Question 1

Which of the following statements is true about a sole proprietorship?

Accepted Answer

A) The owner and the business are separate legal entities but not separate accounting entities. 
B) The owner and the business are separate accounting entities but not separate legal entities. 
C) The owner and the business are separate legal entities and separate accounting entities. 
D) Most large businesses in this country are organized as sole proprietorships. 
A) The owner and the business are separate legal entities but not separate accounting entities. 
B) The owner and the business are separate accounting entities but not separate legal entities. 
C) The owner and the business are separate legal entities and separate accounting entities. 
D) Most large businesses in this country are organized as sole proprietorships. B

Question 2

Which of the following statements is correct?

Accepted Answer

A) Revenues are reported on the income statement regardless of whether the customer has paid for the goods or services. 
B) Expenses are reported within the income statement during the period that they are paid for. 
C) Net income includes a deduction for dividend payments made to stockholders. 
D) Net income normally equals the net cash generated by operations. 
A) Revenues are reported on the income statement regardless of whether the customer has paid for the goods or services. 
B) Expenses are reported within the income statement during the period that they are paid for. 
C) Net income includes a deduction for dividend payments made to stockholders. 
D) Net income normally equals the net cash generated by operations. A

Question 3

How are creditor and investor claims reported on a balance sheet?

Accepted Answer

A) The claims of creditors are liabilities and those of investors are assets. 
B) The claims of both creditors and investors are liabilities, but only the claims of investors are considered to be long-term. 
C) The claims of creditors are reported as liabilities while the claims of investors are recorded as stockholders' equity. 
D) The claims of creditors and investors are considered to be essentially equivalent. 
A) The claims of creditors are liabilities and those of investors are assets. 
B) The claims of both creditors and investors are liabilities, but only the claims of investors are considered to be long-term. 
C) The claims of creditors are reported as liabilities while the claims of investors are recorded as stockholders' equity. 
D) The claims of creditors and investors are considered to be essentially equivalent. C

Question 4

Which of the following would not be reported in the operating activities section of a cash flow statement?

Accepted Answer

A) Cash paid for dividends to stockholders. 
B) Cash paid for interest expense. 
C) Cash paid for employee wages. 
D) Cash received from customers. 
A) Cash paid for dividends to stockholders. 
B) Cash paid for interest expense. 
C) Cash paid for employee wages. 
D) Cash received from customers.

Question 5

Which of the following statements pertaining to the audit function is incorrect?

Accepted Answer

A) The primary responsibility for the information in the financial statements lies with the auditors. 
B) The audit report describes the auditor's opinion of the fairness of the financial statements. 
C) An audit ensures that the financial statements conform to generally accepted accounting principles. 
D) The auditor doesn't examine all of the transactions an entity incurred. 
A) The primary responsibility for the information in the financial statements lies with the auditors. 
B) The audit report describes the auditor's opinion of the fairness of the financial statements. 
C) An audit ensures that the financial statements conform to generally accepted accounting principles. 
D) The auditor doesn't examine all of the transactions an entity incurred.

Question 6

Which of the following describes the operations section of a cash flow statement?

Accepted Answer

A) It provides information about how operations have been financed. 
B) It provides information pertaining to dividend payments to stockholders. 
C) It provides information with respect to a company's ability to generate cash flow to pay for goods and services. 
D) It provides the net increase or decrease in cash during the period. 
A) It provides information about how operations have been financed. 
B) It provides information pertaining to dividend payments to stockholders. 
C) It provides information with respect to a company's ability to generate cash flow to pay for goods and services. 
D) It provides the net increase or decrease in cash during the period.

Question 7

Which of the following doesn't represent a professional accounting certification?

Accepted Answer

A) Certified Management Accountant 
B) Certified Public Accountant 
C) Certified Internal Auditor 
D) Certified Tax Accountant 
A) Certified Management Accountant 
B) Certified Public Accountant 
C) Certified Internal Auditor 
D) Certified Tax Accountant

Question 8

Larson Company ends its recent year of operations with $3,500,000 in retained earnings.During the year Larson's net income exceeded its dividend declarations by $200,000.Larson's dividend declarations were $25,000 greater than the dividend payments.
How much was Larson Company's beginning retained earnings?

Accepted Answer

The answer of Larson Company ends its recent year of...

Question 9

Which financial statement would you use to determine a company's earnings performance during an accounting period?

