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:... Cash investments made by the stockholders of the business are reported

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 low­cost 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

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 premium­price  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