Question 1  of 37

Kelly Petroleum Products owns furniture that was purchased for $19,600. Accumulated depreciation is $17,300. The furniture was sold for $3,800. Which of the following is the correct entry to record the transaction?



Gain on sale of furniture5,000

Accumulated depreciation17,300



Gain on sale of furniture3,800


Accumulated depreciation17,300


Accumulated depreciation17,300




Accumulated depreciation17,300


Gain on sale of furniture1,500




Question 2  of 37

If a corporation issues only one class of stock, it must be:




either common or preferred.



Question 3  of 37

The price that the stockholder pays to acquire stock from the corporation is the:


stated price.

issue price.

authorized price.

par price.


Question 4  of 37

Treasury stock is a(n):


asset account.

liability account.

contra-equity account.

contra-asset account.


Question 5  of 37

A company may declare a stock split to:


reduce total equity.

decrease the market value of the stock.

avoid playing a cash dividend.

reduce retained earnings.


Question 6  of 37

The stockholders’ equity section of the balance sheet for Minturn Mine Corporation is shown below:

Paid-in capital

Preferred stock, 7%, $50 par value, 10,000 shares authorized, 7,000 shares issued, redemption value $56 per share$350,000

Paid-in capital in excess of par value-preferred50,000

Common stock, $10 par value, 50,000 shares authorized, 18,000 shares issued180,000

Paid-in capital in excess of par value-common20,000

Total Paid-in capital$600,000

Retained earnings300,000

Total stockholders’ equity$900,000


Assume there are 2 years’ dividends in arrears on the preferred stock, including the current year. The book value per share for preferred stock is:







Question 7  of 37

An investor who wishes to know whether a company is successful in using its assets to earn income for the individuals who finance the business should review the:


earnings per share.

return on assets.

times-interest ratio earned.

return on equity.


Question 8  of 37

Return on equity is a ratio that:


a) cannot be calculated if the company has preferred stock in addition to common stock.

b) is calculated by dividing net income plus preferred dividends by average common stockholders’ equity.

c) shows the relationship between net income available for common stockholders and average common stockholders’ equity.

d) Both A and B are correct.


Question 9  of 37

Which of the following are included in the cost of land?


The cost of paving

The cost of fencing

The cost of clearing the land

The cost of outdoor lighting


Question 10  of 37

Which of the following is included in the cost of a plant asset?


Amounts paid to ready the asset for its intended use

The purchase price of the plant asset

The taxes paid

All of the above


Question 11  of 37

Which of the following depreciation methods allocates an equal amount of depreciation to each year?





All of the above

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