Free test bank for survey of accounting 7th edition

A summary of changes in the earnings retained by the corporation for a specific period of time is known as a n:... A summary of the cash receipts and cash payments for a specific period

Free Test Bank for Survey of Accounting 7th Edition by Warren Overview

60 Free Test Bank for Survey of Accounting 7th

Edition by Warren

Multiple Choice Questions

A low-cost emphasis strives to provide:

1 a no-frills, standardized products and services.

2 b products and services that provide unique market needs.

3 c products and services that provide prestige and image for customers.

4 d products and services that compete on features other than price.

Debts owed by a business are referred to as:

1 a accounts receivable.

2 b equities.

3 c stockholders’ equity.

4 d liabilities.

A list of assets, liabilities, and owners' equity as of a specific date

is a(n):

1 a income statement.

2 b balance sheet.

3 c statement of cash flows.

4 d retained earnings statement.

A summary of changes in the earnings retained by the

corporation for a specific period of time is known as a (n):

1 a income statement.

2 b balance sheet.

3 c statement of cash flows.

4 d retained earnings statement.

Rights to payments from customers are:

1 a liabilities.

2 b prepaid expenses.

3 c accounts receivable.

4 d accounts payable.

A summary of the cash receipts and cash payments for a specific period of time is a(n):

1 a income statement.

2 b balance sheet.

3 c statement of cash flows.

4 d retained earnings statement.

From the following information for BlueInks Corporation, compute the rate on return of assets.Net income after tax $30,548; Taxes

$6,785; Interest expense $3,545; Total assets at beginning of year $150,500; Total assets at end of year $175,684

1 a 20.90%

2 b 25.06%

3 c 22.89%

4 d 18.73%

Profitability ratios such as _ can be used to analyze and assess a company’s financial performance

1 a fixed assets turnover

2 b current ratios

3 c dividend pay out ratios

4 d return on assets

A corporation is _

1 a.an entity that is organized according to state or federal statutes and in which ownership is divided into

2 shares of stock

3 b an entity that is owned by an individual

4 c an entity which has unlimited liability to creditors for the debts of the company

5 d an entity which has limited access to capital

Tadeo, Inc had the following account balances at September 30,

2015 What is Tadeo’s net income for the month of September? Accounts Payable $ 5,800; Capital Stock 12,000; Cash 15,500; Equipment 14,300; Fees Earned 53,000; Miscellaneous Expense 16,800; Rent Expense 4,000; Retained Earnings 7,000; Wages Expense 17,850;

1 a $10,800

2 b $14,350

3 c $14,450

4 d $27,500

Managers are evaluated primarily on the business's:

1 a tax collections.

2 b growth.

3 c economic performance.

4 d all of these.

Return on assets of 4.25% implies:

1 a $4.25 return on every $100 of total assets.

2 b $4.25 return on every $100 of debt.

3 c $4.25 return on every $100 of current assets.

4 d $4.25 return on every $100 invested to purchase new assets.

Governments have an interest in the economic performance of business because of:

1 a tax collections.

2 b community involvement from the business.

3 c business incentives.

4 d all of these.

Financing activities _

1 a involve obtaining funds to operate a business

2 b involve obtaining assets such as buildings and equipment

3 c help to earn revenues and profits

4 d help to make wise investments in other companies

Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept?

1 a Business entity concept

2 b Going concern concept

3 c Objectivity concept

4 d Adequate disclosure concept

Capital market stakeholders have an interest in the company because:

1 a they provide incentives for the company to market their products.

2 b.they are part of the Marketing Department that is responsible for promoting the products or services to increase the business profits.

3 c they help market their products to customers or find vendors to supply needed inputs.

4 d they provide major financing for the business.

Due to various fraudulent business practices and accounting coverups in the early 2000s, Congress enacted the Sarbanes-Oxley Act of 2002 The act was responsible for establishing a new oversight board for public accountants called the:

1 a Generally Accepted Accounting Practices for Public Accountants Board.

2 b Public Company Accounting Oversight Board.

3 c Congressional Accounting Oversight Board.

4 d.Financial Accounting Standards Board.

A summary of the cash receipts and cash payments for a specific period of time is a(n):

1 a.income statement.

2 b balance sheet.

3 c statement of cash flows.

4 d retained earnings statement.

