Test bank for financial accounting 8th edition part 1 by weygandt

Test Bank for Financial Accounting 8th Edition Part 1 by WeygandtAccountants refer to an economic event as a 1.. business events are recorded only at the end of the year.. Communication

Test Bank for Financial Accounting 8th Edition Part 1 by Weygandt

Accountants refer to an economic event as a

1 a purchase

2 b sale

3 c transaction

4 d change in ownership

The process of recording transactions has become more efficient because

1 a fewer events can be quantified in financial terms

2 b computers are used in processing business events

3 c more people have been hired to record business transactions

4 d business events are recorded only at the end of the year

Communication of economic events is the part of the accounting process that involves

1 a identifying economic events

2 b quantifying transactions into dollars and cents

3 c preparing accounting reports

4 d recording and classifying information

Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?

1 a The appointment of a new CPA firm to perform an audit

2 b The purchase of a new computer

3 c The sale of store equipment

4 d Payment of income taxes

The use of computers in recording business events

1 a has made the recording process more efficient

2 b does not use the same principles as manual accounting systems

3 c has greatly impacted the identification stage of the accounting process.

4 d is economical only for large businesses

The accounting process involves all of the following except

1 a identifying economic transactions that are relevant to the business

2 b communicating financial information to users by preparing financial reports

3 c recording nonquantifiable economic events

4 d analyzing and interpreting financial reports

The accounting process is correctly sequenced as

1 a identification, communication, recording

2 b recording, communication, identification

3 c identification, recording, communication

4 d communication, recording, identification

Which of the following techniques are not used by accountants to interpret and report financial information?

1 a Graphs

2 b Special memos for each class of external users

3 c Charts

4 d Ratios

Accounting consists of three basic activities which are related to economic events of an organization These include

1 a identifying, recording, and communicating

2 b identifying, calculating, and responding

3 c classifying, numbering, and reporting

4 d issuing, reporting, and classifying

All of the following statements are correct except

1 a Good decision-making depends on good information

2 b A vital element in communicating economic events is the accountant's ability to analyze and interpret reported information

3 c The origins of accounting are generally attributed to Socrates, a classical Greek philosopher, who promoted accounting as a social contract

4 d The information that a user of financial information needs depends upon the kinds of decisions the user makes

Which of the following would not be considered an internal user of accounting data for the GHI Company?

1 a President of the company

2 b Production manager

3 c Merchandise inventory clerk

4 d President of the employees' labor union

Which of the following would not be considered an external user of

accounting data for the GHI Company?

1 a Internal Revenue Service Agent

1 a The president of a company

2 b The controller of a company

3 c Creditors of a company

4 d Salesmen of the company

Which of the following is an external user of accounting information?

2 b Customers.

3 c Investors

4 d All of these are external users

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

The final step in solving an ethical dilemma is to

1 a identify and analyze the principal elements in the situation

2 b recognize an ethical situation

3 c identify the alternatives and weigh the impact of each alternative on

stakeholders

4 d recognize the ethical issues involved

The first step in solving an ethical dilemma is to

1 a identify and analyze the principal elements in the situation

2 b identify the alternatives

3 c recognize an ethical situation and the ethical issues involved

4 d weigh the impact of each alternative on various stakeholders

Ethics are the standards of conduct by which one's actions are judged as

1 a identify and analyze the principle elements in the situation

2 b contact law enforcement regarding any violations of corporate ethics codes

3 c identify the alternatives and weigh the impact of each alternative on

various stakeholders

4 d recognize an ethical situation and the ethical issues involved

In order to increase comparability, in recent years, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

1 a convergence

2 b monetary unit assumption

3 c the cost principle

4 d the fair value principle

Martin Corporation purchased land in 2007 for $290,000 In 2013, it

purchased a nearly identical parcel of land for $460,000 In its 2013 balance sheet, Martin valued these two parcels of land at a combined value of

$920,000 By reporting the land in this manner, Martin Corp has violated the

1 a cost principle

2 b convergence

3 c economic entity assumption

4 d monetary unit assumption

Andre Dickinson, owner of Andre's Fine Wines, also owns a personal residence that costs $475,000 The market value of his residence is $625,000 During preparation of the financial statements for Andre's Fine Wines, the

accounting concept most relevant to the presentation of Andre's home is

1 a the economic entity assumption

2 b the fair value principle

3 c the monetary unit assumption.

