A) Increases net income.
B) Increases stockholders' equity.
C) Has no effect on net income or stockholders' equity.
D) Decreases net income and decreases stockholders' equity.
Answer: B
A) 170,000.
B) 220,000.
C) 210,000.
D) 180,000.
Answer: A
A) Increasing the number of shares outstanding.
B) Increasing profits.
C) Reducing the number of shares outstanding.
D) Decreasing the company's obligation to pay dividends.
Answer: C
A) To distribute surplus cash without paying dividends.
B) To boost earnings per share.
C) To satisfy employee stock ownership plans.
D) All of the other answer choices are correct.
Answer: D
A) Preferred Stock.
B) Authorized Stock.
C) Treasury Stock.
D) Common Stock.
Answer: C
A) Increase assets and increase stockholders' equity.
B) Decrease assets and increase stockholders' equity.
C) Decrease assets and decrease stockholders' equity.
D) No effect on the accounting equation.
Answer: C
A) Treasury stock is reported on the balance sheet in the equity section.
B) The purchase and sale of treasury stock has no impact on the income statement.
C) Treasury stock represents a negative equity account.
D) All of the other answer choices are correct.
Answer: D
A) Treasury stock is recorded as an asset by the acquiring company.
B) Only losses on the sale of treasury stock are recorded in the income statement.
C) Stockholders' equity is reduced when treasury stock is acquired.
D) Gains and losses on the sale of treasury stock are recorded in the income statement.
Answer: C
A) Decrease.
B) Increase.
C) No effect.
D) Cannot determine from the given information.
Answer: C
A) Decrease.
B) Increase.
C) No effect.
D) Cannot determine from the given information.
Answer: A
A) A gain account is credited.
B) A loss is reported.
C) A revenue account is credited.
D) Additional Paid-in Capital is increased.
Answer: D
A) Debit Preferred Stock $5,000.
B) Credit Cash $5,000.
C) Credit Preferred Stock $5,000.
D) Credit Additional Paid-In Capital $4,000.
Answer: D
A) Convertible.
B) Redeemable.
C) Cumulative.
D) They all are potential features of preferred stock.
Answer: D
A) Common Stock.
B) Preferred Stock.
C) Bonds.
D) The other answer choices have equal preference.
Answer: C
A) Common Stock.
B) Preferred Stock.
C) Bonds.
D) They all have similar voting rights.
Answer: A
A) Bonds.
B) Preferred Stock.
C) Common Stock.
D) They all have similar expected returns.
Answer: A
A) Common Stock.
B) Preferred Stock.
C) Bonds.
D) They all have similar expected returns.
Answer: A
A) Is always recorded as a liability.
B) Is always recorded as part of stockholders' equity.
C) Can have features of both liabilities and stockholders' equity.
D) Is not included in either liabilities or stockholders' equity.
Answer: C
A) Debit to Cash $1,500.
B) Credit to Additional Paid-In Capital $1,400.
C) Credit to Common Stock of $100.
D) All of the other answer choices are correct.
Answer: D
A) Debit Common Stock $10,000.
B) Credit Cash $50,000.
C) Credit Common Stock $50,000.
D) Credit Additional Paid-In Capital $40,000.
Answer: D
A) Credit Common Stock $300,000.
B) Credit Cash $300,000.
C) Credit Common Stock $15,000.
D) Debit Additional Paid-In Capital $285,000.
Answer: C
A) Credit to Common Stock for $80,000.
B) Debit to Additional Paid-In Capital for $60,000.
C) Credit to Cash for $80,000.
D) Credit to Common Stock for $20,000.
Answer: D
A) A debit to Cash for $25,000.
B) A debit to Additional Paid-in Capital for $25,000.
C) A credit to Additional Paid-in Capital for $250,000.
D) A credit to Common Stock for $25,000.
Answer: D
A) A debit to Cash for $25,000.
B) A debit to Additional Paid-in Capital for $25,000.
C) A credit to Common Stock for $250,000.
D) A credit to Additional Paid-in Capital for $225,000.
Answer: D
A) Treasury Stock
B) Cash
C) Additional Paid-in Capital
D) Retained Earnings
Answer: C
A) Increase assets and increase liabilities.
B) Increase assets and increase revenue.
C) Increase assets and increase stockholders' equity.
D) Increase assets and decrease stockholders' equity.
