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Accy 4356 Test

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1.
Which amount do you record when recording an asset and liability (if lessee)?
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2.
For Lessee: if economic substance of lease is NOT transferring ownership, then
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3.
When you retire treasury shares, which accts are affected and how?
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4.
Describe the Open Market method to buyback stock.
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5.
What is the external decision maker's view of debt reductions?
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6.
What do you record each year when you're trying to pay off at maturity?
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7.
Why would Management want to avoid a capital lease as opposed to an operating lease?
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8.
What are some outlets to buyback stock?
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9.
When you reduce equity by retiring callable PS, what accounts are affected and how?
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10.
Which accts are affected when you pay your final int. payment and retire at bond maturity?
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11.
Reasons to reduce Owner's Equity:
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12.
Treasury stock (is/is not) an asset
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13.
What do you record after making payments on an operating lease?
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14.
Why lease instead of buy?
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15.
Minimum Lease payments include:
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16.
When you convert debt, how is the B/S affected?
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17.
What types of leases have to have disclosures in financial stmts? What must be disclosed?
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18.
If you retire CS and pay LESS than the original issue price, which accts are affected and how?
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19.
Leases contracts include any provision wanted by
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20.
Are executory costs included in minimum lease payments?
A.
Most common (95%), a corporation acquires shares in the same manner that an individual investor would normally acquire shares, through a stock broker.
B.
is not; it is a contra-equity account. DO NOT recognzie gain or loss.
C.
1. Distribute Earnings of corporations to investors in form of dividends.2. Return the contributed capital to investors (repurchase, recall stock, distribute liquidating dividend)
D.
both lessee (acquires right to use) and lessor
E.
Record the PV MIN. LEASE PYMTS (using lower of lessee's incremental borrowing rate or the implicit rate if the lease is known)
F.
Open market, fixed-price tender offer, dutch auction tender offer, targeted block repurchase
G.
NO. Expensed by lessee.
H.
1. record interest expense at market rate in effect AT ISSUANCE.2. Amortizing the discount away (eventually down to zero)3. Net carrying value is getting closer to face value
I.
1. Tax advantages (rent expense is deductible) 2. Off-balance-sheet financing (avoid recording financial obligation) 3. Avoid risk of obsolescence
J.
ALL types of leases (operating and capital leases). General description of leases must be disclosed
K.
remove TS and remove CS and APIC based on original price. Adjust other OE accts as needed. No TOTAL change to OE, though.
L.
reduce CS at par, reduce APIC-CS at orig price, increase APIC-Stock Retirement by remainder. Decrease cash
M.
Bond payable decreases by $1000, Cash decreases by $1000
N.
reduces risk and increases financial flexibility
O.
1. Periodic payments 2. Bargain Purchase Price 3. Guaranteed Residual value to be returned 4. Any pymts due to failure to renew/extend lease
P.
Keeping an asset and liability off the balance sheet affects the debt-to-equity ratio and Return on Assets (ROA)
Q.
Increase Rent Expense on IS (or Oper. Exp.), and decrease Operating Activities on CF Stmt
R.
Cash decreases, PS & APIC decreases, RE decreases, total OE decreases (but no "loss")
S.
Remove debt from books and replace with equity. A gain or loss may be recognized, but NO affect on stmt CF
T.
Operating Lease. Otherwise, Capital Lease
Type the Answer that corresponds to the displayed Question.
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21.
When there is a "loss" from buying back stock, which accts are affected and how?
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22.
How do you treat proceeds of convertible bonds at issuance?
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23.
1. Accg recognizes economic substance over legal form 2. Accg recognizes legal form over economic substance
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24.
When there is a "gain" from buying back stock, which accts are affected and how?
Type the Question that corresponds to the displayed Answer.
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25.
ownership-type costss: maintenance, insurance, etc.
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26.
When an investor may acquire a large block of stock and threaten a hostile takeover unless management buys out the "greenmailer" at a price premium.

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