Accepted Answer

A) Balance sheet 
B) Statement of retained earnings 
C) Income statement 
D) Statement of cash flows 
A) Balance sheet 
B) Statement of retained earnings 
C) Income statement 
D) Statement of cash flows

Question 10

Husky Company has provided the following information for its most recent year of operation:
Cash collected from customers totaled $89,300.
Cash borrowed from banks totaled $31,700.
Cash paid to employees totaled $32,100.
Cash paid for interest totaled $2,900.
Cash received from selling Husky stock to stockholders totaled $41,000.
Cash payments to banks for repayment of money borrowed totaled $7,500.
Cash paid for operating expenses totaled $9,600.
Land costing $25,000 was sold for $25,000 cash.
Cash paid for dividends to stockholders totaled $3,300.
How much was Husky's cash flow from operating activities?

Accepted Answer

A) $47,600 
B) $44,700 
C) $41,400 
D) $37,200 
A) $47,600 
B) $44,700 
C) $41,400 
D) $37,200

Question 11

Fulton Company was established at the beginning of 2010 when several investors paid a total of $200,000 to purchase Fulton stock.No additional investments in stock were made during the year.By December 31,2010,Fulton had cash on hand of $45,000,office equipment (net)of $40,000,inventories of $156,000,and accounts payable of $10,000.Sales for the year were $812,000.Of this amount,customers still owed $20,000.Fulton paid dividends of $25,000 to its stockholders during 2010.
Requirements:
1.Based on the information above,prepare a balance sheet for Fulton Company as of December 31,2010.In the process of preparing the balance sheet,you must calculate the ending balance in retained earnings.
2.Prepare a statement of retained earnings for the year ended December 31,2010.
3.What was the amount of Fulton's net income for 2010?
4.Was Fulton successful during its first year in operation?

Accepted Answer

1. Balance Sheet for Fulton Company as o

Question 12

Which of the following properly describes the impact on the financial statements when a company incurs operating expenses of $9,000,of which $3,000 remains unpaid?

Accepted Answer

A) Net income decreased $9,000. 
B) Cash increased $6,000. 
C) Net income decreased $3,000. 
D) Cash decreased $9,000. 
A) Net income decreased $9,000. 
B) Cash increased $6,000. 
C) Net income decreased $3,000. 
D) Cash decreased $9,000.

Question 13

The statement of retained earnings explains the change in the retained earnings balance caused by stockholder investments and dividend declarations.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not reported as a liability on a balance sheet?

Accepted Answer

A) Income taxes payable 
B) Contributed capital 
C) Accounts payable 
D) Dividends declared 
A) Income taxes payable 
B) Contributed capital 
C) Accounts payable 
D) Dividends declared

Question 15

Which of the following is not a consequence to a company resulting from the issue of their financial statements?

Accepted Answer

A) The effect on the selling price of their stock. 
B) The providing of information to their competitors. 
C) The effect on bonus payments to its employees. 
D) The providing of information to their auditors. 
A) The effect on the selling price of their stock. 
B) The providing of information to their competitors. 
C) The effect on bonus payments to its employees. 
D) The providing of information to their auditors.

Question 16

Which of the following would immediately cause a change in a corporation's retained earnings?

Accepted Answer

A) Net income or net loss and declaration of dividends. 
B) Declaration of dividends and issuance of stock to new stockholders. 
C) Net income and issuance of stock to new stockholders. 
D) Declaration of dividends and purchase of new machinery. 
A) Net income or net loss and declaration of dividends. 
B) Declaration of dividends and issuance of stock to new stockholders. 
C) Net income and issuance of stock to new stockholders. 
D) Declaration of dividends and purchase of new machinery.

Question 17

Which of the following is a disadvantage of a corporation when compared to a partnership?

Accepted Answer

A) The stockholders have limited liability. 
B) The corporation is treated as a separate legal entity from the stockholders. 
C) The corporation and its stockholders are subject to double taxation. 
D) The corporation must account for the business's transactions separate and apart from those of the owners. 
A) The stockholders have limited liability. 
B) The corporation is treated as a separate legal entity from the stockholders. 
C) The corporation and its stockholders are subject to double taxation. 
D) The corporation must account for the business's transactions separate and apart from those of the owners.

