st leo mba 560 module 4 quiz 510200

1.Quayle Company has been sued by a customer who claims injury from use of Quayle s product. The company s lawyers and a consultant believe the likelihood of a judgment against Quayle is remote. What should Quayle do to account for this potential liability? (Points : 2)

2.How does the amortization of the principal balance affect the amount of interest expense recorded each succeeding year? (Points : 2)

3.Borrowing by issuing a note payable is a(n): (Points : 2)

4.A current asset is a(n): (Points : 2)

5.Applegate Company experienced an accounting event that affected its financial statements as indicated below:

Which of the following accounting events could have caused these effects on Knight’s statements? (Points : 2)

6.Current liabilities include: (Points : 2)

7.Locke Company issued bonds payable. Which of the following choices accurately reflects how the issue would affect Locke’s financial statements?

(Points : 2)

8.The Halogen Corporation issued a 5-year note payable on January 1, 2010 for $2,500. The interest rate is 5% and the annual payment of $578, due each December 31, includes both interest and principal. Which of the following correctly shows the effects of the December 31, 2011, payment?

(Points : 2)

9.Liquidity refers to a company s ability to: (Points : 2)

10.On January 1, 2010, Hays Corporation arranged a $3,000 line of credit with the Barnett Bank. It agreed to accept the bank’s offer of 1% above the prime rate with interest payments on December 31 of each year. All borrowings and payments on principal are to take place on January 1 of each year. Hays began its loan transactions with Barnett Bank by borrowing $1,000 on January 1, 2010. On January 1, 2011, Hays borrowed an additional $1,000 from Barnett Bank, bringing the total amount borrowed to $2,000. On January 1, 2012, Hays paid $500 on the principal of the loan. On December 31, 2012, Hays records the 2012 interest payment. The prime rate for 2012 was 5%. Which of the following answers shows the effect of the 2012 interest payment on the financial statements?

(Points : 2)

11.Flynn Company issued 2,000 shares of $10 par value common stock at a market price of $16. As a result of this accounting event, total paid-in capital would: (Points : 2)

12.The price-earnings ratio is the: (Points : 2)

13.Reissuance of treasury stock for cash is what kind of transaction? (Points : 2)

14.Which form of business organization is established as a separate legal entity from its owners? (Points : 2)

15.The difference between the corporate form of business organization and other forms is most clearly shown in which of the following sections of the financial statements? (Points : 2)

16.Purchase of treasury stock for cash is what kind of transaction? (Points : 2)

17.Which of the following would not be a reason for the market price of Bishop Corporation stock to decrease? (Points : 2)

18.The issuance of a stock dividend will: (Points : 2)

19.Madison Company paid dividends of $3,000, $6,000, and $10,000 during 2008, 2009, and 2010 respectively. The company had 500 shares of preferred stock outstanding with a $10 per share cumulative dividend. The amount of dividends received by the common shareholders during 2010 would be: (Points : 2)

20.What kind of transaction is the declaration of a stock dividend? (Points : 2)