Accounting and Finance Worksheet MCQs (Grade 13)

At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Thomas $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be

• $54,700

• $49,700

• $47,000

• $64,500

• $42,200

If a bond has a contract rate of 8% on a $1,000 bond, how much annual interest will it pay

• $100

• $80

• $40

• $1000

• $8

What is the primary disadvantage of bond financing related to a company's return on equity?

• Bonds increase the company's return on equity.

• Bonds can decrease the company's return on equity if the company has lower income.

• Bonds allow the company to withdraw dividends freely.

• Bonds do not require interest payments.

• Bonds reduce the company's equity investments.

What is the total preferred stock value on Dillon's balance sheet for the issuance of preferred stock at $100 par value for 50 shares?

• $1,000

• $5,000

• $6000

• $10,000

• $300,000

A corporation issued 10,000 shares of its $5 par value common stock in exchange for equipment that has a market value of $120,000. The entry to record this transaction would include:

• A debit to Common Stock for $50{,}000.

• A debit to Land for $50{,}000.

• A credit to Equipment for $50{,}000.

• A credit to Paid-in Capital in Excess of Par Value, Common Stock for $70{,}000.

• A credit to Common Stock for $120{,}000.

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

• A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182{,}000.

• A debit to Cash for $14{,}000.

• A credit to Common Stock for $182{,}000.

• A credit to Common Stock for $14{,}000.

• A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196{,}000.

Which statement about no-par value stock is correct?

• It must have a stated value.

• It cannot be legally issued in most states.

• It is not assigned a value per share by the charter.

• It requires a minimum dividend.

• It is usually preferred stock.

The total value of the owners' stake in the corporation is best represented by:

• Market Capitalization

• Authorized Capital

• Paid-In Capital

• Retained Earnings

• Stockholders' Equity

What is the primary purpose of a purchase discount?

• To increase sales

• To encourage prompt payment

• To inflate revenue

• To reduce cost of goods sold

• To manage inventory levels

Which of the following statements regarding liabilities is not true?

• A liability is a probable future payment of assets or services.

• Unearned future wages to be paid to employees should be recorded as liabilities.

• For a liability to be reported, it must be a present obligation that results from a past transaction or event, and requires a future payment of assets or services.

• Information about liabilities is more useful when the balance sheet identifies them as either current or long term.

• Liabilities can involve uncertainty in whom to pay.