Question 18

Husky Company has provided the following information for its most recent year of operation:
Cash collected from customers totaled $89,300.
Cash borrowed from banks totaled $31,700.
Cash paid to employees totaled $32,100.
Cash paid for interest totaled $2,900.
Cash received from selling Husky stock to stockholders totaled $41,000.
Cash payments to banks for repayment of money borrowed totaled $7,500.
Cash paid for operating expenses totaled $9,600.
Land costing $25,000 was sold for $25,000 cash.
Cash paid for dividends to stockholders totaled $3,300.
How much was Husky's cash flow from financing activities?

Accepted Answer

A) $72,700 
B) $59,000 
C) $65,200 
D) $61,900 
A) $72,700 
B) $59,000 
C) $65,200 
D) $61,900

Question 19

Determine the missing amounts for each independent case below.Assume the amounts given are at the end of the company's first year of operation. $\begin{array}{l}
\begin{array} { l } 
\text { Company } & \text { Total } & \text { Total } \
\text { Name } & \text { Revenue } & \text { Assets } \
\text { Randolph } & \$ 600,000 & \$ 450,000 \
\text { Newman } & \$ 105,000 & \
\text { Wiseman } & & \$ 190,000 \
\text { Martin } & \$ 180,000 & \$ 215,000 \
\text { VanTassel } & &
\end{array}
\begin{array} { l } 
\text { Total } & \text { Total } \
\text { Expenses } & \text { Liabilities } \
\$ 350,000 & \$ 130,000 \
& \$ 80,000 \
\$ 70,000 & \
\$ 115,000 & \$ 75,000 \
\$ 55,000 & \$ 75,000
\end{array}

\begin{array} { l } 
\text { Net Income } & \text { Stockholders} \
\text { (Loss) } & \text {  Equity } \
\
\$ 10,000 & \$ 75,000 \ 
(\$ 30,000) & \$ 100,000\
\
 \$ 19,000 &\$ 79,000 
\end{array}

\end{array}$

Accepted Answer

To determine the missing amounts for eac

Question 20

During the fiscal year ended 2010,a company had revenues of $400,000,expenses of $280,000,and an income tax rate of 30 percent.What was the company's 2010 net income?

Accepted Answer

A) $120,000 
B) $36,000 
C) $84,000 
D) $400,000 
A) $120,000 
B) $36,000 
C) $84,000 
D) $400,000

Which of the following statements is true about a sole proprietorship?

Which of the following statements is correct?

How are creditor and investor claims reported on a balance sheet?

Which of the following would not be reported in the operating activities section of a cash flow statement?

Which of the following statements pertaining to the audit function is incorrect?

Which of the following describes the operations section of a cash flow statement?

Which of the following doesn't represent a professional accounting certification?

Which financial statement would you use to determine a company's earnings performance during an accounting period?

Which of the following properly describes the impact on the financial statements when a company incurs operating expenses of $9,000,of which $3,000 remains unpaid?

The statement of retained earnings explains the change in the retained earnings balance caused by stockholder investments and dividend declarations.

Which of the following is not reported as a liability on a balance sheet?

Which of the following is not a consequence to a company resulting from the issue of their financial statements?

Which of the following would immediately cause a change in a corporation's retained earnings?

Which of the following is a disadvantage of a corporation when compared to a partnership?

During the fiscal year ended 2010,a company had revenues of $400,000,expenses of $280,000,and an income tax rate of 30 percent.What was the company's 2010 net income?

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

Adjustments,Financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

Filters

Exam 1: Financial Statements and Business Decisions

Which of the following statements is true about a sole proprietorship?

Which of the following statements is correct?

How are creditor and investor claims reported on a balance sheet?

Which of the following would not be reported in the operating activities section of a cash flow statement?

Which of the following statements pertaining to the audit function is incorrect?

Which of the following describes the operations section of a cash flow statement?

Which of the following doesn't represent a professional accounting certification?

Which financial statement would you use to determine a company's earnings performance during an accounting period?

Which of the following properly describes the impact on the financial statements when a company incurs operating expenses of $9,000,of which $3,000 remains unpaid?

The statement of retained earnings explains the change in the retained earnings balance caused by stockholder investments and dividend declarations.

Which of the following is not reported as a liability on a balance sheet?

Which of the following is not a consequence to a company resulting from the issue of their financial statements?

Which of the following would immediately cause a change in a corporation's retained earnings?

Which of the following is a disadvantage of a corporation when compared to a partnership?

During the fiscal year ended 2010,a company had revenues of $400,000,expenses of $280,000,and an income tax rate of 30 percent.What was the company's 2010 net income?

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

Adjustments,Financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

Filters