Question 1

An employee receives an hourly rate of $27,with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked,46; federal income tax withheld,$350; cumulative earnings for year prior to current week,$99,700; social security tax rate,6.0% on maximum of $106,800; and Medicare tax rate,1.5% on all earnings.What is the net pay for the employee?

Accepted Answer

A)  $798.85
B)  $873.77
C)  $953.16
D)  $1,223.77E) A) and B)
F) All of the above

Question 2

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

Accepted Answer

A) True 
 B)False

Question 3

If the market rate of interest is greater than the contractual rate of interest,bonds will sell:

Accepted Answer

A)  at a premium.
B)  at face value.
C)  at a discount.
D)  only after the stated rate of interest is increased.E) B) and C)
F) None of the above

Question 4

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 75,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

Accepted Answer

A)  10,000
B)  70,000
C)  50,000
D)  60,000E) B) and C)
F) A) and D)

Question 5

Three dates included in a dividend announcement are date of declaration,date of record,and .

Accepted Answer

A)  date of acceptance
B)  date of payment
C)  date of order
D)  date of liquidationE) All of the above
F) None of the above

Question 6

One of the conditions for paying a cash dividend is sufficient retained earnings.

Accepted Answer

A) True 
 B)False

Question 7

Gross earnings for a payroll period less payroll deductions are referred to as:

Accepted Answer

A)  overtime pay.
B)  bonus pay.
C)  gross pay.
D)  net pay.E) B) and C)
F) A) and C)

Question 8

How is treasury stock shown on the balance sheet?

Accepted Answer

A)  As an addition to assets
B)  As a reduction of stockholders' equity
C)  As an addition to stockholders' equity
D)  Treasury stock is not shown on the balance sheet.E) B) and C)
F) A) and C)

Question 9

When a corporation issues bonds,it executes a contract with the bondholders known as a bond debenture.

Accepted Answer

A) True 
 B)False

Question 10

The amount of capital paid-in by the stockholders of the corporation is called legal capital.

Accepted Answer

A) True 
 B)False

Question 11

Most employers are required to withhold from employees for:

Accepted Answer

A)  both federal and state unemployment compensation.
B)  only federal unemployment compensation tax.
C)  only federal income tax.
D)  only state unemployment compensation tax.E) A) and B)
F) C) and D)

Question 12

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

Accepted Answer

A) True 
 B)False

Question 13

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Accepted Answer

A) True 
 B)False

Question 14

If paid-in capital in excess of par--preferred stock is $80,000,preferred stock is $500,000,paid-in capital in excess of par--common stock is $50,000,common stock is $1,000,000,and retained earnings is $230,000,the total stockholders' equity is $1,860,000.

Accepted Answer

A) True 
 B)False

Question 15

Payroll taxes levied against employees become liabilities:

Accepted Answer

A)  on the first of the following month.
B)  at the time the liability for the employees' wages is paid.
C)  when earned by the employee.
D)  at the end of an accounting period.E) C) and D)
F) A) and D)

Question 16

Which of the following is a reason to undergo a reverse stock split?

Accepted Answer

A)  To reduce the stock's market price per share.
B)  To increase total stockholders' equity.
C)  To reduce total stockholders' equity.
D)  To increase the market value of the stock per share.E) C) and D)
F) A) and B)

Question 17

When the contract rate of interest on bonds is less than the market rate of interest,the bonds sell at:

Accepted Answer

A)  a premium.
B)  their face value.
C)  their maturity value.
D)  a discount.E) None of the above
F) A) and D)

Question 18

Indicate whether the following actions would (+)increase,(-)decrease,or (0)not affect a company's total assets,liabilities,and stockholders' equity.

Accepted Answer

Assets Liabilities Stockholders' Equity ...

Question 19

The issuance of common stock affects both paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

Before a stock dividend can be declared or paid,there must be sufficient cash.

Accepted Answer

A) True 
 B)False

Exam 8: Liabilities and Stockholders Equity

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

Correct Answer
verified

The issuance of common stock affects both paid-in capital and retained earnings.