Answer: C
A) Stock that is performing well.
B) Stock that has been authorized for issuance.
C) Stock issued plus treasury stock.
D) Stock in the hands of stockholders.
Answer: D
A) Authorized, issued, and outstanding.
B) Outstanding, issued, and authorized.
C) Issued, outstanding, and authorized.
D) Issued, authorized, and outstanding.
Answer: B
A) Ability to transfer ownership.
B) Additional taxes.
C) Limited liability.
D) Ability to raise capital.
Answer: B
A) The disadvantages are that generating capital is difficult and that owners have limited liability.
B) Disadvantages are that the business is subject to government regulations and double taxation on its income.
C) One disadvantage is that ownership is easy to transfer.
D) All of the other answer choices are correct.
Answer: B
I. Double taxation
II. Ability to raise capital
III. Ability to transfer ownership
IV. More paperwork
V. Limited liability
A) II.
B) II., III., V.
C) I., II., III.
D) II., IV., V.
Answer: B
A) The nature of the firm's business activities.
B) The shares of stock to be issued.
C) The initial board of directors.
D) All of the other answer choices are correct.
Answer: D
A) Dividend payments can be deducted for income tax purposes but interest payments cannot.
B) Expansion is accomplished without surrendering ownership control.
C) The risk of going bankrupt is less.
D) All of the other answer choices are correct.
Answer: C
A) The Financial Accounting Standards Board.
B) The Commission on Accounting Procedures.
C) The Accounting Principles Board.
D) The Securities and Exchange Commission.
Answer: D
A) To receive dividends when declared.
B) To share in the distribution of assets.
C) To elect board of directors.
D) To participate in the day-to-day operations.
Answer: D
A) Sole proprietorship.
B) Partnership.
C) Corporation.
D) Limited liability company (LLC).
Answer: C
A) Investment by friends and family of the founders.
B) Initial Public Offering.
C) Investment by the founders of the business.
D) Outside investment by "angel" investors and venture capital firms.
Answer: C
A) Investment by friends and family of the founders.
B) Investment by the founders of the business.
C) Initial public offering (IPO).
D) Outside investment by "angel" investors and venture capital firms.
Answer: C
A) Double Taxation
B) Liability
C) Restrictions on number of stockholders
D) Inability to transfer ownership
Answer: C
A) Treasury Stock.
B) Common Stock.
C) Sales Revenue.
D) Retained Earnings.
Answer: C
A) Interest expense/Net income.
B) Net income/Interest expense.
C) (Net income + interest expense + tax expense)/Interest expense.
D) Interest expense/(Net income + interest expense + tax expense).
Answer: C
A) The debt to equity ratio measures a company's risk and is calculated as total liabilities divided by stockholders' equity.
B) Leverage enables a company to earn a higher return using debt than without debt.
C) Return on assets is calculated as net income divided by the ending balance for total assets.
D) The times interest earned ratio compares interest expense with income available to pay interest charges.
Answer: C
A) Assuming more debt is always bad for the company.
B) Assuming more debt is always good for the company.
C) Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds.
D) Assuming more debt reduces leverage.
Answer: C
A) The debt to equity ratio.
B) The return on equity ratio.
C) The times interest earned ratio.
D) The return on assets ratio.
Answer: A
A) $800,000
B) $320,000
C) $1,000,000
D) $2,000,000
Answer: A
A) $2,000,000
B) $320,000
C) $1,000,000
D) $800,000
Answer: A
A) 1.5
B) 0.66
C) 2.5
D) 1.0
Answer: A
A) $1,250,000
B) $1,000,000
C) $1,500,000
D) $250,000
Answer: A
A) 10%
B) 11%
C) 9%
D) 25%
Answer: A
A) $42,500.
B) $45,000.
C) $4,250,000.
D) $85,000.
Answer: A
A) $102,323.
B) $84,557.
C) $104,376.
D) $100,000.
Answer: C
A) $104,265.
B) $95,842.
C) $71,906.
D) $100,000.
Answer: B
A) $102,323.
B) $84,557.
C) $104,376.
D) $100,000.
Answer: C
A) $104,625.
B) $95,842.
C) $71,906.
D) $100,000.
Answer: B
A) $163,200.
B) $186,410.
C) $214,877.
D) $200,000.
Answer: C
A) $139,609.
B) $186,410.
