Test bank for financial accounting 1st edition

The payment of cash dividends would have which of the following effects on the accounting equation?. Increase stockholders’ equity Payment of expenses would have which of the following e

Test Bank for Financial Accounting 1st Edition

Items such as revenue, expenses and dividends are classified as:

1 A stockholders’ equity

2 B retained earnings

3 C liabilities

4 D assets

The payment of cash dividends would have which of the following effects on the accounting equation?

1 A Increase liabilities

2 B Decrease stockholders’ equity

3 C Increase assets

4 D Increase stockholders’ equity

Payment of expenses would have which of the following effects on the

accounting equation?

1 A Increase liabilities

2 B Decrease stockholders’ equity

3 C Increase assets

4 D Increase stockholders’ equity

Monies owed to a company by customers are classified as:

1 A payables

2 B dividends

3 C cash

4 D receivables

Casey’s is famous for their submarine sandwiches At the end of 2009,

Casey’s total assets were $345,000, and total liabilities were $129,500 How much was Casey’s stockholders’ equity?

1 A $474,500

2 B $345,000

3 C $215,500

4 D Some other number

ABC purchased office supplies on account for $50,000 How would this

transaction affect ABC’s accounting equation?

1 A Increase assets and stockholders’ equity by $50,000

2 B Increase liabilities and stockholders’ equity by $50,000

3 C Increase assets by $50,000 and decrease liabilities by $50,000

4 D Increase assets by $50,000 and increase liabilities by $50,000

Lauren purchased a computer on account for her business How will this transaction affect the accounting equation?

1 A Assets increase; liabilities decrease

2 B Assets increase; stockholder equity increases

3 C Assets increase; liabilities increase

4 D Assets decrease; liabilities increase

Beginning retained earnings are $65,000; sales are $29,500; expenses were

$33,000 and dividends paid are $3,500 How much is the net income or loss for the company?

1 A $26,000

2 B ($3,500)

3 C ($7,000)

4 D $0

Beginning retained earnings are $31,000; sales are $46,800; expenses are

$43,500 and dividends paid are $2,800 How much is the net income or loss for the company?

1 A $3,300

2 B $ 500

3 C $34,300

4 D ($3,300)

Beginning retained earnings are $65,000; sales are $29,500; expenses are

$33,000 and dividends paid are $3,500 How much is the amount in ending retained earnings?

1 A $58,000

2 B $61,500

3 C $68,500

4 D $65,000

Beginning retained earnings are $31,000; sales are $46,800; expenses are

$43,500 and dividends paid are $2,800 How much is the amount in ending retained earnings?

1 A $34,400

2 B $28,200

3 C $34,300

4 D $31,500

Which of the following is a FALSE statement?

1 A Revenues provide inward flows of assets

2 B Revenue is categorized as an asset

3 C Revenue is categorized as part of retained earnings

4 D Revenues are generated from the sale of goods and services

Which of the following is a TRUE statement?

1 A Purchasing office equipment for cash is a shift of assets

2 B Buying something on account decreases total liabilities

3 C Retained earnings do not include payments of dividends

4 D Paying off an account increases the total of assets

Dividends are part of:

4 D common stock.

Celia buys a new machine for her shop on credit The effect on the accounting equation is:

1 A increase liabilities, increase assets

2 B decrease liabilities, increase assets

3 C increase assets, increase stockholders’ equity

4 D increase liabilities, decrease stockholders’ equity

The first financial statement that is prepared is the:

1 A Statement of Cash Flows

4 D some other report

A statement of cash flows is usually prepared:

1 A first

2 B second

3 C third.

4 D last

A net income or loss is originally shown on the:

1 A statement of cash flows

4 D Statement of cash flows

Beginning retained earnings for the period would be shown on the:

1 A Statement of retained earnings

2 B Income statement

3 C Balance sheets

4 D Statement of cash flows

Of the financial statements, which is dated as of a specific date?

1 A Statement of cash flows

2 B Income statement

3 C Balance sheet

4 D Statement of retained earnings

Which of the financial statements includes a listing of assets owned by the company?

