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27 Nov 2019

12. Company A has a high Current Ratio relative to others in its industry, but a low Quick Ratio. This may be indicative of (relative to others in the industry):

a. More reliance on cash sales

b. More discounting and therefore a higher cost of goods sold

c. Higher Accounts Payable

d. Higher Inventory

13. Which of the following is not a common shareholder right?

a. Right to vote for a Board of Directors

b. Right to receive dividends

c. Right to vote to declare a dividend

d. Right to pre-emptively maintain its overall share of a company

  1. Which of the following is not a feature of a corporation?

a. Limited liability of its owners

b. Centralized management

c. Limited transferability of ownership

d. Permanent life apart from its owners

  1. All of the following are risks of holding bonds, except:

a. Default

b. Interest rate changes

c. Reinvestment

d. Loss of principal when called

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Tod ThielLv2
4 May 2019
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Related questions

The preemptive right is important to shareholders because it:

a. protects the current shareholders against a dilution of their ownership interests.
b. allows managers to buy additional shares below the current market price.
c. protects bondholders, and thus enables the firm to issue debt with a relatively low-interest rate.
d. is included in every corporate charter.
e. will result in higher dividends per share.

8. Your company issued bonds at a premium. Which of the following statements is NOT true?
A. The contra account, premium on bonds payable, is amortized each year by shifting part of its balance to interest expense.
B. On the date of issuance, the stated interest rate was greater than the market interest rate.
C. As the current date approaches the maturity date, the carrying value of the bond approaches the face value of the bond.
D. The account used to record the premium has a normal debit balance.

9. Which of the following would help a company improve its quick ratio without necessarily lowering the liability risk to a creditor?
A. Borrowing money on a long-term note just before the end of the accounting period.
B. Shifting resources from long-term assets to short-term assets such as supplies and inventory.
C. Shifting obligations from long-term liabilities to short-term liabilities.
D. Acquiring inventory by issuing a long-term note.

10. Which of the following is not used to calculate the times interest earned ratio?
A. Net income.
B. Income tax expense.
C. Interest earned on investments.
D. Interest expense.

11. Which of the following statements regarding treasury stock is true?
A. When a company reissues treasury stock for more than it originally paid for the stock, it does not report a gain.
B. When a company purchases treasury stock or pays a dividend, it increases total stockholders' equity.
C. Treasury stock is reported as an asset on the balance sheet.
D. Treasury stock is reported as issued and outstanding stock.

16. Typically, all other things equal, a profitable company that pays little or no dividends:
A. is a bad investment.
B. will reinvest profits which can lead to greater growth potential.
C. will experience relatively stable stock prices over time.
D. will appeal to investors who desire distributions of profit.

17. If a corporation declares and distributes a 10% stock dividend on its common shares, the account debited is:
A. Dividends Payable.
B. Common Stock.
C. Share Capital.
D. Retained Earnings.

20. Limited Liability Companies (LLCs) are like general partnerships in that:
A. income tax is not paid by the company itself.
B. the business has a separate legal identity.
C. liability is limited.
D. amounts paid to the owners are recorded as salaries expense.

21. Which of the following statements regarding financing activities is NOT true?
A. Cash dividends paid to a company's stockholders are reported as cash outflows from financing activities.
B. When a company issues stock for cash, it reports a cash inflow from financing activities.
C. When a company repurchases stock with cash, it reports a cash outflow for financing activities.
D. When a company repays a loan, it reports a cash outflow from investing activities.

22. Which of the following statements regarding quality of income ratio is NOT true?
A. A quality of income ratio will increase if a company's working capital management allows current assets such as inventory to increase out of control.
B. Variations in the ratio can be seasonal and are the result of sales fluctuations rather than reasons for alarm.
C. The quality of income ratio measures the portion of income that was generated in cash.
D. The quality of income ratio is useful when compared to industry competitors or to prior periods.

23. Which of the following types of information is not provided by the statement of cash flows?
A. Company management of current assets and liabilities.
B. Expenditures on long-term assets.
C. Current profitability as measured by specific revenues and expenses.
D. Reliance on external financing.

24. Cash and cash equivalents include:
A. assets that have stable long-term value.
B. assets that are short-term, highly liquid, and are purchased within three months of maturity.
C. assets that consistently grow in value over the long run.
D. assets that are expected to be used up within a year.

Which of the following contribute to a corporation's ability to build large pools of capital? That is, which of the following increase the willingness of investors to provide capital to a corporation?

I. limited liability

II. ease of transferring ownership

III. separation between the life of the business and the life of the owner

IV. double taxation of profits

V. agency costs

A. I only

B. I and III only

C. I, III, and IV only

D. I, II, and III only

E. I, II, III, and V only

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