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Multiple Choice Quiz
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1

Which one of the following is a current liability?
A)account receivable
B)mortgage payable over thirty years
C)note payable in nine months
D)inventory
E)retained earnings
2

Which of the following are components of stockholders' equity?

I. common stock
II. capital surplus
III. long-term debt
IV. retained earnings

A)I and IV only
B)I and II only
C)II and III only
D)II and IV only
E)I, II, and IV only
3

An asset which _____ is defined as a liquid asset.
A)cost less than its current value
B)declines in value each year
C)is used to manufacture a product
D)has a physical presence
E)is readily and easily converted to cash
4

Langley Enterprises sold $35,000 in stock and issued $50,000 in debt this past year. The firm also repaid $24,000 on its loans and paid $5,600 in interest. During the year, Langley paid quarterly dividends which totaled to $12,000 for the year and earned a net income of $38,700. The beginning balances at the start of the year were:

Preferred stock $ 80,000
Treasury stock 4,000
Long-term debt 92,000
Accumulated retained earnings 126,500
Capital surplus 248,600
Common stock 160,000

What is the book value of stockholders' equity at the end of the year?

A)$638,900
B)$642,100
C)$668,800
D)$680,800
E)$692,800
5

The financial records of Jennings, Inc., show current assets of $600 and net fixed assets of $1,500. The firm has $900 in liabilities, which is the amount the firm would need to pay today to extinguish its debt. The firm estimates that it could sell its current assets for $550 and its fixed assets for $1,700. What is the market value of the stockholders' equity?
A)$250
B)$800
C)$1,200
D)$1,350
E)$2,300
6

A firm's balance sheet shows current assets of $205, net fixed assets of $350, long-term debt of $140, and owners' equity of $280. What is the value of the firm's current liabilities?
A)$5
B)$50
C)$135
D)$145
E)$565
7

The balance sheet of the Jenkins Co. shows current assets of $1,600. These assets could probably be sold today for $1,500 cash. The firm owes $800 to its short-term creditors and $2,200 to its long-term creditors. The equipment of the firm has a book value of $3,200 and a market value of $2,800. What is the book value of the stockholders' equity?
A)$400
B)$600
C)$1,300
D)$1,700
E)$1,800
8

Which one of the following is a long-term liability?
A)deferred taxes
B)accounts payable
C)capital surplus
D)notes payable
E)treasury stock
9

A firm has cash of $20, accounts payable of $25, inventory of $95, net fixed assets of $135, accounts receivable of $30, and stockholder's equity of $100. The current assets equal _____ and the long-term debt is:
A)$140; $150.
B)$140; $155.
C)$145; $150.
D)$145; $155.
E)$150; $155.
10

An accrued expense is classified as:
A)a current asset.
B)a fixed asset.
C)a current liability.
D)a long-term liability.
E)stockholders' equity.





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