UGBA102A+Final+Review+12.1.09

UGBA102A+Final+Review+12.1.09 - INTRODUCTION TO FINANCIAL...

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INTRODUCTION TO FINANCIAL ACCOUNTING UGBA102A FINAL REVIEW SESSION GSI - KELLY KNORR December 1, 2009
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Schedule Today’s Agenda 1. Review of Practice Midterm 3 2. Any additional questions Good luck on the test!
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Practice Midterm 3 Solutions Multiple Choice 1. The amount of federal income tax that is withheld from employees' paychecks by the employer should A) be recorded as a current liability. B) be recorded as an asset. C) be recorded as revenue. D) not be recorded on the employer's books. E) be recorded as a long-term liability. The company must pay this amount to the government within a year 2. Apple Inc. is involved in a lawsuit, which has not been settled. It is probable that the jury will find in favor of the plaintiff and Apple Inc. will owe the plaintiff $10 million. How should Apple Inc. account for this lawsuit? A) No disclosure is necessary. B) Record a loss for $10 million. C) Disclose the lawsuit in the footnotes. D) Record a gain for $10 million. E) Reduce cash by $10 million. The amount is determinable and the likelihood that Apple will have to pay is probable
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4. All of the following are considered as rights of common stockholders except for A) voting. B) dividends. C) residual claim. D) continuous life. E) preemptive right. 2. On July 1, 2008, Blitzer Inc. signed a one-year, 6% interest-bearing note payable for $5,000. Blitzer Inc. has a December 31 yearend. The amount of interest expense that should be reported in the 2008 income statement for this note (rounded to the nearest dollar) would be A) $300 B) $200 C) $150 D) $ 25 E) $ 0 Practice Midterm 3 Solutions Multiple Choice $5,000 x 6% x 6/12 = $150 Principal x int rate x amt of year = int expense The corporation has continuous life, not the stockholder 3
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A company has a balance in common stock of $250,000, additional paid-in capital of $2,000,000, retained earnings of $6,000,000 and a par value per share of common stock of $1.00. They declare and issue a 6-to-5 stock split when the market price per share is $10. Which of the following is true after the stock split? A) The number of shares of common stock outstanding will increase to 300,000. B) Total stockholders’ equity will be reduced. C) The par value will decrease to $.50 per common share. D) Retained earnings will decrease by $500,000. E) The market price per share will likely be $12. Multiple Choice
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UGBA102A+Final+Review+12.1.09 - INTRODUCTION TO FINANCIAL...

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