Financial Statements Paper 4

1

Unless the shares are specifically restricted, a holder of common stock with a preemptive right may share proportionately in all of the following except






2

Which one of the following statements is correct regarding the effect preferred stock has on a company?






3

A retained earnings appropriation can be used to






4

Which one of the following statements regarding treasury stock is correct?






5

Tyler Corporation purchased 10,000 shares of its own $5 par-value common stock for $25 per share. This stock originally sold for $28 per share. Tyler used the cost method to record this transaction. If the par-value method had been used rather than the cost method, which of the following accounts would show a different dollar amount?






6

A statement of cash flows is intended to help users of financial statements






7

On February 1, Year 1, a computer software firm agrees to program a software package. Twelve payments of $10,000 on the first of each month are to be made, with the first payment March 1, Year 1. The software is accepted by the client June 1, Year 2. How much Year 1 revenue should be recognized?






8

For financial statement purposes, the installment method of accounting may be used if the






9

Several of Fox, Inc.’s customers are having cash flow problems. Information pertaining to these customers for the years ended March 31, Year 7 and Year 8 follows:
............................................. 3/31/Yr 7... 3/31/Yr 8
Sales ......................................$10,000.... $15,000
Cost of sales ..............................8,000....... 9,000
Cash collections on Year 7 sale...s 7,000....... 3,000
on Year 8 sales............................ -- ..........12,000
If the cost-recovery method is used, what amount would Fox report as gross profit from sales to these customers for the year ended March 31, Year 8?






10

How should the balances of progress billings and construction in progress be shown at reporting dates prior to the completion of a long-term contract?






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