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Quiz 1 10P

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1. The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to
A) decrease current liabilities and stockholders' equity.
B) increase total assets and stockholders' equity.
C) increase current liabilities and stockholders' equity.
D) decrease stockholders' equity and total assets.


2. If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?
A) $3,000,000
B) $90,000
C) $300,000
D) $210,000

3. At the time of acquisition of a debt investment,
A) no journal entry is required.
B) the cost principle applies.
C) the Stock Investments account is debited when bonds are purchased.
D)the Investment account is credited for its cost plus brokerage fees.

4. If a short-term debt investment is sold, the Investment account is
A) credited for the book value of the bonds at the sale date.
B) credited for the cost of the bonds at the sale date.
C) credited for the fair value of the bonds at the sale date.
D) debited for the cost of the bonds at the sale date.

5. The primary purpose of the statement of cash flows is to
A) provide information about the investing and financing activities during a period.
B) prove that revenues exceed expenses if there is a net income.
C) provide information about the cash receipts and cash payments during a period.
D) facilitate banking relationships.

6. The order of presentation of activities on the statement of cash flows is
A) operating, investing, and financing.
B) operating, financing, and investing.
C) financing, operating, and investing.
D) financing, investing, and operating.

7. The formula for horizontal analysis of changes since the base period is the current year amount
A) divided by the base year amount.
B) minus the base year amount divided by the base year amount.
C) minus the base year amount divided by the current year amount.
D) plus the base year amount divided by the base year amount.

8. Directing includes
A) providing a framework for management to have criteria to terminate employees
when needed.
B) running a department under quality control standards universally accepted.
C) coordinating a company's diverse activities and human resources to produce a
smooth-running operation.
D) developing a complex performance ranking system to give certain high performers
good raises.

9. The work of factory employees that can be
physically and directly associated with converting raw materials into finished
goods is
A) manufacturing overhead.
B) indirect materials.
C) indirect labor.
D) direct labor.

10. As of December 31, 2012, Stand Still Industries had $2,500 of raw materials inventory. At the beginning of 2012, there was $2,000 of materials on hand. During the year, the company
purchased $325,000 of materials; however, it paid for only $312,500. How much
inventory was requisitioned for use on jobs during 2012?
A) $312,000
B) $324,500
C) $325,500
D)$313,000


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