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Intermediate accounting final
test questions
32
Accounting
Undergraduate 4
04/24/2016

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Cards

Term
Cash dividends become a liability of the company
Definition
On the date of declaration
Term
A market adjustment for trading security would
Definition
Be a gain or loss in the income statement
Term
If bonds are issued at a premium and the effective interest method is used for amortizing the premium, the interest expense for succeeding six month periods will be
Definition
A decreasing amount
Term
If shares of common stock are held as treasury shares, accounted for using the par value method, the entry to record the retirement of these shares would include
Definition
A credit to Treasury Stock for the par value of the shares retired
Term
Under what condition would Drake company use the equity method to account for its investment
Definition
Purchase of 35% of Lowes common stock
Term
The journal entry to record an interest payment for bonds issued at a discount would include
Definition
A credit to Discount on Bonds Payable
Term
A stock split will
Definition
Change the par value per share but not the total par value of stock outstanding
Term
If an available for sale security is sold, the seller would record
Definition
A realized gain or loss for the difference between the selling price and the original cost
Term
If the contract rate on a bond issue is 6% and the effective rate when the bonds are issued is
Definition
An amount below par value
Term
Cash dividends become a liability of the company
Definition
On the date of declaration
Term
A market adjustment for trading securities would
Definition
Be a gain or loss in the income statement
Term
How are the following accounts classified?
Definition
Dividends Payables:
Liability

Property Dividends Payable:
Liability

Stock Dividends Distributable:
Equity
Term
Jake Company has an investment in Loverill Company stock and accounts for it using the equity method earns an income during the year, Jake would
Definition
Credit Income from Investment in Loverill stock
Term
If bonds are issued at a discount, the amount of discount amortized will be
Definition
More for the second interest payment than the first if the effective interest method is used
Term
The cash interest paid on bonds equals the
Definition
Face value multiplied by the stated rate
Term
If the convert. at preferred stock is converted to common stock and the total par value of the company's original amount received for the preferred stock converted, the journal entry to record the company
Definition
A credit to Paid in Capital in Excess of Par-Common Stock
Term
Mikel Company issued bonds in the primary bond market; Port Company purchased some, purchased some of these bonds from Port in the secondary market between interest payment bonds until they mature. Stone will debit the Investment in Held to Maturity Securities-
Definition
The present value of the future cash receipts, net of accrued interest
Term
Zero-interest bonds would sell at
Definition
A discount
Term
Minimum lease payments could include any of the following except
Definition
Executory costs
Term
Net operating losses (NOLs)
Definition
Can be carried back 2 years and then forward up to 20 years until used
Term
In calculating diluted earnings per share, stock options are considered using
Definition
The treasury stock method
Term
The implicit rate in a lease is the rate
Definition
The lessor has built into the required lease payments
Term
Which of the following items would lead to a deferred tax liability
Definition
Installment rates
Term
In calculating diluted earnings per share, dilutive convertible bonds are
Definition
Adding the after tax interest to the numerator
Term
If an asset is returned to the lessor at the end of the lease term
Definition
The lessee would pay the lessor if the asset is worth less than its guaranteed
Term
If the company uses accelerated tax depreciation and straight line book depreciation the
Definition
Noncurrent deferred tax liability
Term
If a lease is cancelled it would be
Definition
An operating lease
Term
In calculating basic earnings per share, preferred dividends are subtracted in the number which one
Definition
The preferred stock is noncumulative and no dividends were declared
Term
A midyear stock split would
Definition
Adjust the weighted average number of shares of common stock outstanding
Term
The useful life used to amortize an asset under a capital lease would
Definition
Be the life of the lease if the life of the lease is at 75% of the life
Term
Interest received from an investment in municipal bonds would be
Definition
A nontaxable revenue
Term
Diluted earnings per share is a number calculated by considering
Definition
Changes in the number of shares of common stock hypothetically outstanding are actually dilutive
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