C) $214,877.
D) $200,000.
Answer: B
A) $163,200.
B) $186,410.
C) $214,878.
D) $200,000.
Answer: C
A) $139,609.
B) $186,410.
C) $214,877.
D) $200,000.
Answer: B
A) $537,194.
B) $464,469.
C) $538,973.
D) $500,000.
Answer: C
A) $537,194.
B) $464,469.
C) $359,528.
D) $500,000.
Answer: B
A) $537,194.
B) $464,469.
C) $538,972.
D) $500,000.
Answer: C
A) $537,194.
B) $464,471.
C) $359,528.
D) $500,000.
Answer: B
A) Future value of $1.
B) Present value of $1.
C) Future value of an ordinary annuity of $1.
D) Present value of an ordinary annuity of $1.
Answer: D
A) Future value of $1.
B) Present value of $1.
C) Future value of an ordinary annuity of $1.
D) Present value of an ordinary annuity of $1.
Answer: B
A) The face amount of the bond.
B) The total of the face amount plus all interest payments.
C) The present value of the face amount plus the present value of the periodic interest payments.
D) The face amount of the bond plus the present value of the periodic interest payments.
Answer: C
A) The future value of the face amount only.
B) The present value of the interest only.
C) The present value of the face amount plus the present value of the periodic interest payments.
D) The future value of the face amount plus the future value of the periodic interest payments.
Answer: C
A) A debit of $5 million to a loss account.
B) A credit of $5 million to a gain account.
C) No gain or loss on retirement.
D) A credit to cash for $18 million.
Answer: A
A) A debit of $3 million to a loss account.
B) A credit of $3 million to a gain account.
C) No gain or loss on retirement.
D) A credit to cash for $18 million.
Answer: B
A) A credit of $6 million to a gain account.
B) A debit of $6 million to a loss account.
C) No gain or loss on retirement.
D) A credit to cash for $42 million.
Answer: A
A) GAAP has been violated.
B) The issuing company will always report a non-operating gain.
C) The issuing company will always report a non-operating loss.
D) The issuing company may report a non-operating gain or loss.
Answer: D
Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds:
Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value
01/01/2021 $ 8,640,967
06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606
12/31/2021 300,000 347,464 47,464 8,734,070
06/30/2022 300,000 349,363 49,363 8,783,433
12/31/2022 300,000 351,337 51,337 8,834,770
A) 3%.
B) 4%.
C) 6%.
D) 8%.
Answer: D
Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds:
Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value
01/01/2021 $ 8,640,967
06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606
12/31/2021 300,000 347,464 47,464 8,734,070
06/30/2022 300,000 349,363 49,363 8,783,433
12/31/2022 300,000 351,337 51,337 8,834,770
A) 3%.
B) 4%.
C) 6%.
D) 8%.
Answer: C
A) Has a carrying value that increases over time.
B) Is contained in the balance sheet.
C) Is a schedule that reflects the changes in the carrying value of the bond over its term to maturity.
D) All of the other answer choices are correct.
Answer: C
A) Has a carrying value that decreases over time.
B) Is contained in the balance sheet.
C) Is a schedule that reflects the changes in carrying value of the bond over its term to maturity.
D) All of the other answer choices are correct.
Answer: C
A) Increases.
B) Decreases.
C) Remains the same.
D) Is equal to the change in book value.
Answer: B
A) Increases.
B) Decreases.
C) Remains the same.
D) Is equal to the change in book value.
Answer: A
A) Less than the interest expense.
B) Equal to the interest expense.
C) Greater than the interest expense.
D) More than if the bonds had been sold at a discount.
Answer: C
A) Less than the interest expense.
B) Equal to the interest expense.
C) Greater than the interest expense.
D) More than if the bonds had been sold at a premium.
Answer: A
A) If the bonds were sold at a discount.
B) If the bonds were sold at a premium.
C) If the bonds were sold at either a discount or a premium.
D) The carrying value of bonds will never increase.
Answer: A
A) If the bonds were sold at a discount.
B) If the bonds were sold at a premium.
C) If the bonds were sold at either a discount or a premium.
D) The carrying value of bonds will never decrease.
Answer: B
A) Decrease for bonds issued at a discount and decrease for bonds issued at a premium.
B) Decrease for bonds issued at a discount and increase for bonds issued at a premium.
