On September 1, Hoa Binh Company borrows $10,000 from ACB Bank by signing a 60-day, 6% note. What is the correct journal entry to record the payment of the note at maturity?

Debit Notes Payable $$10,000; Debit Interest Expense $$ 100; Credit Cash $10,100.

Debit Notes Payable $$10,000; Credit Cash $$ 10,000.

Debit Notes Payable $$10,000; Credit Interest Expense $$ 100; Credit Cash $9,900.

Debit Interest Expense $$100; Credit Notes Payable $$ 10,100.

Debit Cash $$10,100; Credit Notes Receivable $$ 10,000; Credit Interest Revenue $100.

What is recorded when a corporation issues stock at a premium?

Paid-in capital in excess of par value is reported as part of equity.

Paid-in capital in excess of par value is reported as revenue.

The excess amount over par value is listed under liabilities.

The premium is recorded under operating expenses.

The premium is reported as income.

Which of the following statements is true?

Interest on bonds is tax deductible.

Interest on bonds is not tax deductible.

Dividends to stockholders are tax deductible.

Bonds do not have to be repaid.

Bonds always increase return on equity.

All at the Following statements regarding long-term liabilities are true except?

Liabilities that do not have a fixed due date, but are payable on demand, are reported as long-term liabilities.

Liabilities not expected to be paid within the longer of one year or the company's operating cycle are reported as long-term liabilities.

Long-term liabilities include long-term notes payable, warranty liabilities, lease liabilities, and bonds payable.

Long-term liabilities can be reported on the balance sheet in a single total or in multiple categories.

A single liability can be divided between current and noncurrent sections on the balance sheet.

What is the tax advantage of bond interest payments?

Bond interest payments are tax deductible, reducing taxable income.

Bond interest payments are exempt from taxation.

Bond interest payments are taxed at a lower rate than equity earnings.

Bond interest payments are tax-free for the company.

Bond interest payments are not subject to state taxes.

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

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

Bonds increase the company's return on equity.

Bonds allow the company to withdraw dividends freely.

Bonds do not require interest payments.

Bonds reduce the company's equity investments.

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 credit to Common Stock for $120,000.

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

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

A credit to Common Stock for $182,000.

A credit to Common Stock for $14,000.

Which statement about no-par value stock is correct?

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

It cannot be legally issued in most states.

It requires a minimum dividend.

Which of the following statements regarding liabilities is not true?

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

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

C. 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.

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

E. Liabilities can involve uncertainty in whom to pay.

Companies report the cost of stock options in the:

Statement of retained earnings.

A discount on bonds payable:

Occurs when a company issues bonds with a contract rate less than the market rate.

Occurs when a company issues bonds with a contract rate more than the market rate.

Increases the Bond Payable account.

Decreases the total bond interest expense.

Is not allowed in many states to protect creditors.

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:

Credit to Premium on Bonds Payable.

Credit to Discount on Bonds Payable.

Debit to Premium on Bonds Payable.

Debit to Discount on Bonds Payable.

A bond is issued at par value when:

The market rate of interest is the same as the contract rate of interest.

The bond is not between interest payment dates.

Straight line amortization is used by the company.

Accounts payable are:

Amounts owed to suppliers for products and/or services purchased on credit.

Not usually due on specific dates.

Statement of retained earnings does not include:

Revaluation of long-term investments

The inventory system that updates the accounting records for merchandise transactions only at the end of a period. This statement is about:

Specific identification inventory system

How is Stock dividend different from cash dividend?

Stock dividend does not reduce assets and equity

Stock dividend increases cash account balance of the corporation

Stock dividend increased retained earnings

On January 1, a company issues bonds dated January 1 with a par value of $$300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $$ 312,177. The journal entry to record the issuance of the bond is:

debit cash $$312,177; credit premium on bonds payable $$ 12,177; credit bonds payable $300,000.

debit cash $$312,177; credit discount on bonds payable $$ 12,177; credit bonds payable $300,000.

debit cash $$300,000; debit premium on bonds payable $$ 12,177; credit bonds payable $312,177.

debit bonds payable $$300,000; debit bond interest expense $$ 12,177; credit cash $312,177.

debit cash $$312,177; credit bonds payable $$ 312,177.

Corporate Accounting and Organization Multiple Choice Questions

Authored by Ong BE

English

12th Grade

Corporate Accounting and Organization Multiple Choice Questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following normally reduces retained earnings?

Net income earned during the year.

Declaration of cash dividends.

Issuance of additional common stock.

Stock split.

Sale of treasury stock above cost.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When a corporation issues par value stock at its par value, what is the primary effect on the company's accounting equation?

A. Assets decrease and Equity increases.

B. Assets increase and Liabilities decrease.

C. Assets increase and Equity increases.

D. Liabilities increase and Equity decreases.

E. There is no change to the accounting equation.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary role of a registrar in a corporation?

To assist investors in trading company shares on the stock exchange.

To maintain a list of stockholders and handle dividend payments.

To issue physical stock certificates for all public companies.

To transfer shares between companies during mergers.

To manage the company's investment portfolio.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is an advantage of the corporate form of organization?

Double taxation.

Limited liability of stockholders.

Mutual agency of owners.

Unlimited liability of owners.

Difficulty in raising capital.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following best describes "known liabilities"?

Obligations whose amounts and timing are uncertain.

Obligations created only through litigation.

Obligations that are measurable and certain, such as accounts payable or notes payable.

Obligations payable only at liquidation.

Obligations that require issuing stock.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Increase by $40,000

Increase by $60,000

Decrease by $40,000

Decrease by $60,000

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When ending inventory is overstated:

Net income is overstated

Net income is understated

COGS is overstated

Assets are understated

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Corporate Accounting and Organization Multiple Choice Questions

Which of the following normally reduces retained earnings?

When a corporation issues par value stock at its par value, what is the primary effect on the company's accounting equation?

What is the primary role of a registrar in a corporation?

Which of the following is an advantage of the corporate form of organization?

Which of the following best describes "known liabilities"?

When ending inventory is overstated:

Sales discounts under perpetual system:

Perpetual system advantages include:

On September 1, Hoa Binh Company borrows $10,000 from ACB Bank by signing a 60-day, 6% note. What is the correct journal entry to record the payment of the note at maturity?

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