Question 1

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Indicate whether Treasury Stock is a debit or credit account and whether it is closed or not
closed each period.

Select one:
a. Debit, closed
b. Debit, not closed
c. Credit, closed
d. Credit, not closed
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Question 2
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Dividends in arrears are listed in which section of the balance sheet?

Select one:
a. Liabilities, but not Equity
b. Equity, but not Liabilities
c. Both Liabilities and Equity
d. Neither Liabilities nor Equity
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Question 3
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If Visser Company issues 25,000 shares of $2 par value common stock for $100,000, the
account Paid-In Capital in Excess of Par Value will be credited for

Select one:
a. $30,000
b. $50,000
c. $65,000
d. $20,000
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Question 4
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What is the most likely effect of a stock split on Par Value per Share and the Common Stock
account balance?

Select one:
a.

Par Value per Share Common Stock

Decrease Increase

b.

Par Value per Share Common Stock

Decrease No Effect
c.

Par Value per Share Common Stock

Increase Increase

d.

Par Value per Share Common Stock

No Effect No Effect

e.

Par Value per Share Common Stock

No Effect Increase

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Question 5
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How does the combined declaration and distribution of a cash dividend affect the
following?

Select one:
a.

Retained Earnings Current Liabilities

Decrease Increase

b.

Retained Earnings Current Liabilities

No Effect Decrease

c.
 Retained Earnings Current Liabilities
No Effect Increase

d.

Retained Earnings Current Liabilities

Decrease No Effect

e.

Retained Earnings Current Liabilities

Increase Increase

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Question 6
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Given the following for the Titan Company; the company began operations on 1/1/1.

Preferred Stock, 4%, Cumulative $10,000

Common Stock $20,000
Cash Dividends paid Year 1 $ 200
Year 2 $ 200
Year 3 $ 1,200

Year 3 Dividends received by the Preferred shareholders is:

Select one:
a. $400
b. $800
c. $600
d. $1,200
e. $200
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Question 7
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The effective (market) rate of interest is used to determine:

Select one:
a. The rate of interest printed on the bond.
b. The amount of cash interest the bond issuer pays to the investor on the interest payment
dates.
c. The amount of principal due at the maturity date of the bond.
d. The rate investors demand for loaning funds to the corporation.
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Question 8
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Conroy Corp. issued $100,000, 5% five-year bonds at 96. The total interest expense over the
life of the bond is:

Select one:
a. $25,000
b. $29,000
c. $21,000
d. $9,000
e. $24,000
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Question 9
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A Discount on Bonds Payable account indicates

Select one:
a. The contractual rate is greater than the effective rate
b. The market rate is greater than the stated rate
c. The market rate is less than the effective rate
d. The coupon rate is greater than the yield rate
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Question 10
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Which accounts are contra accounts?

Select one:
a. Premium on Bonds Payable, but not Discount on Bonds Payable
b. Discount on Bonds Payable, but not Premium on Bonds Payable
c. Both Discount and Premium on Bonds Payable
d. Neither Discount nor Premium on Bonds Payable
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