4 d convergence

Generally accepted accounting principles are

1 a income tax regulations of the Internal Revenue Service

2 b standards that indicate how to report economic events

3 c theories that are based on physical laws of the universe

4 d principles that have been proven correct by academic researchers

The cost principle requires that when assets are acquired, they be recorded

The cost of an asset and its fair value are

1 a never the same

2 b the same when the asset is sold

3 c irrelevant when the asset is used by the business in its operations

4 d the same on the date of acquisition

The body of theory underlying accounting is not based on

1 a physical laws of nature

1 a Feasible Accounting Standards Body.

2 b Financial Accounting Studies Board

3 c Financial Accounting Standards Board

4 d Financial Auditors' Standards Body

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles It is true that

1 a they are both governmental agencies

2 b the SEC is a private organization of accountants

3 c the SEC often mandates guidelines when no accounting principles exist

4 d the SEC and FASB rarely cooperate in developing accounting standards

GAAP stands for

1 a Generally Accepted Auditing Procedures

2 b Generally Accepted Accounting Principles

3 c Generally Accepted Auditing Principles

4 d Generally Accepted Accounting Procedures

Financial information that is capable of making a difference in a decision

The Duce Company has five plants nationwide that cost a total of $100

million The current fair value of the plants is $500 million The plants will be recorded and reported as assets at

The proprietorship form of business organization

1 a must have at least three owners in most states

2 b represents the largest number of businesses in the United States

3 c combines the records of the business with the personal records of the owner.

4 d is characterized by a legal distinction between the business as an economic unit and the owner

The economic entity assumption requires that the activities

1 a of different entities can be combined if all the entities are corporations

2 b must be reported to the Securities and Exchange Commission

3 c of a sole proprietorship cannot be distinguished from the personal economic events of its owners

4 d of an entity be kept separate from the activities of its owner

A business organized as a corporation

1 a is not a separate legal entity in most states

2 b requires that stockholders be personally liable for the debts of the business

3 c is owned by its stockholders

4 d terminates when one of its original stockholders dies

The partnership form of business organization

1 a is a separate legal entity

2 b is a common form of organization for service-type businesses

3 c enjoys an unlimited life

4 d has limited liability

Which of the following is not an advantage of the corporate form of business organization?

1 a Limited liability of stockholders

Which of the following is true regarding the corporate form of business

organization?

1 a Corporations are the most prevalent form of business organization

2 b Corporate businesses are generally smaller in size than partnerships and proprietor-ships

3 c The revenues of corporations are greater than the combined revenues of partnerships and proprietorships

4 d Corporations are separate legal entities organized exclusively under

federal law

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the

1 a stand alone concept

2 b monetary unit assumption

3 c corporate form of ownership

4 d economic entity assumption

Ted Leo is the proprietor (owner) of Ted's, a retailer of golf apparel When recording the financial transactions of Ted's, Ted does not record an entry for

a car he purchased for personal use Ted took out a personal loan to pay for the car What accounting concept guides Ted's behavior in this situation?

1 a Pay back concept

2 b Economic entity assumption

3 c Cash basis concept

4 d Monetary unit assumption

A basic assumption of accounting assumes that the dollar is

1 a unrelated to business transactions

2 b a poor measure of economic activities

3 c the common unit of measure for all business transactions

4 d useless in measuring an economic event

Mofro’s Computer Repair Shop started the year with total assets of $270,000 and total liabilities of $180,000 During the year, the business recorded

$450,000 in computer repair revenues, $270,000 in expenses, and Mofro paid dividends of $45,000 Stockholders' equity at the end of the year was

1 a $90,000

2 b $135,000

3 c $180,000

4 d $225,000

Mofro’s Computer Repair Shop started the year with total assets of $270,000 and total liabilities of $180,000 During the year, the business recorded

$450,000 in computer repair revenues, $270,000 in expenses, and Mofro paid dividends of $45,000 Mofro's stockholders' equity changed by what amount from the beginning of the year to the end of the year?

