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StudentQuestions-1 - 4. When a company has a financial...

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4. When a company has a financial leverage ratio close to 1 to 1, A. the company is primarily using debt financing for acquisition of its assets. B. the creditors of the company would most likely be willing to give a loan to the company since debt is low. C. the return to stockholders is lower than it would be if the ratio was higher. D. both B and C are correct. E. none of the above are correct. 5. At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants. December 31 was the end of the accounting year; therefore, the owner made the appropriate adjusting entry at that time. When the December rent was collected in January of the following year, the entry made by the apartment owner should include A. an increase (debit) to Rent revenue receivable. B. a decrease (credit) to Rent revenue receivable. C. a decrease (debit) to Rent revenue collected in advance. D. an increase (credit) to Rent revenue. E. a decrease (credit) to Cash. 7. Which of the following would cause retained earnings to decrease? A. Sale of service on credit. B. Loss on disposal of equipment. C. Dividend declared by the board of directors. D. Both B and C cause retained earnings to decrease. E. All of the above make retained earnings decrease. 8. Which of the following would not cause stockholders' equity to change? A. Sale of additional stock to investors. B. Earning revenue for services performed. C. Cash payment for dividends previously declared. D. Declaration of a cash dividend to stockholders. E. None of the above is correct. 9. On January 1, 2009 Gucci Brothers Inc. started the year with a $500,000 credit balance in retained earnings and $600,000 balance in capital stock. During 2009, the company earned net income of $100,000, declared a dividend of $15,000, and issued more stock for $25,000. What is total stockholders' equity on December 31, 2009? A. $1,100,000 B. $1,210,000 C. $1,225,000 D. $1,240,000 E. None of the above. 1
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10. The Harris TV Store had the following transactions in August: Complete the following statements: 2 $60,000
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11. Explain why a $5,000 revenue collected in advance for service would be recorded as a debit to cash and a credit to a liability account. 12. On October 1, 2009, World Services, Inc., was started with $100,000 invested by the owners as contributed capital. On October 31, the accounting records contained the following amounts: Prepare an income statement in good form for October 31, 2009 which is the first month of operation. Ignore taxes.
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StudentQuestions-1 - 4. When a company has a financial...

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