1. Which of the following statements about stock dividends is true?
- Stock dividends increase the number of shares outstanding.
- Stock dividends are more valuable than stock splits.
- Stock dividends are recorded as a reduction in cash.
- Stock dividends are dividends given in the form of stock from another company.
2. Treasury stock is:
- investments in government securities.
- retained earnings that have been appropriated to make equity investments.
- a company's own stock that it has repurchased.
- assets held for safekeeping in company's vaults.
3. Which of the following would not be found listed as a liability on a company's balance sheet?
- Operating lease obligations
- Capital lease obligations
- Bonds payable
- Taxes payable
4. Which of the following is not a component of pension expense?
- Service cost
- Interest cost
- Actual return on plan assets
- Expected return on plan assets
5. Deferral of unrealized gains or losses may generate major difference between the economic pension cost and the:
- reported pension.
- company pension.
- past pension.
- post retirement pension.
6. Minority interest appears on the balance sheet of some companies. Minority interest:
- is classified as a liability.
- is classified as equity.
- arises when a company records investments using the equity method.
- arises when a company owns controlling interest in another company, but less than 100%.
7. Which of the following would be found listed as a liability on a company's balance sheet?
- Operating lease obligations
- Projected benefit obligation
- Purchase commitment obligation
- Post-retirement benefits other than pension obligation
8. Investing in equity is considered to involve more risk than investing in:
- stocks.
- bonds.
- cash.
- gold.
9. A lessee must account for a lease as a capital lease if:
- the lease is shorter than 20 years.
- the present value of leases is greater than 10% of lessee's assets.
- the lease is longer than 20 years.
- None of the above
10. If a company that leases equipment from another company records these leases as operating leases rather than capital leases, its:
- recorded liabilities will be lower.
- recorded assets will be higher.
- total cash flows will be higher.
- leverage ratios will be higher