ACCT 2810 Exam 3 review Chapter 8

Which of the following payroll taxes is imposed on employers but not employees

Federal unemployment tax

When a bond is issued, what is the impact on the accounting equation

Cash and bonds payable increase

When bond interest is paid, what is the effect on the accounting equation

Cash and retained earnings decrease

When a bond is repaid, what is the effect on the accounting equation

Bonds payable and cash decrease

When a bond is issued at a discount, which of the following is true

Interest payments will be less than interest expense

When a bond is issued at a premium, which of the following is true

Interest payments will be more than the interest value

When a bond is issued at a premium, which of the following is true

Interest payments will be more than interest expense

When a bond is issued at par, which of the following

Interest payments will be equal to interest expense

When a bond is issued at a discount, it means

market rate > stated rate

A contingent liability should be disclosed only if it is

Reasonably possible

A contingent liability should be reorded as a liability if it is

It is probable and can be estimated

A contingent liability should not be disclosed or recorded if it is

Remote

Which of the following is true about a stock split

It increases the # of shares and decreases the par value

Treasury stock is

contra equity account

Which of the following is true about a stock dividend

It decreases retained earnings and increases contributed capital

What is the effect of the declaration of a cash dividend

Retained Earnings and dividends payable increase

Notes payable

Formal debt instruments

Bonds are typically

interest-bearing liabilities

The number of shares of stock currently in the hands of stockholders is called

Outstanding shares

The number of shares of stock currently in the hands of stockholders plus treasury shares is called

issued shares

Which of the following is true about a stock dividend

It has no impact on assets

When treasury stock is purchased, what happens

Total assets and Stock equity decrease

A company issues 1,000 shares of 5 par value common stock for 20 per share. How much does the C/S account increase by

1,000 x 5=5,000 $5,000

10,000,6%,6 months' note receivable issued on Jan.1. What will interest expense be on June 30

10,000 x 6% x 6/12= $300

For the previous example, what is the impact of repaying the note payable to the accounting equation

Cash decreases by 10,000+300= 10,300; Notes payable 10,000; Re by 300

What does the debt ratio measure

Solvency

What does earnings per share measure?

Profitability

If a note payable is due in 9 months. How is it classified

Current liability