Question

Which one of the following is not a basic right for common shareholders?
   1)    Sharing a corporation's profits through dividends declared by the board of directors.

   2)    Maintaining one's proportionate ownership in the corporation.

   3)    Receiving a proportionate share of any assets remaining before the corporation pays its liabilities in the event of liquidation.

   4)    Participating in a corporation by voting in shareholder meetings.

Tammy Ltd. signed a note payable in exchange for equipment. How does this transaction affect Tammy Ltd.'s statement of cash flows?
   1)    Increases cash from investing activities.

   2)    Decreases cash from investing activities.

   3)    Increases cash from financing activities.

   4)    There is no effect.

Kyla Co. issues $1 million of new shares and pays $200,000 in cash dividends during 2019. In addition, the company issued a new bond for $1.5 million, and paid off existing bonds with a face value of $2 million. Kyla Co.'s net cash flow from financing activities in 2019 is:
   1)    An outflow of $100,000.

   2)    An inflow of $800,000.

   3)    An outflow of $200,000.

   4)    An inflow of $300,000.

In 2019, Tammy Asset Management Corp. (TAM) received $500,000 on collection from their customers. These cash receipts would be reported on TAM's 2019 cash flow statement as a(n):
   1)    not reported on the 2019 cash flow statement

   2)    investing activity

   3)    financing activity

   4)    operating activity

Which of the following is indicative of the best solvency situation?

   1)    a low debt to total assets and high earnings per share

   2)    a high inventory turnover and return on assets

   3)    a high times interest earned and an unused operating line of credit

   4)    a low debt to total assets and high times interest earned

Prior to recording the December 31, 2019, year-end adjusting entries for a small business, revenues exceed expenses by $50,000. The following information was known at December 31, 2019:

(1) Services amounting to $8,000 had been performed but not yet been billed or recorded.
(2) An advertising campaign is scheduled to run from Jan 1 to June 30, 2020. The $6,000 costs for the campaign were paid for on November 30, 2019.
(3) $7,000 of depreciation on capital assets for 2019 has not yet been recorded.
(4) The company paid $6,000 of a one-year insurance policy effective starting from Dec 1, 2019.

No adjustment has yet been made. Assuming the company prepares financial statements only on its fiscal year end December 31, what is its accounting income before taxes for 2019?
   1)    45,000

   2)    50,500

   3)    44,500

   4)    39,000