S08_136B_MT2

S08_136B_MT2 - May 14, 2008 Anderson ECON 136B MT 2 v. 1...

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May 14, 2008 Anderson ECON 136B MT 2 v. 1 Name _________________________ Complete questions 1-28 (multiple choice) on green scantron and the remaining problems in your blue-books. WRITE YOUR EXAM VERSION NUMBER ON YOUR SCANTRON. 1. Costs of issuing new stock is treated by the company as: a. An expense when incurred. b. An asset. c. A reduction to equity. d. An asset which is amortized over the life of the company. 2. If a company were to liquidate, who would be the last in line to receive cash from the liquidation? a. Common shareholders. b. Vendors. c. Preferred shareholders. d. Debt holders. 3. A bond with an 8% stated rate which sold in a 6% market would have what characteristic at the end of its term: a. A premium which has not yet been fully amortized. b. A fully amortized premium. c. A discount which has not yet been fully amortized. d. A fully amortized discount. 4. Which of the following is not a form of "contributed capital"? a. Retained earnings b. Preferred stock c. APIC d. Common stock 5. Which of the following entitles the owner to unlimited upside if a company does well: a. debt. b. common stock. c. preferred stock. d. All forms of equity ownership. 6. Stock subscriptions receivable are reported as: a. Current assets. b. Contra-equity. c. Long term assets. d. Equity.
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MT 2 v. 1--Page 2 7. Stockholders interest is a "residual interest" representing the assets remaining after all debts have been extinguished. a. False b. True 8. The interest rate written in the terms of the bond indenture is known as the a. coupon rate, nominal rate, or stated rate. b. nominal rate. c. stated rate. d. coupon rate. 9. A bond with an 8% stated rate which sold in a 6% market would have what characteristic in the middle of its term: a. A fully amortized discount. b. A discount which has not yet been fully amortized. c. A fully amortized premium. d. A premium which has not yet been fully amortized. 10. A company pays for goods by issuing a 5 year note payable in the amount of $100,000 and bearing interest at 1%. A bank would lend them the money under the circumstances at a rate of 8%. Which of the following statements is most accurate? a. Accounting should reflect the transaction based on the legal form over the substance of the transaction. b. The purchase price of the goods for accounting purposes is less than $100,000. c. The purchase price of the goods for accounting purposes is more than $100,000. d. The purchase price of the goods for accounting purposes is $100,000. 11. If you assume that interest rates are very low right now and that they are likely to increase, then: a. Interest rates have no impact on the value of a bond after it has been issued. b. Investments in bonds do not change in value over time. c.
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This note was uploaded on 01/31/2010 for the course ECON 136B taught by Professor Anderson during the Spring '08 term at UCSB.

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S08_136B_MT2 - May 14, 2008 Anderson ECON 136B MT 2 v. 1...

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