ACCT 201A Exam #3;Questions And Answers.
A major disadvantage of a corporation is - answer:-Additional Taxes
ABC Corp. issues 1,000 shares of $10 par value common stock at $12 per share. When
the transaction is recorded, credits are made to - answer:-Common Stock $10,000 and
Paid-In Capital in Excess of Stated Value $2,000
Additions to plant assets are - answer:-Capital Expenditures
Bennie Razor Company has decided to sell one of its old manufacturing machines on
June 30, 2022. The machine was purchased for $80,000 on January 1, 2018, and was
depreciated on a straight-line basis for 10 years assuming no salvage value. If the
machine was sold for $26,000, what was the amount of the gain or loss recorded at the
time of the sale? - answer:-$18,000 loss
Cuso Company purchased equipment on January 1, 2021, at a total invoice cost of
$400,000. The equipment has an estimated salvage value of $10,000 and an estimated
useful life of 5 years. What is the amount of accumulated depreciation at December 31,
2022, if the straight-line method of depreciation is used? - answer:-$156,000
Depreciation is a process of - answer:-Cost Allocation
Entries for cash dividends are required on the - answer:-Declaration date and the
payment date
Howard Corporation issued a 20-year mortgage note payable on January 1, 2022. At
December 31, 2022, the unpaid principal balance will be reported as - answer:-Part
current and part long-term liability
If a company reports goodwill as an intangible asset on its books, what is the one thing
you know with certainty? - answer:-The company purchased another company
If everything else is held constant, earnings per share is increased by - answer:-The
purchase of treasury stock
In the stockholders' equity section of the balance sheet, common stock - answer:-Is part
of paid-in capital
In the stockholders' equity section, the cost of treasury stock is deducted from -
answer:-Total paid-in capital and retained earnings
JD Company borrowed $70,000 on December 1 on a 6-month, 12% note. At December
31 - answer:-Both the note payable and the interest payable are current liabilities
, ACCT 201A Exam #3;Questions And Answers.
Laurel Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are
issued at a premium, this indicates that - answer:-The contractual interest rate exceeds
the market interest rate
No Fault Insurance Company collected a premium of $18,000 for a 1-year insurance
policy on April 1. What amount should No Fault report as a current liability for Unearned
Insurance Premiums at December 31? - answer:-$4,500
On January 1, 2022, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The
entry to record the issuance of the bonds would include a - answer:-Credit to Bonds
Payable for $200,000
Ottman Company borrows $88,500 on September 1, 2022, from Farley State Bank by
signing an $88,500, 12%, 1-year note. What is the accrued interest at December 31,
2022? - answer:-$3,540
Pierce Company incurred $150,000 of research and development costs in its laboratory
to develop a new product. It spent $20,000 in legal fees for a patent granted on January
2, 2022. On July 31, 2022, Pierce paid $15,000 for legal fees in a successful defense of
the patent. What is the total amount that should be debited to Patents through July 31,
2022? - answer:-$35,000
Preferred stock may have priority over common stock except in - answer:-Voting
Prescher Corporation issued bonds that pay interest every January 1. The entry to
accrue bond interest at December 31 includes a - answer:-Credit to Interest Payable
The benefits to leasing include each of the following except - answer:-Higher resale
value
The market interest rate - answer:-Is the rate investors demand for loaning funds
The time period for classifying a liability is one year or the operating cycle, whichever is
- answer:-Longer
To be classified as a current liability, a debt must be expected to be paid, within -
answer:-1 year or the operating cycle, whichever is longer
U-Bet corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock
outstanding at December 31, 2022. No dividends were declared in 2020 or 2021. If U-
Bet wants to pay $375,000 of dividends in 2022, common stockholders will receive -
answer:-$135,000
What term is used for bonds that have specific assets pledged as collateral? - answer:-
Secured bonds
A major disadvantage of a corporation is - answer:-Additional Taxes
ABC Corp. issues 1,000 shares of $10 par value common stock at $12 per share. When
the transaction is recorded, credits are made to - answer:-Common Stock $10,000 and
Paid-In Capital in Excess of Stated Value $2,000
Additions to plant assets are - answer:-Capital Expenditures
Bennie Razor Company has decided to sell one of its old manufacturing machines on
June 30, 2022. The machine was purchased for $80,000 on January 1, 2018, and was
depreciated on a straight-line basis for 10 years assuming no salvage value. If the
machine was sold for $26,000, what was the amount of the gain or loss recorded at the
time of the sale? - answer:-$18,000 loss
Cuso Company purchased equipment on January 1, 2021, at a total invoice cost of
$400,000. The equipment has an estimated salvage value of $10,000 and an estimated
useful life of 5 years. What is the amount of accumulated depreciation at December 31,
2022, if the straight-line method of depreciation is used? - answer:-$156,000
Depreciation is a process of - answer:-Cost Allocation
Entries for cash dividends are required on the - answer:-Declaration date and the
payment date
Howard Corporation issued a 20-year mortgage note payable on January 1, 2022. At
December 31, 2022, the unpaid principal balance will be reported as - answer:-Part
current and part long-term liability
If a company reports goodwill as an intangible asset on its books, what is the one thing
you know with certainty? - answer:-The company purchased another company
If everything else is held constant, earnings per share is increased by - answer:-The
purchase of treasury stock
In the stockholders' equity section of the balance sheet, common stock - answer:-Is part
of paid-in capital
In the stockholders' equity section, the cost of treasury stock is deducted from -
answer:-Total paid-in capital and retained earnings
JD Company borrowed $70,000 on December 1 on a 6-month, 12% note. At December
31 - answer:-Both the note payable and the interest payable are current liabilities
, ACCT 201A Exam #3;Questions And Answers.
Laurel Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are
issued at a premium, this indicates that - answer:-The contractual interest rate exceeds
the market interest rate
No Fault Insurance Company collected a premium of $18,000 for a 1-year insurance
policy on April 1. What amount should No Fault report as a current liability for Unearned
Insurance Premiums at December 31? - answer:-$4,500
On January 1, 2022, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The
entry to record the issuance of the bonds would include a - answer:-Credit to Bonds
Payable for $200,000
Ottman Company borrows $88,500 on September 1, 2022, from Farley State Bank by
signing an $88,500, 12%, 1-year note. What is the accrued interest at December 31,
2022? - answer:-$3,540
Pierce Company incurred $150,000 of research and development costs in its laboratory
to develop a new product. It spent $20,000 in legal fees for a patent granted on January
2, 2022. On July 31, 2022, Pierce paid $15,000 for legal fees in a successful defense of
the patent. What is the total amount that should be debited to Patents through July 31,
2022? - answer:-$35,000
Preferred stock may have priority over common stock except in - answer:-Voting
Prescher Corporation issued bonds that pay interest every January 1. The entry to
accrue bond interest at December 31 includes a - answer:-Credit to Interest Payable
The benefits to leasing include each of the following except - answer:-Higher resale
value
The market interest rate - answer:-Is the rate investors demand for loaning funds
The time period for classifying a liability is one year or the operating cycle, whichever is
- answer:-Longer
To be classified as a current liability, a debt must be expected to be paid, within -
answer:-1 year or the operating cycle, whichever is longer
U-Bet corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock
outstanding at December 31, 2022. No dividends were declared in 2020 or 2021. If U-
Bet wants to pay $375,000 of dividends in 2022, common stockholders will receive -
answer:-$135,000
What term is used for bonds that have specific assets pledged as collateral? - answer:-
Secured bonds
