Question 1

The auditor can be held liable for malpractice in situations where the investors suffered losses while relying on the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following transactions affects both the income statement and the statement of cash flows?

Accepted Answer

A) Selling stock in exchange for cash. 
B) Declaring and paying a cash dividend. 
C) Selling a product to a customer which creates an account receivable. 
D) Paying employee wages as they are earned. 
A) Selling stock in exchange for cash. 
B) Declaring and paying a cash dividend. 
C) Selling a product to a customer which creates an account receivable. 
D) Paying employee wages as they are earned.

Question 3

Sparty Corporation has provided the following information for its most recent year of operation:
Revenues earned were $97,000,of which $9,000 were uncollected at the end of the year.
Operating expenses incurred were $39,000,of which $7,000 were unpaid at the end of the year.
Dividends declared were $11,000,of which $3,000 were unpaid at the end of the year.
Income tax expense is 30% of pretax income.
How much net income was reported on Sparty's income statement?

Accepted Answer

A) $32,900 
B) $39,300 
C) $33,600 
D) $40,600 
A) $32,900 
B) $39,300 
C) $33,600 
D) $40,600

Question 4

Which of the following statements is false?

Accepted Answer

A) A positive net income results in an increase in retained earnings. 
B) The ending retained earnings balance from the statement of retained earnings is reported on the balance sheet. 
C) The change in the cash balance on the statement of cash flows added to the beginning cash balance equals the ending cash balance. 
D) The dividends reported on the statement of retained earnings are also reported as dividend expense on the income statement. 
A) A positive net income results in an increase in retained earnings. 
B) The ending retained earnings balance from the statement of retained earnings is reported on the balance sheet. 
C) The change in the cash balance on the statement of cash flows added to the beginning cash balance equals the ending cash balance. 
D) The dividends reported on the statement of retained earnings are also reported as dividend expense on the income statement.

Question 5

During 2011,Canton Company's assets increased $95,500 and their liabilities decreased $17,300.Canton Company's stockholders' equity on December 31,2011 was $211,500.How much was stockholders' equity on January 1,2011?

Accepted Answer

A) $98,700 
B) $324,300 
C) $133,300 
D) $289,700 
A) $98,700 
B) $324,300 
C) $133,300 
D) $289,700

Question 6

Moss Company has provided the following data:
2010 revenues were $87,500.
2010 net income was $43,900.
Dividends declared and paid by Moss during 2010 totaled $15,700.
Total assets on December 31,2010 were $227,000.
Total stockholders' equity on December 31,2010 was $133,000.
Contributed capital on December 31,2010 was $93,000.
What was the beginning retained earnings balance?

Accepted Answer

To calculate the beginning retained earn

Question 7

The Financial Accounting Standards Board (FASB)has been given the authority by the Securities and Exchange Commission (SEC)to develop generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 8

What is the objective of the cash flow statement? Describe the three cash flow classifications that are reported within the cash flow statement.

Accepted Answer

The answer of What is the objective of the cash...

Question 9

Madrid Company has provided the following data (ignore income taxes):
2010 revenues were $77,500.
2010 net income was $33,900.
Dividends declared and paid during 2010 totaled $5,700.
Total assets on December 31,2010 were $217,000.
Total stockholders' equity on December 31,2010 was $123,000.
Retained earnings on December 31,2010 were $83,000.
Which of the following is not correct?

Accepted Answer

A) 2010 expenses were $43,600. 
B) Total liabilities on December 31, 2010 were $94,000. 
C) Retained earnings increased $33,900 during 2010. 
D) Contributed capital on December 31, 2010 was $40,000. 
A) 2010 expenses were $43,600. 
B) Total liabilities on December 31, 2010 were $94,000. 
C) Retained earnings increased $33,900 during 2010. 
D) Contributed capital on December 31, 2010 was $40,000.

Question 10

Parker Pool Supply,Inc.reported the following items for the year ended December 31,2010:
 $$\begin{array} { l r } 
\text { Wages and salary expense } & \$ 527,000 \
\text { Cost of goods sold } & 1,124,000 \
\text { Rent expense } & 395,000 \
\text { Sales revenue } & 2,564,000 \
\text { Interest expense } & 30,000 \
\text { Income tax expense } & 121,000 \
\text { Accounts receivable } & 27,000
\end{array}$$ Requirements:
Prepare an income statement for the year ended December 31,2010.

Accepted Answer

Parker Pool Supply, Inc.
Income Statemen

Question 11

What financial statement would you look at to determine the dividends declared by a business?

Accepted Answer

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

Question 12

Which of the following is considered to be an expense on the income statement?