1 A Statement of cash flows

2 B Income statement

3 C Balance sheet

4 D Statement of retained earnings

The correct order for the preparation of financial statements is: 1 Statement

of cash flows 2 Income statement 3 Balance sheet 4 Statement of retained earnings

The balance sheet is used to report:

1 A results of operations for a specific date

2 B the financial position on a specific date

3 C results of operations for a specific period

4 D the financial position for a specific period

The income statement is used to report:

1 A results of operations for a specific date

2 B the financial position on a specific date

3 C results of operations for a specific period

4 D the financial position for a specific period

The issues pronouncements that are guidelines for accounting practice

Financial statements are prepared based on which of the following?

1 A Generally accepted accounting principles

2 B State and local laws

3 C Internal revenue service rules

4 D Generally accepted auditing standards

What is the purpose of financial accounting information?

1 A To provide biased information to the markets for trading

2 B To help investors, creditors, and others to make decisions

3 C To help managers plan and to control business operations

4 D To comply with SEC and IRS rules

Which of the following is considered an asset?

1 A items owned by the company

2 B future economic benefits of the company

3 C earnings kept in the business

4 D monies owed to third parties.

A business pays off a note payable What effect does this have on the

1 A Stockholders’ equity and assets go up

2 B There is no change in total assets

3 C Assets go up and liabilities go down

4 D Stockholders’ equity and liabilities go up

Revenues, expenses and dividends are all a part of:

1 A assets

2 B retained earnings

3 C liabilities

4 D common stock

Cash and Accounts receivable are both a part of:

1 A Increase in assets; increase in stockholders’ equity

2 B Increase in liabilities; increase in stockholders’ equity

3 C Decrease in assets; increase in stockholders’ equity

4 D Increase in assets; decrease in stockholders’ equity

Brandon borrowed money for his business from a local bank What accounts will be affected?

1 A Cash and accounts payable

2 B Cash and notes payable

3 C Accounts payable and revenue

4 D Accounts receivable and revenue

Revenues would have which of the following effects on the accounting

equation?

1 A Decrease stockholders’ equity

2 B Increase common stock

3 C Increase liabilities

4 D Increase stockholders’ equity

Which of the following is a written promise to pay?

If total assets remain the same and total stockholders’ equity increases, liabilities will:

1 A increase by the same amount

2 B decrease by the same amount

3 C remain the same

4 D increase by a different amount

A company purchases merchandise (inventory) for cash What is the net result on the accounting equation?

1 A Total assets will go up and total liabilities will go down

2 B Total assets will go up and stockholders’ equity will go up

3 C Total assets will not change

4 D Total liabilities will go up

ABC Company sold $34,000 worth of merchandise for cash Which of the following best describes the effect on the expanded accounting equation?

1 A Total assets and total liabilities will increase

2 B Total assets and total revenue will increase

3 C Total liabilities will increase and total revenue will decrease

4 D Total assets will decrease and total liabilities will increase

In the expanded accounting equation, revenues minus expenses are part of:

1 A assets

2 B retained earnings.

3 C liabilities

4 D dividends

Having a net loss will:

1 A decrease retained earnings

2 B increase retained earnings

3 C force the company into bankruptcy

4 D force the company to pay dividends

Casey invested $5,000 into his business He would:

1 A increase cash and increase stockholders’ equity

2 B decrease cash and increase stockholders’ equity

3 C increase liabilities and increase stockholders’ equity

4 D increase cash only

Liabilities are defined as:

1 A earnings retained in the business

2 B amounts owed to third parties

3 C stockholders’ claims to assets

4 D future economic benefits of a company

Assets are defined as:

1 A earnings retained in the business

2 B amounts owed to others

3 C stockholders’ claims to assets

4 D future economic benefits of a company

Payables are classified as:

Which of the following is NOT a reason to study accounting?

1 A A student will become aware of ethics in business

2 B A student will learn the language of business

3 C A student will better their math skills

4 D A student will learn to analyze financial information.

Which statement is FALSE about ethics?

1 A Ethics are rules

2 B Ethics are guidelines of how we perceive right and wrong

3 C Ethics are a vital part of the accounting profession

4 D Things may be unethical but still be legal

To ensure that the guidelines for right behavior are followed, a corporation should follow:

1 A ethical principles

2 B accounting law

3 C the corporate culture

4 D the leaders in their category of business

The main goal of understanding the process of accounting is to help ensure that the business is:

1 A profitable

2 B ethical

3 C competitive

4 D admired by the customer

Ethical dilemmas may be created by all of the following EXCEPT:

1 A individual actions contradicting the goals of the business

2 B the culture of the organization clashing with ethical principles.

3 C personal beliefs being different than organizational beliefs

4 D all of the employees having the same belief systems

Which of the following may create an ethical dilemma?

