20 MCQ Lenders who rely on collateral as the security for a loan tend to focus their attention on the borrower

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Question 1 of 20 5.0 Points
Lenders who rely on collateral as the security for a loan tend to focus their attention on the borrower’s:
A. balance sheet.
B. income statement.
C. statement of cash flows.
D. statement of changes in stockholders’ equity.
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Mark for Review What’s This?Question 2 of 20 5.0 Points
Balance sheets prepared in compliance with GAAP reflect a mixture of:
A. current value and discounted future cash flows.
B. discounted cash flows and future values.
C. historical cost and future cash values.
D. historical cost, fair value, net realizable value, and discounted present values.
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Mark for Review What’s This?Question 3 of 20 5.0 Points
To Answer Questions 3-5, refer to the following information for Moor Sales Corporation.
Moor Sales recorded sales of $540,000 for the current year. It was determined that in the past approximately 2% of sales prove to be uncollectible. Having made the proper adjusting entry recognizing bad debt expense, the year-end balances are:
Accounts Receivable $74,000
Allowance for Doubtful Accounts 8,000
What is the net amount of Accounts Receivable that will appear on Moor’s balance sheet at year end?
A. $63,200
B. $66,000
C. $74,000
D. $82,000
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Mark for Review What’s This?Question 4 of 20 5.0 Points
What is the amount of bad debt expense that appears on the Moor income statement?
A. $2,800
B. $8,000
C. $10,800
D. $18,800
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Question 5 of 20 5.0 Points
What type of account is Allowance for Doubtful Accounts?
A. Contra-asset
B. Contra-equity
C. Current asset
D. Expense
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Mark for Review What’s This?Question 6 of 20 5.0 Points
Inventories are reported on the balance sheet at:
A. current market value.
B. historical cost.
C. net realizable value.
D. the lower of cost or market.
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Mark for Review What’s This?Question 7 of 20 5.0 Points
Property, plant, and equipment are reported on the balance sheet at:
A. current market value.
B. historical cost.
C. historical cost minus accumulated depreciation.
D. net realizable value.
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Mark for Review What’s This?Question 8 of 20 5.0 Points
Long-term debt is reported on the balance sheet at:
A. current market value.
B. discounted present value.
C. future value.
D. net realizable value.
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Mark for Review What’s This?Question 9 of 20 5.0 Points
The amount of income taxes recognized on the income statement but not yet payable to the government is found on the:
A. balance sheet in the account Deferred Income Taxes.
B. balance sheet in the account Income Taxes Payable.
C. income statement in the account Income Tax Expense—Current.
D. income statement in the computation of comprehensive income.
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Mark for Review What’s This?Question 10 of 20 5.0 Points
The retained earnings account is comprised of:
A. cash reinvested in the business by the shareholders.
B. cash retained in the business.
C. the cumulative earnings less dividends since the inception of the corporation.
D. the earnings of the corporation for the current year.
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Mark for Review What’s This?Question 11 of 20 5.0 Points
Operating activities on the statement of cash flows result from the cash effects of:
A. borrowing and repaying loans used in the production of revenue.
B. producing and delivering goods and services.
C. purchasing and disposing of fixed (plant) assets used in production of revenue.
D. selling stocks and bonds to raise capital for the production of revenue.
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Mark for Review What’s This?Question 12 of 20 5.0 Points
Investing activities on the statement of cash flows result from the cash effects of:
A. borrowing and repaying loans used in the production of revenue.
B. producing and delivering goods and services.
C. purchasing and disposing of fixed (plant) assets used in production of revenue.
D. selling stocks and bonds to raise capital for the production of revenue.
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Mark for Review What’s This?Question 13 of 20 5.0 Points
Financing activities on the statement of cash flows result from the cash effects of:
A. paying amounts owed to suppliers.
B. payment of dividends.
C. purchasing and disposing of debt securities.
D. receipt of dividends from equity investments.
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Mark for Review What’s This?Question 14 of 20 5.0 Points
QUESTIONS 14-20 ARE BASED ON THE FOLLOWING DATA FOR LEATHERWOOD COMPANY.
• All sales are on account.
• All purchases of inventory are on account.
• Only purchases of inventory run through accounts payable.
• Any purchases of equipment were made in cash.
• Any changes to long-term liabilities or stock accounts involved cash.
The Leatherwood Corporation comparative balance sheets for Year 1 and Year 2 with selected data are as follows.

A brief income statement for Year 2 shows the following:

How much cash did Leatherwood collect from customers during Year 2?
A. $150,000
B. $750,000
C. $850,000
D. $900,000
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Mark for Review What’s This?Question 15 of 20 0.0 Points
How much cash did Leatherwood pay to suppliers for inventory during Year 2?
A. $150,000
B. $400,000
C. $500,000
D. $600,000
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Mark for Review What’s This?Question 16 of 20 5.0 Points
How much did Leatherwood pay in dividends to shareholders in Year 2?
A. $30,000
B. $120,000
C. $150,000
D. $330,000
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Mark for Review What’s This?Question 17 of 20 5.0 Points
How much did Leatherwood pay in income taxes to the government in Year 2?
A. $30,000
B. $80,000
C. $110,000
D. $150,000
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Mark for Review What’s This?Question 18 of 20 5.0 Points
What are Leatherwood’s cash flows from operating activities for Year 2?
A. $0
B. $50,000 outflow
C. $150,000 outflow
D. $400,000 inflow
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Mark for Review What’s This?Question 19 of 20 5.0 Points
What are Leatherwood’s cash flows from investing activities for Year 2?
A. $0
B. $100,000 inflow
C. $100,000 outflow
D. $350,000 outflow
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Mark for Review What’s This?Question 20 of 20 5.0 Points
What are Leatherwood’s cash flows from financing activities for Year 2?
A. $0
B. $50,000 inflow
C. $50,000 outflow
D. $150,000 outflow

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