2 b the statement of financial position

3 c the statement of cash flows

4 d the statement of retained earnings

The primary purpose of the statement of cash flows is to report

1 a a company's investing transactions

2 b a company's financing transactions

3 c information about cash receipts and cash payments of a company

4 d the net increase or decrease in cash

All of the financial statements are for a period of time except the

1 a income statement

2 b retained earnings statement.

3 c balance sheet

4 d statement of cash flows

The ending retained earnings amount is shown on

1 a the balance sheet only

2 b the retained earnings statement only

3 c both the income statement and the retained earnings statement

4 d both the balance sheet and the retained earnings statement

Black Keys Company began the year with stockholders' equity of $185,000 During the year, the company recorded revenues of $250,000, expenses of

$190,000, and paid dividends of $20,000 What was Black Keys’ stockholders' equity at the end of the year?

1 a $185,000

2 b $225,000

3 c $245,000

4 d $265,000

Kennedy Company issued stock to Ed Kennedy in exchange for his investment

of $25,000 cash in the business The company recorded revenues of

$185,000, expenses of $140,000, and had paid dividends of $10,000 What was Kennedy's net income for the year?

1 a $35,000

2 b $45,000

3 c $55,000

4 d $60,000.

Centro-matic Company began the year with stockholders' equity of $15,000 During the year, Centro-matic issued additional shares of stock in exchange for cash of $21,000, recorded expenses of $60,000, and paid dividends of

$4,000 If Centro-matic’s ending stockholders' equity was $56,000, what was the company’s revenue for the year?

The net income reported by Fat Possum’s Service Shop for the year was

1 a $50,000

2 b $70,000

3 c $80,000

4 d $90,000

Misra Company compiled the following financial information as of December

31, 2013: Revenues $170,000 Retained earnings (1/1/13) 30,000 Equipment 40,000 Expenses 125,000 Cash 45,000 Dividends 10,000 Supplies 5,000 Accounts payable 20,000 Accounts receivable 35,000 Common stock 40,000 Misra’s assets on December 31, 2013 are

1 a $90,000

2 b $125,000

3 c $180,000

4 d $245,000

Misra Company compiled the following financial information as of December

31, 2013: Revenues $170,000 Retained earnings (1/1/13) 30,000 Equipment 40,000 Expenses 125,000 Cash 45,000 Dividends 10,000 Supplies 5,000 Accounts payable 20,000 Accounts receivable 35,000 Common stock 40,000 Misra’s stockholders' equity on December 31, 2011 is

1 a $45,000

2 b $70,000

3 c $105,000

4 d $125,000

Teamboo Company’s stockholders' equity at the beginning of August 2013 was $300,000 During the month, the company earned net income of $70,000 and paid dividends of $30,000 At the end of August 2013, what is the amount

On January 1, 2013, Cat Power Company reported stockholders' equity of

$470,000 During the year, the company paid dividends of $20,000 At

December 31, 2013, the amount of stockholders' equity was $550,000 What amount of net income or net loss would the company report for 2013?

1 a Net loss of $20,000

2 b Net income of $60,000

3 c Net income of $80,000

4 d Net income of $100,000

Stahl Consulting started the year with total assets of $20,000 and total

liabilities of $5,000 During the year, the business recorded $16,000 in

catering revenues and $10,000 in expenses Stahl issued stock of $3,000 and paid dividends of $5,000 during the year The stockholders' equity at the end

of the year was

1 a $11,000

2 b $18,000

3 c $19,000

4 d $21,000

Stahl Consulting started the year with total assets of $20,000 and total

liabilities of $5,000 During the year, the business recorded $16,000 in

catering revenues and $10,000 in expenses Stahl issued stock of $3,000 and paid dividends of $5,000 during the year The net income reported by Stahl Consulting for the year was:

1 a $1,000

2 b $4,000

3 c $6,000

4 d $9,000

Stahl Consulting started the year with total assets of $20,000 and total

liabilities of $5,000 During the year, the business recorded $16,000 in

catering revenues and $10,000 in expenses Stahl issued stock of $3,000 and paid dividends of $5,000 during the year Stockholders' equity changed by what amount from the beginning of the year to the end of the year?