D104 Intermediate Accounting II - Set 5 - Part 3

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 41: Which method is typically used to compute depletion?

Straight-line method

Declining-balance method

Units-of-production method

Activity method

Question 42: How is the carrying amount of a bond calculated for the purpose of determining a gain or loss on redemption?

Face value less unamortized premium

Face value plus accrued interest

Face value less unamortized discount

Face value plus unamortized premium

Question 43: What happens when stock options are forfeited unexpectedly before they vest?

Record a loss in additional paid-in capital

Reallocate the remaining compensation expense

Reverse the recorded compensation expense to date

Credit common stock for the forfeited value

Question 44: How should stock issued for property or services be recorded?

At the fair value of the stock issued

At the par value of the stock issued

At the book value of the stock issued

At the lesser of fair value of stock or property received

Question 45: What happens when a bond is sold at a premium?

The carrying value increases over time

The carrying value decreases over time

The bond's interest expense is lower than the cash interest paid

The bond's interest expense is higher than the cash interest paid

Question 46: What is the payout ratio?

Net income / Preferred dividends

Cash dividends / (Net income - Preferred dividends)

Retained earnings / Total dividends

Cash dividends / Common stockholders' equity

Question 47: How should bond issuance costs be treated?

Expensed in the period incurred

Deducted from the bond premium

Accumulated in a deferred charge account and amortized

Recorded as a current liability

Question 48: What does the term "weighted average common shares outstanding" refer to?

Shares outstanding at the end of the year

Shares outstanding at the beginning of the year

Time-weighted number of shares outstanding during the year

Average shares outstanding over the past two years

Question 49: How is the times interest earned ratio calculated?

(Net income + Interest expense) / Interest expense

(Net income + Income tax expense) / Interest expense

(Net income + Interest expense + Income tax expense) / Interest expense

Net income / Interest expense

Question 50: What is the book value of a plant asset equal to?

The balance of the related accumulated depreciation account

The fair market value of the asset at a balance sheet date

The assessed value of the asset for property tax purposes

The asset's acquisition cost less the total related depreciation recorded to date

Congratulations! You have completed all 5 question sets. Good job!

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