Cash investments made by the stockholders of the business are reported on the statement of cash flows in the:

1 a financing activities section.

2 b investing activities section.

3 c operating activities section.

4 d supplemental statement.

During 2015, Trinder Corporation had an increase in total assets

of $80,000 and an increase in total liabilities of $60,000

Assuming that capital stock increased by $8,000 and no

dividends were paid, calculate Trinder’s net income or net loss for

2015

1 a Net income of $12,000

2 b Net income of $72,000

3 c Net income of $28,000

4 d Net loss of $20,000

Cash collected from sales during the normal course of business would be an example of which type of business activity?

1 a Operating

2 b Investing

3 c Financing

4 d None of these

Univeo, Inc had revenues of $245,000, expenses of $180,000, and dividends of $45,000 during 2015 Which of the following statements is correct?

1 a Net income for 2015 totaled $65,000.

2 b Net income for 2015 totaled $20,000.

3 c Total retained earnings increased by $65,000 during 2015.

4 d Total retained earnings decreased by $20,000 during 2015.

Including all relevant data a reader needs to understand the

financial condition and performance of a business refers to which concept?

1 a Adequate disclosure concept

2 b Going concern concept

3 c Objectivity concept

4 d Business entity concept

If there was no beginning retained earnings, net income of

$30,300, and ending retained earnings of $8,000, how much were dividends?

1 a $38,300

2 b $22,300

3 c $6,000

4 d $8,000

Given the following list of accounts, calculate Total Assets:

Accounts Receivable $ 10,000; Capital Stock 20,000 Cash

25,300; Equipment 16,800; Fees Earned 44,400; Miscellaneous Expense 17,800; Rent Expense 3,250; Retained Earnings 7,850; Salaries Expense 15,400; Wages Expense 15,000;

1 a $52,100

2 b $55,300

3 c $54,600

4 d $40,050

A note payable requires payment of the amount borrowed plus:

1 a interest.

2 b tax.

3 c overhead.

4 d dividend.

Motel 6, a company that helps customers find budget motels across the nation, is an example of a business using which of the following?

1 a Low-cost emphasis

2 b Outreach emphasis

3 c Customer emphasis

4 d Premium-price emphasis

_ is the increase in assets from selling products and

services

1 a Revenue

2 b Liabilities

3 c Products

4 d Stockholders’ Equity

Heedy Company had the following account balances in 2015 and

2016, respectively Assuming dividends of $20,000 were paid in

2016, how much was net income? 2016 2015: Capital Stock $ 42,000 $ 40,000; Retained Earnings x 210,000; Total

Stockholders’ Equity $ 314,000 $ 250,000

1 a $62,000

2 b $82,000

3 c $272,000

4 d $252,000

Costs incurred in operating a business are also known as:

1 a revenues.

2 b expenses.

3 c liabilities.

4 d dividends.

60 Free Test Bank for Survey of Accounting 7th

Edition by Warren Multiple Choice Questions - Page 2 Which of the following is an appropriate representation of the accounting equation?

1 a Assets + Liabilities = Stockholders’ equity

2 b Assets = Liabilities + Stockholders’ equity

3 c Assets = Liabilities

4 d Assets = Liabilities + Retained earnings

Under a _, a business designs products that possess unique attributes or characteristics for which customers are willing to pay more

1 a premium-price emphasis

2 b outreach emphasis

3 c low-cost emphasis

4 d customer emphasis

The debt created by a business when it makes a purchase on account is referred to as an:

1 a account payable.

2 b account receivable.

3 c asset.

4 d expense payable.

Which of the following is an intangible asset?

1 a Patent

2 b Cash

3 c Land

4 d Equipment

What is the primary objective of most businesses?

1 a To maximize profits

2 b To pay dividends to stockholders

3 c To provide a benefit to society

4 d To manufacture a quality product

Which of the following is not an example of a capital market

stakeholder?

1 a Banks

2 b Owners

3 c Suppliers

4 d Stockholders

Which of the following is the correct order for preparing financial statements?

