AC202 Principles of Accounting II Name Kayleigh Alves
Park University Version D
First Hour Exam-Chapters 13-15
Multiple Choice Questions (2 points each) Select the ONE, BEST Answer.
1. A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a:
A. Credit to Interest Income.
B. Credit to Premium on Bonds Payable.
C. Credit to Discount on Bonds Payable.
D. Debit to Premium on Bonds Payable.
E. Debit to Discount on Bonds Payable. 2. A company may retire bonds by:
A. Exercising a call option.
B. The holders converting them to stock.
C. Purchasing the bonds on the open market.
D. Paying them off at maturity.
E. All of these. 3. All of the following statements relating to accounting for international operations are True except:
A. Foreign exchange gains or losses can occur when accounting for international sales transactions.
B. Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet.
C. Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss) account.
D. The balance in the Foreign Exchange Gain (or Loss) account is reported on the income statement.
E. Foreign exchange gains or losses can occur when accounting for international purchases transactions. 4. Buying stock in a corporation is attractive to investors because:
A. Stockholders are not liable for the corporate acts or debts.
B. Stock is easily transferred.
C. A corporation has unlimited life.
D. Shareholders are not mutual agents of the corporation.
E. All of these. 5. Retained earnings:
A. Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
B. Can