      Is an outflow of cash from the use of a plant asset

e.      Is applied to land

6.       Times interest earned is calculated by: (Points : 2)

a.       Multiplying interest expense times income

b.      Dividing interest expense by income before interest expense

c.       Dividing income before interest expense and any income tax by interest expense

d.      Dividing interest and income tax expense by income before interest and income tax expense

7.       The interest accrued on $3,600 at 7% for 60 days is: (Points : 2)

a.       $36

b.      $42

c.       $252

d.      $180

e.      $420

Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

8.       Plant assets are: (Points : 2)

a.       Tangible assets used in the operation of a business that have a useful life of more than one accounting period

b.      Current assets

c.       Held for sale

d.      Intangible assets used in the operations of a business that have a useful life of more than one accounting period

e.      Tangible assets used in the operation of business that have a useful life of less than on accounting period

9.       Total asset turnover is calculated by dividing: (Points : 2)

a.       Gross profit by average total assets

b.      Average total assets by gross profit

c.       Net sales by average total assets

d.      Average total assets by net sales

e.      Net assets by total assets

10.   If the times interest ratio: (Points : 2)

a.       Increases, then risk increases

b.      Increases, then risk decreases

c.       Is greater than 1.5, then the company is in default

d.      Is less than 1.5, the company is carrying too little debt

11.   The matching principle requires: (Points : 2)

a.       That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user

b.      The use of the direct write-off method for bad debts

c.       The use of the allowance method of accounting for bad debts

d.      That bad debts be disclosed in the financial statements

e.      That bad debts not be written off

12.   A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000. The accumulated depreciation on it was $60,000. The proceeds from the insurance company were $90,000. The company should recognize: (Points : 2)

a.       A loss of $25,000

b.      A gain of $25,000

c.       A loss of $65,000

d.      A gain of $65,000

e.      A gain of $90,000

Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

13.   A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining: (Points : 2)

a.       2 years

b.      5 years

c.       7 years

d.      8 years

e.      10 years

14.   A company had a fixed interest expense of $6,000, its income before interest expense and any income taxes was $18,000 and its net income was $8,400. The company's times interest earned ratio is equals to (Points : 2)

a.       0.33

b.      0.71

c.       1.40

d.      3.00

e.      12,000

Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

15.   On October 10, 2010, Printfast Company sells a commercial printer for $2,350 with a one year warranty that covers parts. Warranty expense is project to be 4% of sales. On February 28, 2011, the printer requires repairs. The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair. What is the warranty liability at the end of 2010? (Points : 2)

a.       $49.00

b.      $84.80

c.       $94.00

d.      $0, there is no liability at the end of 2010

e.      $230.00

Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

16.   A premium on common stock: (Points : 2)

a.       Is the amount paid in excess of par by purchasers of newly issued stock

b.      Is the difference between par value and issue price when the amount paid is below par

c.       Represents profit from issuing stock

d.      Represents capital gain on sale of stock

e.      Is prohibited in most states

17.   A company borrowed $300,000 cash from the bank by signing a 5-year, 8% installment note. The present value factor for an annuity at 8% for 5 years is 3.9927. Each annuity payment equals $75,137. The present value of the note is: (Points : 2)

a.       $75,137

b.      $94,013

c.       $300,000

d.      $375,685

Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

18.   The amount of income earned per share of a company's common stock is known as: (Points : 2)

a.       Restricted retained earnings per share

b.      Earnings per share

c.       Continuing operations per share

d.      Dividends per share

e.      Book value per share

19.   To provide security to creditors and to reduce interest costs, bonds and notes payable can be secured by: (Points : 2)

a.       Safe deposit boxes

b.      Mortgages

c.       Equity

d.      The FASB

e.      Debentures

20.   Amortizing a bond discount: (Points : 2)

a.       Allocates a part of the total discount to each interest period

b.      Increases the market value of the Bonds Payable

c.       Decreases the Bonds Payable account

d.      Decreases interest expense each period

e.      Increases cash flows from the bond

21.   A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a: (Points : 2)

a.       Credit to Interest Income

b.      Credit to Premium on Bonds Payable

c.       Credit to Discount on Bonds Payable

d.      Debit to Premium on Bonds Payable

22.   A company issues at par 7% bonds with a par value of $500,000 on June 1, which is 5 months after the most recent interest date. How much total cash interest is received on May 1 by the bond issuer? (Points : 2)

a.       $0

b.      $2,916.66

c.       $100,000.00

d.      $14,583.33

e.      $35,000.00

Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

23.   Installment notes payable that require periodic payments of accrued interest plus equal amounts of principal result in: (Points : 2)

a.       Periodic total payments that gradually decrease in amount

b.      Periodic total payments that are equal

c.       Periodic total payments that gradually increase in amount

d.      Increasing amounts of interest each period

e.      Increasing amounts of principal each period

24.   Bonds that have interest coupons attached to their certificates, which the bondholders detach during each interest period and present to a bank for collection, are called: (Points : 2)

a.       Coupon bonds

b.      Callable bonds

c.       Serial bonds

d.      Convertible bonds

25.   The market value of a bond is equal to: (Points : 2)

a.       The present value of all future cash payments provided by a bond

b.      The present value of all future interest payments provided by a bond

c.       The present value of the principal for an interest-bearing bond

d.      The future value of all future cash payments provided by a bond

e.      The future value of all future interest payments provided by a bond