1 A A company takes an order in November for delivery in December

2 B A person sees another employee stealing and reports it

3 C A company underestimates its expenses

4 D All employee evaluations follow identical procedures

Ethical behavior is encouraged because:

1 A our society expects ethical behavior

2 B ethics and legality are the same things

3 C laws are the same as ethics

4 D it makes the world a better place

A tax service is primarily a:

1 A merchandising operation

2 B service operation

3 C not-for-profit operation

4 D manufacturing operation

Which of the following types of organization would probably sell goods?

4 D Limited liability companies

Which of the following business forms is similar to a corporation in regard to owner liability?

1 A Limited liability corporation

2 B Limited liability company

4 D limited liability company

Home Depot would primarily be considered a:

1 A manufacturing business

2 B merchandising business

1 A Reliability of the price in 1979

2 B Objectivity of the price in 1979

3 C Market price in 1979

4 D Current cost in 2009

Rick owns a sporting goods store In his initial accounting records, he

included his personal computer and all of his personal sporting gear Rick is violating what principle of accounting?

4 D Something other than what is listed

Most assets should be listed at:

1 A current replacement cost

2 B current market value

3 C historical cost

4 D inflation-adjusted cost

The accounting principle that best defines a business is:

The knowledge gained from studying accounting will aid you in making

decisions about a business to enhance its profitability

Generally Accepted Accounting Principles (GAAP) are the rules and guidelines governing accounting

The fundamental accounting equation is Assets plus Liabilities equals

The Statement of Retained Earnings is prepared to determine the final amount of retained earnings to show on the balance sheet

Many law and accounting firms are set up as partnerships

Items such as revenue, expenses and dividends are classified as:

4 D Increase stockholders’ equity

Payment of expenses would have which of the following effects on the

accounting equation?

1 A Increase liabilities

2 B Decrease stockholders’ equity

3 C Increase assets

4 D Increase stockholders’ equity

Monies owed to a company by customers are classified as:

1 A payables

2 B dividends

3 C cash.

4 D receivables

Casey’s is famous for their submarine sandwiches At the end of 2009,

Casey’s total assets were $345,000, and total liabilities were $129,500 How much was Casey’s stockholders’ equity?

1 A $474,500

2 B $345,000

3 C $215,500

4 D Some other number

ABC purchased office supplies on account for $50,000 How would this

transaction affect ABC’s accounting equation?

1 A Increase assets and stockholders’ equity by $50,000

2 B Increase liabilities and stockholders’ equity by $50,000

3 C Increase assets by $50,000 and decrease liabilities by $50,000

4 D Increase assets by $50,000 and increase liabilities by $50,000

Lauren purchased a computer on account for her business How will this transaction affect the accounting equation?

1 A Assets increase; liabilities decrease

2 B Assets increase; stockholder equity increases

3 C Assets increase; liabilities increase

4 D Assets decrease; liabilities increase

Beginning retained earnings are $65,000; sales are $29,500; expenses were

$33,000 and dividends paid are $3,500 How much is the net income or loss for the company?

1 A $26,000

2 B ($3,500)

3 C ($7,000)

4 D $0

Beginning retained earnings are $31,000; sales are $46,800; expenses are

$43,500 and dividends paid are $2,800 How much is the net income or loss for the company?

1 A $3,300

2 B $ 500

3 C $34,300

4 D ($3,300)

Beginning retained earnings are $65,000; sales are $29,500; expenses are

$33,000 and dividends paid are $3,500 How much is the amount in ending retained earnings?

1 A $58,000

2 B $61,500

3 C $68,500

4 D $65,000

Beginning retained earnings are $31,000; sales are $46,800; expenses are

$43,500 and dividends paid are $2,800 How much is the amount in ending retained earnings?

1 A $34,400

2 B $28,200

3 C $34,300

4 D $31,500

Which of the following is a FALSE statement?

1 A Revenues provide inward flows of assets

2 B Revenue is categorized as an asset

3 C Revenue is categorized as part of retained earnings

4 D Revenues are generated from the sale of goods and services

Which of the following is a TRUE statement?

1 A Purchasing office equipment for cash is a shift of assets

2 B Buying something on account decreases total liabilities

3 C Retained earnings do not include payments of dividends

4 D Paying off an account increases the total of assets

Dividends are part of:

1 A sales

2 B expenses