1. The cost of a product warranty should be included as an expense in the (Point
ID: 2345935 • Letter: 1
Question
1. The cost of a product warranty should be included as an expense in the (Points : 2)
period the cash is collected for a product sold on account.
future period when the cost of repairing the product is paid.
period of the sale of the product.
future period when the product is repaired or replaced.
2. The market interest rate related to a bond is also called the (Points : 2)
stated interest rate.
effective interest rate.
contract interest rate.
straight-line rate.
3. Which statement below is NOT a reason for a corporation to buy back its own stock? (Points : 2)
Resale to employees
Bonus to employees
For supporting the market price of the stock
To increase the shares outstanding
4. Payroll taxes levied against employees become liabilities (Points : 2)
the first of the following month.
at the time the liability for the employee's wages is paid.
when earned by the employee.
at the end of an accounting period.
5. The primary purpose of a stock split is to (Points : 2)
increase paid-in capital.
reduce the market price of the stock per share.
increase the market price of the stock per share.
increase retained earnings.
6. Stockholders' equity (Points : 2)
is usually equal to cash on hand.
includes paid-in capital and liabilities.
includes retained earnings and paid-in capital.
is shown on the income statement.
7. Most employers are required to withhold from employees for (Points : 2)
both federal and state unemployment compensation.
only federal unemployment compensation tax.
only federal income tax.
only state unemployment compensation tax.
8. If a corporation issues only one class of stock, it is called (Points : 2)
common stock.
treasury stock.
no-par stock.
preferred stock.
9. Gross earnings for a payroll period less payroll deductions are referred to as (Points : 2)
overtime pay.
bonus pay.
gross pay.
take-home pay.
10. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? (Points : 2)
5,000
35,000
45,000
55,000
Explanation / Answer
1) period of the sale of the product. 2) stated interest rate. 3) To increase the shares outstanding 4) at the end of an accounting period. 5) reduce the market price of the stock per share. 6) includes retained earnings and paid-in capital. 7) both federal and state unemployment compensation. 8) common stock 9) gross pay. 10) 35,000
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