Principles of Accounting 21) Issued stock is:A) Authorized shares of stock that can be sold.B) Stock only sold to another companyC) Shares sold and in stockholders possessionD) Stock sold to stockholders.2) In the statement of cash flows which event would cause net income to be increased?A) A decrease in InventoryB) An increase in Prepaid InsuranceC) A decrease in Accounts PayableD) An increase in Accounts Receivable3) Finished Goods Inventory appears on which of the following statements on the worksheet?A) Statement of cost of goods manufactured and income statementB) Statement of cost of goods manufactured and balance sheetC) Income statement and balance sheetD) Income statement and cost of goods sold statement4) One reason a corporation might issue bonds rather than sell stock is that:a. Bond interest is a tax-deductible expenseb. Interest rates are highc. Dividends will lower the amount of tax dued. Bondholders have claims at liquidation5) For a corporation bond interest:a. Is treated the same as dividends for tax purposes.b. Has no effect on earnings and therefore has no effect on income taxesc. Reduces income tax by reducing earningd. None of the above6) Dividends paid to stockholders area:a. Taxable to the recipient stockholderb. Taxable to the corporationc. Treated the same as bond interestd. None of the above7) If beginning and ending inventories are $20000 and $30000 respectively and cost of goods sold is $400000 what is the inventory turnover ratio?a. 18b. 16c. 15.5d. 158) Declaration of a cash dividend causes:a. An increase in stockholders equityb. An increase in cashc. An increase in liabilitiesd. None of the above9) The current ratio is:a) Quick assets divided by current liabilities.b) Assets divided by liabilitiesc) Current assets divided by current liabilitiesd) Net sales divided by current liabilities.10)When the contract rate of interest on bonds is equal to the market rate of interest bonds sell at:a. A premiumb. Their face valuec. Their maturity rated. A discountPrinciples of Finance1) Of the following which is NOT one of the four main areas of finance?a. International financeb. Corporate financec. Investmentsd. All are considered main areas of finance.2) ______________ is a major disadvantage of the corporate form of business.a) Double taxationb) Unlimited liabilityc) Lack of ability to raise capitald) Transfer of ownership3) Everything else equal an industry with more leverage will have a:a. Higher return on assetsb. Higher return on equityc. Lower return on equityd. Both A & B4) If you can earn 5.25% per year on your investments how long will it take to double your money?a. 6.31 yearsb. 19.05 yearsc. 13.55 yearsd. There is not enough information to answer this question.5) Travis bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?a. -$3.00 -9.52%b. -$3.85 -12.22%c. -$.85 -2.70%d. -$3.85 -9.52%6) If you were required to estimate the average return for one category of securities for the coming year history tells us that you should have the greatest degree of confidence estimating which of the following?a. Long-term government bondsb. 3-month U.S. Treasury billsc. Small-company stocksd. Large-company stocks7) Which of the following are not considered a part of the firm s capital structure?a. Long-term debtb. Retained earningsc. Inventoryd. Preferred stock8) Which of the following choices lists the least to most aggressive actions in the pursuit of overdue debt?a. 1) A collection agency 2) court action 3) a letter requesting overdue paymentb. 1) Court action 2) a collection agency 3) a letter requesting overdue paymentc. 1) A letter requesting overdue payment 2) count action 3) a collection agencyd. 1) A letter requesting overdue payment 2) a collection agency 3) court action9) John is in a high income-tax bracket and wishes to minimize current taxes payable. He also has a sizeable current income and prefers high growth rates to significant annual cash flow from his equity investments. Which of the following dividend polices would John most likely prefer if we assume that the dividend policy has no impact on the value of the firm and that the gains tax rate is lower than the ordinary tax rate?a. High-dividend-payout policyb. No-dividend-payout policyc. Low-dividend-payout policyd. John would be indifferent to all of the dividend policies10) Which of the following would NOT be considered a cost of debt financing?a. The required return on a bank loanb. The required return on preferred stockc. The yield-to-maturity of a bond issued. The required return on money borrowed from a venture capitalist.