Correct Answer
verified

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Correct Answer
verified

When a corporation issues bonds,it executes a contract with the bondholders known as a bond debenture.

Correct Answer
verified

Before a stock dividend can be declared or paid,there must be sufficient cash.

Correct Answer
verified

Gross earnings for a payroll period less payroll deductions are referred to as:

Correct Answer
verified

Correct Answer
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When the contract rate of interest on bonds is less than the market rate of interest,the bonds sell at:

Correct Answer
verified

If paid-in capital in excess of par--preferred stock is $80,000,preferred stock is $500,000,paid-in capital in excess of par--common stock is $50,000,common stock is $1,000,000,and retained earnings is $230,000,the total stockholders' equity is $1,860,000.

Correct Answer
verified

Three dates included in a dividend announcement are date of declaration,date of record,and .

Correct Answer
verified

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 75,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

Correct Answer
verified

How is treasury stock shown on the balance sheet?

Correct Answer
verified

The amount of capital paid-in by the stockholders of the corporation is called legal capital.

Correct Answer
verified

Indicate whether the following actions would (+)increase,(-)decrease,or (0)not affect a company's total assets,liabilities,and stockholders' equity.

Correct Answer
verified
Assets Liabilities Stockholders' Equity ...
View Answer

Payroll taxes levied against employees become liabilities:

Correct Answer
verified

If the market rate of interest is greater than the contractual rate of interest,bonds will sell:

Correct Answer
verified

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

Correct Answer
verified

Which of the following is a reason to undergo a reverse stock split?

Correct Answer
verified

One of the conditions for paying a cash dividend is sufficient retained earnings.

Correct Answer
verified

Most employers are required to withhold from employees for:

Correct Answer
verified

Exam 8: Liabilities and Stockholders Equity

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

Correct AnswerverifiedShow Answer

The issuance of common stock affects both paid-in capital and retained earnings.

Correct AnswerverifiedShow Answer

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Correct AnswerverifiedShow Answer

When a corporation issues bonds,it executes a contract with the bondholders known as a bond debenture.

Correct AnswerverifiedShow Answer

Before a stock dividend can be declared or paid,there must be sufficient cash.

Correct AnswerverifiedShow Answer

Gross earnings for a payroll period less payroll deductions are referred to as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the contract rate of interest on bonds is less than the market rate of interest,the bonds sell at:

Correct AnswerverifiedShow Answer

If paid-in capital in excess of par--preferred stock is $80,000,preferred stock is $500,000,paid-in capital in excess of par--common stock is $50,000,common stock is $1,000,000,and retained earnings is $230,000,the total stockholders' equity is $1,860,000.

Correct AnswerverifiedShow Answer

Three dates included in a dividend announcement are date of declaration,date of record,and .

Correct AnswerverifiedShow Answer

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 75,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

Correct AnswerverifiedShow Answer

How is treasury stock shown on the balance sheet?

Correct AnswerverifiedShow Answer

The amount of capital paid-in by the stockholders of the corporation is called legal capital.

Correct AnswerverifiedShow Answer

Indicate whether the following actions would (+)increase,(-)decrease,or (0)not affect a company's total assets,liabilities,and stockholders' equity.

Correct AnswerverifiedAssets Liabilities Stockholders' Equity ...View AnswerShow Answer

Payroll taxes levied against employees become liabilities:

Correct AnswerverifiedShow Answer

If the market rate of interest is greater than the contractual rate of interest,bonds will sell:

Correct AnswerverifiedShow Answer

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

Correct AnswerverifiedShow Answer

Which of the following is a reason to undergo a reverse stock split?

Correct AnswerverifiedShow Answer

One of the conditions for paying a cash dividend is sufficient retained earnings.

Correct AnswerverifiedShow Answer

Most employers are required to withhold from employees for:

Correct AnswerverifiedShow Answer

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Assets Liabilities Stockholders' Equity ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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