University of Maryland University College ACCT311 Intermediate Accounting II Spring 2016 Comprehensive Final Examination 1. Callable bonds a. can be redeemed by the issuer at some time at a pre-specified price. b. can be converted to stock. c. mature in a series of payments. d. None of these is correct. 2. The net amount of a bond liability that appears on the balance sheet is the a. call price of the bond plus bond discount or minus bond premium. b. face value of the bond plus related premium or minus related discount. c. face value of the bond plus related discount or minus related premium. d. maturity value of the bond plus related discount or minus related premium. 3. Which of the following shareholder rights is most commonly enhanced in an issue of preferred stock? a. The right to vote for the board of directors b. The right to maintain one’s proportional interest in the corporation c. The right to receive a full cash dividend before dividends are paid to other classes of Stock d.. The right to vote on major corporate issues 4. How would the declaration of a 10 percent stock dividend by a corporation affect each of the following on its books? Retained Total Stock- Earnings holders’ Equity a. Decrease No effect b. Decrease Decrease c. No effect Decrease d. No effect No effect 5. Which of the following taxes is not included in the payroll tax expense of the employer? a. State unemployment taxes b. Federal unemployment taxes c. FICA taxes d. Federal income taxes 6. Which of the following payroll taxes are paid by the employer? a. FICA taxes b. Federal unemployment taxes c. State unemployment taxes d. All of these 7. Which of the following statements characterizes an operating lease? a. The lessee records depreciation and interest. b. The lessee records the lease obligation related to the leased asset. c. The lessor transfers title of the leased property to the lessee for the duration of the lease term. d. The lessor records depreciation and lease revenue. 8. One of the four general criteria for a capital lease is that the present value at the beginning of the lease term of the minimum lease payments equals or exceeds a. the property’s fair market value. b. 90 percent of the property’s fair market value. c. 75 percent of the property’s fair market value. d. 50 percent of the property’s fair market value. 9. One of the four general criteria for a capital lease specifies that the lease term be equal to or greater than a. the estimated economic life of the property. b. 90 percent of the estimated economic life of the property. c. 75 percent of the estimated economic life of the property. d. 50 percent of the estimated economic life of the property. 10. On December 1, 2011, Blue Inc. signed an operating lease for a warehouse for ten years at $24,000 per year. Upon execution of the lease, Blue paid $48,000 covering rent for the first two years. How much should be shown in Blue’s income statement for the year ended December 31, 2011, as rent expense? a. $0 b. $2,000 c. $24,000 d. $48,000 11. In a lease that is recorded as an operating lease by the lessee, the equal monthly rental payments should be a. allocated between interest expense and depreciation expense. b. allocated between a reduction of the liability for leased assets and interest expense. c. recorded as a reduction in the liability for leased assets. d. recorded as a rental expense. 12. In calculating diluted earnings per share, which of the following should not be considered? a. The weighted average number of common shares outstanding b. The amount of dividends declared on cumulative preferred shares c. The amount of cash dividends declared on common shares d. The number of common shares resulting from the assumed conversion of debentures outstanding 13. The main purpose of reporting diluted earnings per share is to a. provide a comparison figure for debt holders. b. indicate earnings shareholders will r
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