C) Increase for bonds issued at a discount and decrease for bonds issued at a premium.
D) Increase for bonds issued at a discount and increase for bonds issued at a premium.
Answer: C
A) Face value.
B) Current bond market price.
C) Carrying value.
D) Face value less accrued interest since the last interest payment date.
Answer: C
A) Carrying value and interest expense increase.
B) Carrying value and interest expense decrease.
C) Carrying value decreases and interest expense increases.
D) Carrying value increases and interest expense decreases.
Answer: B
A) Carrying value and interest expense increase.
B) Carrying value and interest expense decrease.
C) Carrying value decreases and interest expense increases.
D) Carrying value increases and interest expense decreases.
Answer: A
A) Face amount times the stated interest rate.
B) Face amount times the market interest rate.
C) Carrying value times the market interest rate.
D) Carrying value times the stated interest rate.
Answer: C
A) Face amount times the stated interest rate.
B) Face amount times the market interest rate.
C) Carrying value times the market interest rate.
D) Carrying value times the stated interest rate.
Answer: A
A) Increase assets and liabilities.
B) Increase and decrease assets.
C) Increase assets and stockholders' equity.
D) Increase and decrease stockholders' equity.
Answer: A
A) Increase assets.
B) Increase liabilities.
C) Increase stockholders' equity.
D) Increase assets and liabilities.
Answer: D
A) Its stated rate was lower than the prevailing market rate of interest on similar bonds.
B) Its stated rate was higher than the prevailing market rate of interest on similar bonds.
C) The bonds were issued at a price less than their face value.
D) The bonds must be non-interest bearing.
Answer: B
A) The stated interest rate is less than the market interest rate.
B) The market interest rate is less than the stated interest rate.
C) The stated interest rate and the market interest rate are equal.
D) The stated interest rate and the market interest rate are unrelated.
Answer: B
A) Its stated rate was lower than the prevailing market rate of interest on similar bonds.
B) Its stated rate was higher than the prevailing market rate of interest on similar bonds.
C) The bonds were issued at a price greater than their face value.
D) The bonds must be non-interest bearing.
Answer: A
A) The stated interest rate is greater than the market interest rate.
B) The market interest rate is greater than the stated interest rate.
C) The stated interest rate and the market interest rate are equal.
D) The stated interest rate and the market interest rate are unrelated.
Answer: B
A) Face interest rate.
B) Cash payment rate.
C) Market interest rate.
D) Stated interest rate.
Answer: C
A) Face rate.
B) Yield rate.
C) Market rate.
D) Stated rate.
Answer: D
Bond 1 Bond 2 Bond 3 Bond 4
Stated Rate of Return 7 % 12 % 10 % 8 %
Market Rate of Return 8 % 10 % 10 % 9 %
A) Bond 1.
B) Bond 2.
C) Bond 3.
D) Bonds 2 and 4.
Answer: B
Bond 1 Bond 2 Bond 3 Bond 4
Stated Rate of Return 10 % 8 % 12 % 12 %
Market Rate of Return 12 % 8 % 15 % 10 %
A) Bond 1.
B) Bond 3.
C) Bonds 2 and 4.
D) Bonds 1 and 3.
Answer: D
Bond 1 Bond 2 Bond 3 Bond 4
Stated Rate of Return 5 % 10 % 7 % 10 %
Market Rate of Return 7 % 8 % 7 % 9 %
A) Bond 1.
B) Bond 2.
C) Bond 3.
D) Bonds 2 and 4.
Answer: D
Bond 1 Bond 2 Bond 3 Bond 4
Stated Rate of Return 5 % 7 % 12 % 10 %
Market Rate of Return 7 % 8 % 12 % 9 %
A) Bond 1.
B) Bond 2.
C) Bond 4.
D) Bonds 1 and 2.
Answer: D
A) $83,920.
B) $46,320.
C) $54,055.
D) $50,000.
Answer: C
A) $83,920.
B) $46,320.
C) $53,605.
D) $50,000.
Answer: B
A) Both bonds will sell for the same amount.
B) Bond X will sell for more than Bond Y.
C) Bond Y will sell for more than Bond X.
D) Both bonds will sell at a premium.
Answer: B
A) The actual yield rates.
B) The prime rate.
C) More than the market rate.
D) Less than the market rate.
