Final Exam

Question 1

What’s the entry for issuing a note payable

Answer 1

Debit: cash
Credit: Note payable

Question 2

What’s the adjusting entry for interest

Answer 2

Debit: interest expense
Credit: interest payable

Question 3

What’s the equation to find interest

Answer 3

Amount x Rate x Time

Question 4

How do you record the note and interest being payed

Answer 4

Debit: Notes payable and interest payable
Credit: cash

Question 5

How do you record sales tax in relation to your sales

Answer 5

Debit: Cash
Credit: sales revenue and sales tax payable

Question 6

How do you record unearned revenue and then how do you record when it’s earned

Answer 6

Debit: cash
Credit: unearned rev

Debit: unearned rev
Credit: revenue

Question 7

How do you record payroll and then the actual payment of payroll

Answer 7

Debit: salaries and wages expense
Credit: ant and all taxes payable

Debit: salaries and wages payable
Credit: Cash

Question 8

How do you record bonds issued at discount

Answer 8

Debit cash and discount on bonds payable

Credit: bonds payable

Question 9

How do you record bonds issued at premium

Answer 9

Debit: Cash
Credit: bonds payable and premium on bonds payable

Question 10

What’s the entry for redeeming a bond

Answer 10

Debit: Bond payable
Credit: cash

Question 11

What are the 4 types of bonds

Answer 11

Secured: assets are pledged as collateral
Unsecured: issued against the credit if the borrower
Convertible: can be converted into CS
Callable: can be called back

Question 12

What’s the entry to issue a bond

Answer 12

Debit cash

Credit bonds payable

Question 13

What is liquidity

Answer 13

Measured the short term ability of a company to pay its obligations and meet its unexpected needs for cash

Question 14

Debt to asset ratio

Answer 14

Total liabilities/ total asset

Question 15

Times interest earned

Answer 15

Net income+interest expense+income tax expense / interest expense

Question 16

What are the pros and cons to being a corporation

Answer 16

Pros: separate legal existence, limited liability of stockholders, shareholders may sell their stock, can acquire capital, continuous life, corporate management

Cons: government regulations, additional taxes

Question 17

What is the entry for issuing common stock

Answer 17

Debit: cash
Credit: common stock

Question 18

What is always credited in the issuance of common stock or preferred stock?

Answer 18

Common stock or preferred stock and PIC in excess of par value (if applicable)

Question 19

If you purchase treasury stock what’s the JE

Answer 19

Debit: TS
Credit: Cash

Question 20

Equation to find outstanding stock

Answer 20

Issued stock - Treasury Stock

Question 21

What are the three relevant dates for dividends

Answer 21

Declaration, record, and payment

Question 22

What dividends require entries and if they do what are they

Answer 22

Declaration:
Debit: cash dividends
Credit: dividends payable

Record date: no entry

Payment date:
Debit: dividends payable
Credit: cash

Question 23

What are the results of stock dividends

Answer 23

Decrease in retained earnings and increase in paid in capital

Question 24

Payout ratio

Answer 24

Cash dividends declared on common stock / net income

Higher number better

Question 25

Return on common stockholders equity

Answer 25

Net income- preferred dividends / avg. common stock holders equity

Question 26

Operating activities include

Answer 26

Sale of goods or services Interest received and dividends received All income statement items

Question 27

Investing activities include

Answer 27

Sale of ppe Sale of investments Collection of loans

Question 28

Financing activities include

Answer 28

Sale of CS | Issuance of bonds and notes

Question 29

How are current assets and current liabilities added back or taken out of operating activities

Answer 29

Increase in CA is subtracted Decrease in CA is Added Increase in CL is added Decrease in CL is subtracted

Question 30

Free cash flow

Answer 30

Net cash provided by operating activities - capital expenditures - cash dividends

Question 31

In terms of the corporate life cycle what's does financing do as a company goes from introductory, growth, maturity and decline.

Answer 31

Financing is highest during introductory and slowly decline throughout

Question 32

In terms of the corporate life cycle what's does operating do as a company goes from introductory, growth, maturity and decline.

Answer 32

Lowest during introductory and peaks at maturity then declines during decline

Question 33

In terms of the corporate life cycle what's does investing do as a company goes from introductory, growth, maturity and decline.

Answer 33

Lowest during introductory Peaks at maturity Declines at decline

Question 34

What is included in the operating activists section

Answer 34

``` Net income Depreciation Disposal on PA AR INV Prepaid exp. AP Accrued expenses ```

Question 35

What is included in the investing activists section

Answer 35

Purchase of investments Purchase or sale of PA Disposal of PA

Question 36

What is included in the financing activists section

Answer 36

Redemption of bonds Issued stock Payment of cash dividend

Question 37

What effect do dividends have on the composition of SE,total SE, par or stated value, and number of shares outstanding

Answer 37

Changes composition of SE Total SE remains the same No effect on the par or stated value Increases the number of shares outstanding

Question 38

Total paid in capital

Answer 38

Stock dividend: increase | Stock split: no change

Question 39

Total RE

Answer 39

Stock dividend: decrease | Stock split: no change

Question 40

Total par value

Answer 40

Stock dividend: increase | Stock split: no change

Question 41

Par value per share

Answer 41

Stock dividend: no change | Stock split: decrease

Question 42

Shares outstanding

Answer 42

Stock dividend: increase | Stock split: increase

Question 43

What are the signs for amortization of a discount

Answer 43

+ - -

Question 44

What are the signs for amortization of a premium

Answer 44

- - +