1 a Income statement, Statement of cash flows, Retained earnings statement,

Balance sheet

2 b Retained earnings statement, Income statement, Statement of cash flows,

Balance sheet

3 c Statement of cash flows, Retained earnings statement, Balance sheet, Income statement

4 d Income statement, Retained earnings statement, Balance sheet, Statement of cash flows

Use the following information to determine Total Stockholders’ Equity: Total Assets $ 45,000; Total Liabilities 18,000; Total

Stockholders’ Equity x; Total Retained Earnings 5,000

1 a $58,000

2 b $27,000

3 c $32,000

4 d $40,000

Which of the following are business stakeholders?

1 a Stockholders

2 b Suppliers

3 c Customers

4 d All of these

Which of the following is true about the cost principle?

1 a.It limits the economic data recorded in an accounting system to data related to the activities of that company.

2 b It initially records assets in the accounting records at their purchase price.

3 c It assumes that a company will continue in business indefinitely.

4 d.It reports the revenues earned by a company for a period with the expenses incurred in generating the revenues.

When a business borrows money, it incurs a(n):

1 a tax.

2 b liability.

3 c receivable.

4 d additional equity.

The "rules" of accounting are called:

1 a income tax regulations.

2 b SEC regulations.

3 c Internet rules.

4 d Generally Accepted Accounting Principles.

Which of the following types of business is popular for its ease and low cost of organizing?

1 a Not-for-profit

2 b Corporation

3 c Partnership

4 d Proprietorship

The return on assets is calculated by _

1 a dividing interest expense by average total asset and verage current assets

2 b dividing net income before taxes and interest expense by average total asset

3 c dividing average total asset and interest expense by net income taxes

4 d dividing net income before taxes and interest expense by average current assets

Which of the following is true of rate of return on assets?

1 a It is a measure of a company’s profitability.

2 b It is used to evaluate a company’s ability to pay off its short-term debts.

3 c It is used to determine the financial leverage of a company.

4 d It is a measure of the optimum capital structure.

Who has the first preference to assets in case a business fails?

1 a.Stockholders

2 b Long-term creditors

3 c Customers

4 d Employees

Which of the following is not a characteristic of a corporation?

1 a Corporations are organized as a separate legal taxable entity.

2 b Ownership is divided into shares of stock.

3 c Corporations experience an ease in obtaining large amounts of resources by issuing stock.

4 d A corporation can elect to be taxed as a partnership.

The resources a business owns are called:

1 a assets.

2 b liabilities.

3 c earnings.

4 d stockholders' equity.

_ is an example of internal stakeholders

1 a Managers

2 b Creditors

3 c Stockholders

4 d Suppliers

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as

a month or an year, is called a(n):

1 a prior period statement.

2 b statement of retained earnings.

3 c income statement.

4 d balance sheet.

Which of the following is true about limited liability company?

1 a It is taxed as a separate legal entity.

2 b It combines attributes of a partnership and a corporation.

3 c Its financial resources are limited to the individual owner’s resources.

4 d Its formation process is complex.

The role of accounting in business is best defined as:

1 a.an information system that provides reports to stakeholders about the economic activities and condition of a business.

2 b a method of forecasting the future profitability of a company.

3 c the policies, procedures, and strategies used in a business.

4 d transaction analysis.

The portion of a corporation's net income retained in the business

is called:

1 a interest earnings.

2 b dividends.

3 c tax expense.

4 d retained earnings.

The purchase of factory equipment would be an example of which type of business activity?

1 a Financing

2 b Investing

3 c Operating

4 d All of these

Which of the items below is not a business organization form?

1 a Venture entrepreneurship

2 b Proprietorship

3 c Partnership

4 d Corporation

Which of the following is considered an asset until consumed?

1 a Accounts payable

2 b Prepaid expense

3 c Accounts receivable

4 d Stockholders' equity

Which of the following would not be an example of a

merchandising business?

1 a The Walt Disney Company

2 b JCPenney

3 c Amazon.com

4 d Wal-Mart

When a product is sold, the cost of the product sold is often

called:

1 a cost of goods sold.

2 b selling cost.

3 c period cost.

4 d retained cost.

Shares of ownership are evidenced by issuing:

1 a shares payable.

2 b commercial paper.

3 c shares of stock.

4 d notes payable.

Which of the following businesses use a premium-price emphasis?

1 a Value City Furniture selling furniture at affordable prices

2 b Tommy Hilfiger selling products that have a unique image

3 c Wal-Mart reselling standardized products

4 d Southwest Airlines providing standardized services