Answer: C
A) Sold at a discount because the stated interest rate was higher than the market rate.
B) Sold for the $500,000 face amount less $10,000 of accrued interest.
C) Sold at a premium because the stated interest rate was higher than the market rate.
D) Sold at a discount because the market interest rate was higher than the stated rate.
Answer: D
A) Sold at a premium because the stated interest rate was higher than the market rate.
B) Sold for the $500,000 face amount plus $10,000 of accrued interest.
C) Sold at a discount because the stated interest rate was higher than the market rate.
D) Sold at a premium because the market interest rate was higher than the stated rate.
Answer: A
A) Equal to $500,000.
B) More than $500,000.
C) Less than $500,000.
D) The answer cannot be determined from the information provided.
Answer: B
A) Equal to $500,000.
B) More than $500,000.
C) Less than $500,000.
D) The answer cannot be determined from the information provided.
Answer: C
A) Equal to $500,000.
B) More than $500,000.
C) Less than $500,000.
D) The answer cannot be determined from the information provided.
Answer: A
A) Provide potential benefits only to the issuer.
B) Provide potential benefits only to the investor.
C) Provide potential benefits to both the issuer and the investor.
D) Provide no potential benefits.
Answer: C
A) This feature allows the issuer to repay the bonds before their scheduled maturity date.
B) This feature helps protect the issuer against future decreases in interest rates.
C) This feature usually allows the issuer to repay bonds just below face value.
D) This feature benefits the issuer more when the bond's stated rate is 8% and the market interest rate is 5%.
Answer: C
A) Secured and term.
B) Secured and serial.
C) Unsecured and term.
D) Unsecured and serial.
Answer: B
A) Secured and term.
B) Secured and serial.
C) Unsecured and term.
D) Unsecured and serial.
Answer: C
A) Bonds backed by collateral.
B) Bonds that mature in installments.
C) Bonds with greater risk.
D) Bonds issued below the face amount.
Answer: B
A) Bonds issued below the face amount.
B) Bonds that mature in installments.
C) Bonds that mature all at once.
D) Bonds issued above the face amount.
Answer: C
A) Matures on a single date.
B) Secured only by the "full faith and credit" of the issuing corporation.
C) Matures in installments.
D) Supported by specific assets pledged as collateral by the issuer.
Answer: D
A) Matures on a single date.
B) Secured only by the "full faith and credit" of the issuing corporation.
C) Matures in installments.
D) Supported by specific assets pledged as collateral by the issuer.
Answer: C
A) Matures on a single date.
B) Secured only by the "full faith and credit" of the issuing corporation.
C) Matures in installments.
D) Supported by specific assets pledged as collateral by the issuer.
Answer: A
A) Bonds involve less surrendering of ownership control.
B) Bonds usually have a lower interest rate.
C) Bonds are more likely to involve borrowing from a single lender.
D) Bond issue costs are usually lower than fees charged by the bank.
Answer: B
A) Note.
B) Interest.
C) Lease.
D) Principal or face amount.
Answer: D
A) $62,000.
B) $58,001.
C) $64,570.
D) $43,327.
Answer: B
A) $255,667.
B) $440,463.
C) $500,000.
D) $244,333.
Answer: A
A) $12,000.
B) $11,083.
C) $10,000.
D) $10,800.
Answer: C
A) Total assets of $527,666.30, and total liabilities of $325,000.00.
B) Total assets of $525,000.00, and total liabilities of $327,666.30.
C) Total assets of $527,666.30, and total liabilities of $327,666.30.
D) Total assets of $525,000.00, and total liabilities of $325,000.00.
Answer: D
A) $10,000.
B) $6,000.
C) $4,000.
D) $6,571.
Answer: B
A) Fair value of the underlying asset.
B) Present value of expected cash inflows from using the underlying asset.
C) Present value of lease payments over the lease period.
D) Leases are not reported in the balance sheet.
Answer: C
A) Decrease in assets.
B) Increase in expenses.
C) Increase in revenues.
D) Increase in liabilities.
Answer: D
A) Leasing may allow you to borrow with little or no down payment.
B) Leasing may offer protection against risk of declining asset values.
C) Leasing offers flexibility and lower costs when disposing of an asset.
D) Leasing transfers the title to the lessee at the beginning of the lease.
Answer: D
A) Issuing installment notes.
B) Leasing.
C) Issuing bonds.
