Mock MT exam

Mock MT exam - Bus 321 Mock Exam MULTIPLE-CHOICE QUESTIONS...

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1 Bus 321 Mock Exam MULTIPLE-CHOICE QUESTIONS 2.5 marks each, in total there will be 16 questions in the Mid-term : Select the best answer for each of the following questions. Answer each of these questions by circling the letter corresponding to the answer you have chosen. If more than one answer is chosen for a question, that question will not be marked. Incorrect answers will be marked as zero. No account will be taken of any explanations you offer. 1. Which of the following statements about dividends is true? a) A cash dividend will result in the reduction of cash and reduction of retained earnings when declared. b) A share dividend will result in the reduction of cash and a decrease in shareholders’ equity when declared. c) A cash dividend will result in a decrease in cash and an increase in shareholders’ equity when paid. d) A share dividend will result in no change in the total shareholders’ equity at the time of declaration or payment. Answer: d 2. Which of the following statements about the current ratio is true? a) The current ratio compares current accounts receivable to current accounts payable. b) The current ratio compares current assets to current liabilities. c) The current ratio compares quick assets to current liabilities. d) The current ratio compares current accounts receivable to sales. Answer: b 3. Boyle and Jain Corporation has 40,000 $4-dividend cumulative preferred shares and 50,000 common shares. In its first 2 years of operation, the firm earned $100,000 and $250,000, respectively, all of which was used to pay dividends. What was the common share dividend per share at the end of the second year? a) $0.60 b) $0.75 c) $1.80 d) $2.67 Answer: a. [(100,000-4*40,000)+250,000-4*40,000]/50,000=0.6
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2 Use the following information to answer question 4 and 5: B&I has 10,000, $8 cumulative, fully-participating preferred shares (issued at $2,000,000) and 500,000 common shares. In 2003, the first year of operation, it earned net income of $60,000, all of which was used to pay preferred dividends. In 2004, the corporation earned net income of $650,000,
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Mock MT exam - Bus 321 Mock Exam MULTIPLE-CHOICE QUESTIONS...

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