20 MCQ's

1. On the Statement of Cash Flows, payments to purchase bonds and stocks of other companies are reported in the 
operating activities section.
investing activities section.
financing activities section.
schedule of non cash investing and financing activities
 
2. On the Statement of Cash Flows, payments to lenders for interest are reported in the
 operating activities section.
investing activities section.
financing activities section.
schedule of non cash investing and financing activities
  
3. When doing a horizontal analysis of Net Income for 2003, 2004, 2005, 2006, and 2007, the 2006 Net Income dollar amount is divided by the 
2007 Net Income dollar amount.
2006 Net Income dollar amount.
2003 Net Income dollar amount.
an average dollar amount calculated using all five years
  
4. A decrease in stockholders' equity as a result of operating a business is investment.
revenue.
expense.
dividends.
Investors are

1. When a corporation splits its stock, the total par value of outstanding shares
increases.
decreases.
does not change
 
2. Stockholders Equity created through the successful operation of the corporation is
paid-in capital.
retained earnings.
treasury stock.
restricted retained earnings

3. At the end of the accounting period, the balances of which types of accounts are carried over to the next accounting period?
revenue, liability, and dividend
asset, expense, and dividend
revenue, expense, and dividend
asset, liability, and stockholders' equity
 
4. A decrease in stockholders' equity as a result of operating a business isinvestment.
revenue.
expense.
dividends.
Investors are

1. Carrie owed Charlotte $20,000. Carrie offered Charlotte a promissory note (a negotiable instrument) worth $200,000 upon maturity, which occurred in six months, as payment for the debt. Carrie had actually stolen the promissory note from her friend Samantha. Charlotte probably won't qualify as a holder in due course because
A. Charlotte didn't give value for the instrument.
B. Charlotte didn't take the instrument in good faith.
C. Charlotte should have known the instrument was stolen.
D. the instrument was stolen from Samantha.

2. Ella owed Mark $500. Since Ella didn't have the money to pay Mark, she asked Mark if he would accept a negotiable instrument, such as a promissory note, as payment for the debt. Mark indicated he would accept a negotiable instrument as payment. Ella wrote out a promissory note in which she agreed to pay Mark $550 in 60 days if she failed to pay him the $500 in cash within the next 30 days. Ella's promissory note isn't negotiable because negotiable instrument must
A. be payable at a definite time.
B. state a fixed amount of money.
C. be payable to order or to bearer.
D. give an unconditional promise or order to pay.

3. Don purchased a boat from Randy. Randy told Don that he owned the boat free and clear of all liens, which Randy knew to be false, because he had just put the boat up as collateral on a loan at the bank two weeks earlier. Don issued Randy a negotiable promissory note for $5,000 to pay for the boat. By the time the promissory note came due, the bank had repossessed the boat, making Don aware of Randy's deception. Don will be able to avoid payment to Randy because there was
A. a failure of consideration.
B. a breach of contract.
C. some sort of illegality.
D. fraud in the inducement

4. Joey makes a deposit at Hometown Bank in the amount of $500. Joey's deposit consist of a 4500 check written to him by Ross, who banks with Crosstown Bank. Hometown Bank deposits the check with Friend's Bank, which in turn sends the check to Crosstown Bank. Which of the following is true about this set of facts?
A. Hometown Bank is the payor bank.
B. Crosstown Bank is the payor bank.
C. Hometown Bank is an intermediary bank.
D. Crosstown Bank is the depository bank.

1. Eric wrote Donna a check for $50. Eric accidentally dated the check 3/1/07, even though it was actually 3/1/08 when he wrote the check. Eric thought that there was $75 in the account, but there was actually only $10 in the account. Which one of the following scenarios is most likely to occur?
A. The bank will not honor the check because it's stale.
B. The bank will not honor the check because it's postdated.
C. The bank will honor the check, even though it will result in an overdraft.
D. The bank will honor the check, even though a stop-payment order has been made.

2. Erica writes a $100 check to Sam. Sam takes the check to his bank, endorses the check, and deposits it into his bank. This process is best described as
A. transfer by assignment.
B. taking for value.
C. transfer by negotiation.
D. transfer to a holder in due course.

3. Sara wrote a check to Steven in the amount of $100 to be drawn from her account at Big Money Bank. When took the check to Big Money Bank to be cashed, Big Money refused to pay the check because Sara's deposit wasn't made in time to be credited to her account for that day and wouldn't be available until the next day. Which of the following is true about this turn of events?
A. Sara is liable to Steven for the $100.
B. Sara is not liable to Steven for the $100.
C. Big Money Bank is liable to Sara for the $100.
D. Big Money Bank is liable to Steven for the $100.

4. Joan noticed one day that her bank debit card was missing from her purse. Joan notified her bank immediately. When Joan received her statement the next month, the bank charged her $500 for withdrawals made after the debit card disappeared. Which one of the following laws do the charged violate?
A. Federal Trade Commission Act of 1914
B. Electronic Fund Transfer Act of 1978
C. Banking Act of 1999
D. Electronic Communications Privacy Act of 1986

1. Josie wants to purchase a car at an auction, and needs a check that will serve as the equivalent to cash to pay for the car. Josie should take a __________ check to the auction.
A. traveler's
B. certified
C. guaranteed
D. cashier's

2. Sally borrowed $500 from Burt. Sally signed a note stating that in five years she would pay Burt whatever amount he deemed fair to repay the loan. The note isn't negotiable, because negotiable instruments must
A. state an unconditional promise or order to pay.
B. state a fixed amount of money.
C. be payable on demand or at a definite time.
D. be payable to order or to bearer.

3. Pete sets up an account with Ben's Movie Gallery, whereby whenever Pete rents movies at the Movie Gallery, the amount for the movie rental is deducted from Pete's card account and Ben's Movie Gallery's account is credited for that amount. This set of facts is an example of a/an ______ payment system.
A. online
B. cyberbanking
C. smart card
D. credit card

4. Samantha writes a check to Miranda for $2,500, to be drawn from her account with Mahopani Bank. Miranda deposits the check into her account with Central Bank. Central Bank sends the check to Buffalo Bank, which sends the check to Mahopani Bank for payment. Which of the following is true about this set of facts?
A. Buffalo Bank is an intermediary and collecting bank.
B. Mahopani Bank is an intermediary and collecting bank.
C. Central Bank is the payor bank.
D. Buffalo Bank is the depository bank.