D) Borrowing from banks.
Answer: B
A) Leasing may offer protection against the risk of declining asset values.
B) Lease payments often are lower than installment payments.
C) Leasing offers flexibility and lower costs when disposing of an asset.
D) All of the other answer choices are correct.
Answer: D
A) The effective interest rate would have been higher.
B) The annual cash payment would have been less.
C) The first year's interest expense would have been higher.
D) The second year's interest expense would have been less.
Answer: D
A) $197,612.34
B) $200,000.00
C) $196,779.01
D) $199,166.67
Answer: A
A) $4,054.32
B) $2,387.66
C) $3,220.99
D) $833.33
Answer: B
A) $1,000.00
B) $138.89
C) $833.33
D) $694.44
Answer: C
A) $1,791.60
B) $625.00
C) $2,416.60
D) $1,000.60
Answer: A
A) $625
B) $125
C) $7,500
D) $1,000
Answer: A
A) The final carrying value is not zero in either amortization schedule.
B) The final carrying value is zero in an amortization schedule for bonds.
C) The final carrying value is zero in both amortization schedules.
D) The final carrying value is zero in an amortization schedule for an installment note.
Answer: D
A) Increases expenses, decreases liabilities, and decreases assets.
B) Increases expenses, increases liabilities, and increases assets.
C) Increases expenses, decreases liabilities, and increases assets.
D) Increases expenses, increases liabilities, and decreases assets.
Answer: A
A) August 1, 2021
B) November 30, 2023
C) April 30, 2024
D) December 31, 2022
Answer: C
A) August 1, 2021
B) November 30, 2023
C) April 30, 2024
D) December 31, 2022
Answer: A
A) The monthly payments equal interest expense plus the reduction of the note's carrying value.
B) The amount of interest expense recorded each month increases over time.
C) The amount of the reduction in the note's carrying value recorded each month decreases over time.
D) All of the other answer choices are correct.
Answer: A
A) The same as in the fourth year.
B) The same as in the first year.
C) Less than in the fourth year.
D) More than in the fourth year.
Answer: D
A) The amount of interest expense increases.
B) The amount of interest expense decreases.
C) The amount of interest expense is unchanged.
D) The amounts paid for both interest and principal increase proportionately.
Answer: B
A) The amount that goes to decreasing the carrying value of the note increases.
B) The amount that goes to decreasing the carrying value of the note decreases.
C) The amount that goes to decreasing the carrying value of the note is unchanged.
D) The amounts paid for both interest and principal increase proportionately.
Answer: A
A) Companies that are believed to have high bankruptcy risk generally receive low credit ratings and must pay a higher interest rate for borrowing.
B) As a company's level of debt increases, the risk of bankruptcy increases.
C) Interest expense incurred when borrowing money, as well as dividends paid to stockholders, are both tax-deductible.
D) The mixture of liabilities and stockholders' equity a business uses is called its capital structure.
Answer: C
A) Bond contract.
B) Carrying value.
C) Capital structure.
D) Accounting equation.
Answer: C
A) Source of external financing.
B) Source of internal financing.
C) Liability.
D) Asset.
Answer: B
A) Bonds Payable.
B) Common Stock.
C) Leases.
D) Notes Payable.
Answer: B
A) Bonds Payable.
B) Common Stock.
C) Leases.
D) Notes Payable.
Answer: B
• Provide services on account.
• Pay workers' salaries in the current period.
• Purchase office supplies with cash.
• Pay dividends to stockholders.
A) 0.
B) 1.
C) 2.
D) 3.
Answer: B
A) Increase in current assets.
B) Increase in quick assets.
C) Decrease in current liabilities.
D) Decrease in current assets.
Answer: A
A) Increase in cash
B) Increase in inventory
C) Increase in accounts receivable
D) Increase in current investments
Answer: B
A) No change to the current ratio and decrease the acid-test ratio.
B) Increase the current ratio and increase the acid-test ratio.
C) Decrease the current ratio and decrease the acid-test ratio.
D) Decrease the current ratio and increase the acid-test ratio.
Answer: B
A) Increase the current ratio and increase the acid-test ratio.
B) No change to the current ratio and increase the acid-test ratio.
C) Decrease the current ratio and decrease the acid-test ratio.
D) Decrease the current ratio and increase the acid-test ratio.
Answer: B
