Exam 2

Question 1

Intangible asset type

A name, term, or symbol used to identify a business and its products

Answer 1

Trademark

Question 2

Intangible asset type

A new kitchen gadget that can be produced by only one company

Answer 2

Patent

Question 3

Intangible asset type

Exclusive rights to produce and sell goods with one or more unique features

Answer 3

Patent

Question 4

Intangible asset type

Reputation of a company

Answer 4

Goodwill

Question 5

Intangible asset type

Nike Swoosh

Answer 5

Trademark

Question 6

Intangible asset type

Created from such favorable factors as location, product quailty, reputation, and managerial skill.

Answer 6

Goodwill

Question 7

stockholders equity concepts

account used when issue price exceeds par value of stock

Answer 7

additional paid in capital

Question 8

stockholders equity concepts

a value established for the protection of creditors

Answer 8

par value

Question 9

stockholders equity concepts

the number of shares currently held by stockholders

Answer 9

outstanding shares

Question 10

stockholders equity concepts

a class of stock that does not provide voting rights for shareholders

Answer 10

preferred stock

Question 11

stockholders equity concepts

the maximum number of shares a company can issue to shareholders

Answer 11

authorized shares

Question 12

stockholders equity concepts

the number of sharing originally sold to stockholders

Answer 12

issued shares

Question 13

stockholders equity concepts

a class of stock that provides voting rights for shareholders

Answer 13

common stock

Question 14

stockholders equity concepts

a value that the stock is worth on the stock exchange

Answer 14

market price

Question 15

amortization

Answer 15

the allocation of a premium or discount over the life of a bond

Question 16

interest expense

Answer 16

the value reported on the income statement

Question 17

effective rate

Answer 17

the return required by the market on the day of issuance

Question 18

bond premium

Answer 18

if the contract rate exceeds the market rate

Question 19

contract rate

Answer 19

the rate printed on the bond certificate

Question 20

bond discount

Answer 20

if the contract rate is less than the market rate

Question 21

interest payment equation

Answer 21

face value times contract rate times time VRT

Question 22

payroll item characteristics

Federal Income Tax

Answer 22

Amount is not limited, withheld from employee only

Question 23

payroll item characteristics
FICA - Social Security

Answer 23

Amount is limited, withheld from employee and matched by employer

Question 24

payroll item characteristics
FICA - Medicare

Answer 24

Amount is not limited, withheld from employee and matched by employer

Question 25

payroll item characteristics Federal Unemployment Compensation Tax (FUTA)

Answer 25

Amount is limited, paid by employer only

Question 26

payroll item characteristics State Unemployment Compensation Tax (SUTA)

Answer 26

Amount is limited, paid by employer only

Question 27

The Accounting Equation can be expressed as

Answer 27

Assets = Liabilities + Stockholders' Equity

Question 28

Four financial statements are usually prepared for a business; the Statement of Cash Flows is usually prepared last. The Statement of Stockholders’ Equity (SE), the Balance Sheet (BS), and the Income Statement (IS) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

Answer 28

IS,SE,BS

Question 29

Multiple-step income statements show

Answer 29

both gross profit and income from operations

Question 30

Which of the following should not be considered cash?

Answer 30

postage stamps

Question 31

Allowance for Doubtful Accounts is classified as a(n) ______ account on the ___________.

Answer 31

Correctd. Contra-asset, Balance Sheet

Question 32

The amount of a note is called the

Answer 32

face value

Question 33

Using, Principal (P), Rate of Interest (R), and Time (T), what is the formula to calculate Interest is:

Answer 33

P * R * T

Question 34

A 60-day, 12% note for $9,000, dated January 15, is received from a customer on account. The face value of the note is

Answer 34

$ 9,000

Question 35

The amount of the note plus the interest is called the

Answer 35

maturity value

Question 36

A 60-day, 12% note for $9,000, dated January 15, is received from a customer on account. The maturity value of the note is

Answer 36

$ 9,180

Question 37

The forumula for straight-line depreciation method is

Answer 37

cost - residual value / useful life

Question 38

The ________ value is the estimated value of the asset at the end of its useful life.

Answer 38

residual

Question 39

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Strike company sold the equipment for $55,000. What is the amount of the gain or loss on this transaction?

Answer 39

Gain of $ 5,000

Question 40

Par value

Answer 40

is the monetary value assigned per share in the corporate charter.

Question 41

If common stock is issued for an amount greater than par value, the excess should be applied

Answer 41

to Paid-in Capital in Excess of Par Value.

Question 42

The excess of issue price over par of common stock is termed a(n)

Answer 42

premium

Question 43

The liability for a dividend is recorded on which of the following dates?

Answer 43

the date of declaration

Question 44

What is the total stockholders' equity based on the following account balances? Common Stock $ 400,000 Paid-In Capital in Excess of Par 100,000 Retained Earnings 200,000 Treasury Stock 20,000

Answer 44

$ 680,000

Question 45

The primary purpose of a stock split is to

Answer 45

reduce the market price of the stock per share

Question 46

A corporation has 60,000 shares of $30 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be:

Answer 46

$ 24

Question 47

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

Answer 47

300,000

Question 48

When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at

Answer 48

a discount

Question 49

If the market rate of interest is greater than the contractual rate of interest, bonds will sell

Answer 49

at a discount.

Question 50

On June 8, Alton Co. issued an $95,000, 6%, 120-day note payable to Seller Co. What is the due date of the note?

Answer 50

October 6

Question 51

A current liability is a debt that is reasonably expected to be paid

Answer 51

within one year.

Question 52

The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n)

Answer 52

liability

Question 53

Most employers are required to withhold from employees which of the following employment taxes?

Answer 53

FICA tax

Question 54

The total earnings of an employee for a payroll period is referred to as

Answer 54

gross pay

Question 55

Net pay is:

Answer 55

The amount the employer must pay

Question 56

The following totals for the month of April were taken from the payroll register of Magnum Company. Salarie $ 12,000 Federal Income Tax Withheld $ 2,500 FICA Rate 7.5% FUTA .8% SUTA 5.4% Net Pay would be:

Answer 56

$ 8,600