Reference no: EM132719835

Questions -

Q1. Which one of the following would be considered a contingent liability?

A. A company owes $24,000 on inventories purchased on credit.

B. A company estimates that it will probably have to pay $30,000 to the EPA for a chemical spill.

C. A company has access to a line of credit with a bank in the amount of $46,000.

D. A company believes that it is reasonably possible it will lose a lawsuit and damages could be $26,000.

E. None of the above

Q2. Calculate Earnings per share on a company's common stock. If a company has net income of $100,000 and they have an average common stock share balance of 10,000 shares and they paid $5,000 in preferred dividend during the year. The earnings per share is:

A. $.90

B. $10.50

C. $9.50

D. $10.00

Q3. Calculate the annual interest payment that is required on preferred stock. If a company has 20,000 share of $100 par value 6% preferred stock, which it issued at $250 per share. The company pays interest to it shareholders annually. What is the amount they must pay to shareholders each year?

A. $20,000

B. $100,000

C. $300,000

D. $120,000

Q4. Which of the following items would not be found on a balance sheet? (One answer)

A. Stockholders' Equity

B. Property, plant and equipment

C. Bank financing

D. Retained Earning

E. Cost of Goods Sold