Question

1.Which of the following is the amount the borrower must pay back to the bondholders at maturity?

A. present value

B. principal amount

C. stated interest value

D. market value

2. Which of the following is a true statement regarding the effect of a stock split and stock dividend on total assets or liabilities?

A. Both a stock split and a stock dividend will increase total liabilities.

B. A stock split will increase total assets, but a stock dividend will not.

C. Both a stock split and a stock dividend will decrease total assets.

D. Neither a stock split nor a stock dividend will affect total assets or total liabilities.

3. Which of the following occurs when a cash dividend is declared?

A. Liabilities remain unchanged.

B. Stockholders' equity decreases.

C. Assets increase.

D. Liabilities decrease.

4. Which of the following statements is true of the Sarbanes-Oxley Act?

A. Those who commit securities fraud must be sentenced to 10 years in prison.

B. The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

C. All private and foreign companies must issue an internal control report evaluated by an outside auditor.

D. Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients.

5. Regarding the gross method of handling credit and debit card transactions, which of the following statements is correct?

A. The journal entry on the date of sale is identical to a journal entry made for a sale on account.

B. The total sale amount is deposited on the date of the actual sale.

C. On the date of sale, the Sales Revenue account is credited for the amount of sale less the processing fee.

D. The processing fees for all transactions processed for the month are deducted from the company's bank account, often on the last day of the month.

6. Which of the following is a requirement of the Sarbanes-Oxley Act?

A. The accounting firm that audits a public client must also provide consulting services for the same client.

B. An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report.

C. The Public Company Accounting Oversight Board must create new accounting standards.

D. The Public Company Accounting Oversight Board must conduct audits of public companies.

7. Which is the most liquid form of asset?

A. supplies

B. accounts receivable

C. cash

D. inventory

8. Which of the following statements describes a purchase order?

A. It is an order to purchase goods from a supplier.

B. It is a statement from the supplier showing the goods purchased and the amount due.

C. It is a report showing that the goods have been received in good condition, as ordered.

D. It is a document authorizing a payment to a supplier.

9. In preparing a statement of cash flows using the indirect method, the Depreciation Expense ________.

A. is added back as an adjustment to Net Income in the operating activities section

B. is shown as a negative cash flow in the investing activities section

C. is shown as a negative cash flow under operating activities

D. is added back to Purchases of Plant Assets under investing activities

10. Which of the following describes the financing activities section of the statement of cash flows?

A. It includes increases and decreases in long-term assets.

B. It reports on activities that create revenue or expenses for the entity's business.

C. It includes cash inflows and outflows related to long-term liabilities and equity.

D. It includes interest and dividend income and cash payments for interest expense.

11. The only part that differs in a statement of cash flows prepared by the direct method from one prepared by the indirect method is the ________.

A. non-cash investing and financing activities section

B. financing activities section

C. investing activities section

D. operating activities section

12. Which of the following describes the operating activities section of the statement of cash flows?

A. It reports on how cash flows affect the total assets and total liabilities.

B. It reports cash receipts and cash payments that increase or decrease long-term assets.

C. It reports on activities that create revenue or expenses for the entity's business.

D. It includes cash inflows and outflows related to long-term liabilities and equity.

Answer 1

1	At the maturity of the bond principal amount is paid to the bondholder
	So correct answer is B
2	Stock split and stock dividend only effects the stockholders equity internally and nothing else
	So correct answer is D
3	Cash dividend is declared so cash will decrease and stockholders equity will decrease as retained earnings
	So correct answer is B
4	Internal control report under sarbanes act should be reported by the outside auditor
	So correct answer is C