AC Exam 2 Version B

AC Exam 2 Version B - AC 210 Fall 2007 Exam #2 Version B...

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AC 210 Fall 2007 Exam #2 Version B Score _____/100 NAME_______________________ Student Number_________________________ 1. Blue Waters Fisheries had a retained earnings account balance on January 1, 2004 of $12,000. During 2004 the firm had net income of $7,200 and paid a $3,600 cash dividend. What is the December 31, 2004 retained earnings balance? a. $19,600 b. $21,200 c. $12,200 d. $15,600 2. Use the following complete bond amortization table, which is not labeled $2,850 $285 $240 $45 $2,895 $2,895 $290 $240 $50 $2,945 $2,945 $295 $240 $55 $3,000 What was the total face or maturity value of the bonds? a. $2,850 b. $2,895 c. $2,945 d. $3,000 3. The primary purpose of The Sarbanes Oxley Act of 2002 was to a. require publicly traded companies to file registration statements with the SEC. b. make financial statements more understandable to investors and creditors. c. increase the comparability and consistency of financial statements. d. promote investor confidence in the stock and bond markets. 4. The Securities Act of 1933 required publicly traded corporations to: a. have annual stockholders’ meetings b. pay income taxes c. file registration statements prior to going public d. provide annual reports to investors
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5. If a company has 500,000 shares of common stock authorized, 300,000 shares issued, and 50,000 shares held as treasury stock, how many shares are outstanding? a. 300,000 b. 350,000 c. 250,000 d. 500,000 6. Stacey Company has the following account balances in its stockholders' equity: Preferred Stock of $10,000, Common Stock of $8,000, Paid-in Capital in excess of par value of $16,000, and Retained earnings of $25,000. What is the amount of the company's contributed capital? a. $18,000 b. $34,000 c. $16,000 d. $59,000 7. The dividend payout ratio indicates a. whether more shares should be purchased in the future b. the portion of current earnings paid out in dividends c. the return on investment earned by the investor this period d. the degree of financial leverage used by the firm 8. The Financial Accounting Standards Board a. is a governmental organization that issues Statements of Accounting Standards b. sets accounting standards for both businesses and state and local governments c. establishes accounting rules used by the federal government d. is a private organization that currently sets accounting standards for businesses in the United States e. all of the above 9. Which of the following situations is NOT consistent with the circumstances of a capital lease? a. a company records a liability equal to the present value of the lease payments b. a company controls the resource as if it had been purchased c. a company records a rental expense every time a lease payment is made d. a company is using a resource for most of its useful life
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10. As the proportion of debt increases in a firm's capital structure, what happens to the firm's risk and financial leverage? a. both decrease
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AC Exam 2 Version B - AC 210 Fall 2007 Exam #2 Version B...

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