Accepted Answer

A) Accounts payable 
B) Notes payable 
C) Wages payable 
D) Cost of goods sold 
A) Accounts payable 
B) Notes payable 
C) Wages payable 
D) Cost of goods sold

Question 13

Which of the following is not provided within the notes that accompany the financial statements?

Accepted Answer

A) A description of the accounting rules applied. 
B) A description of the terms of a lease agreement. 
C) A description pertaining to a particular line on the financial statements. 
D) A description of net income for each of the prior three years. 
A) A description of the accounting rules applied. 
B) A description of the terms of a lease agreement. 
C) A description pertaining to a particular line on the financial statements. 
D) A description of net income for each of the prior three years.

Question 14

For a business organized as a general partnership,which statement is true?

Accepted Answer

A) The owners and the business are separate legal entities. 
B) Each partner is potentially responsible for the debts of the business. 
C) Formation of a partnership requires getting a charter from the state of incorporation. 
D) A partnership is not considered to be a separate accounting entity. 
A) The owners and the business are separate legal entities. 
B) Each partner is potentially responsible for the debts of the business. 
C) Formation of a partnership requires getting a charter from the state of incorporation. 
D) A partnership is not considered to be a separate accounting entity.

Question 15

Laker Company has provided the following information for its most recent year of operation:
Cash collected from customers totaled $99,300.
Cash borrowed from banks totaled $42,700.
Cash paid to employees totaled $23,300.
Cash paid for interest totaled $3,100.
Cash received from selling an investment in Husky stock totaled $73,000.
Cash payments to banks for repayment of money borrowed totaled $9,700.
Cash paid for operating expenses totaled $11,200.
Land costing $75,000 was sold for $75,000 cash.
Cash paid for dividend payments to stockholders totaled $7,700.
How much was Laker's net cash flow from investing activities?

Accepted Answer

The answer of Laker Company has provided the following information...

Question 16

Total assets are $37,500,total liabilities are $20,000 and contributed capital is $10,000; therefore,retained earnings are $7,500.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not one of the three steps taken by a corporation to assure the accuracy of its records?

Accepted Answer

A) Implementing a system of internal controls. 
B) The hiring of an independent auditor to report on the fairness of the financial statements. 
C) The hiring of a financial analyst. 
D) The formation of a committee made up of board of directors' members to oversee the integrity of its safeguards utilized. 
A) Implementing a system of internal controls. 
B) The hiring of an independent auditor to report on the fairness of the financial statements. 
C) The hiring of a financial analyst. 
D) The formation of a committee made up of board of directors' members to oversee the integrity of its safeguards utilized.

Question 18

Why does a company hire independent auditors?

Accepted Answer

A) To guarantee the accuracy of both annual and quarterly financial statements. 
B) To verify the accounting accuracy of every transaction entered into. 
C) To report on the fairness of financial statement presentation. 
D) The auditors are responsible for the content of the financial statements. 
A) To guarantee the accuracy of both annual and quarterly financial statements. 
B) To verify the accounting accuracy of every transaction entered into. 
C) To report on the fairness of financial statement presentation. 
D) The auditors are responsible for the content of the financial statements.

Question 19

Which of the following is the amount of revenue reported on the income statement of a retail company?

Accepted Answer

A) The cash collected from customers during the current period. 
B) Both cash and credit sales for the period. 
C) Cash sales for the period. 
D) Cash sales and stockholders' investments. 
A) The cash collected from customers during the current period. 
B) Both cash and credit sales for the period. 
C) Cash sales for the period. 
D) Cash sales and stockholders' investments.

Question 20

Revenue is recognized within the income statement during the period in which cash is collected.

Accepted Answer

A) True 
 B)False

The auditor can be held liable for malpractice in situations where the investors suffered losses while relying on the financial statements.

Which of the following transactions affects both the income statement and the statement of cash flows?

Which of the following statements is false?

During 2011,Canton Company's assets increased $95,500 and their liabilities decreased $17,300.Canton Company's stockholders' equity on December 31,2011 was $211,500.How much was stockholders' equity on January 1,2011?

The Financial Accounting Standards Board (FASB)has been given the authority by the Securities and Exchange Commission (SEC)to develop generally accepted accounting principles.

What is the objective of the cash flow statement? Describe the three cash flow classifications that are reported within the cash flow statement.

What financial statement would you look at to determine the dividends declared by a business?

Which of the following is considered to be an expense on the income statement?

Which of the following is not provided within the notes that accompany the financial statements?

For a business organized as a general partnership,which statement is true?

Total assets are $37,500,total liabilities are $20,000 and contributed capital is $10,000; therefore,retained earnings are $7,500.

Which of the following is not one of the three steps taken by a corporation to assure the accuracy of its records?

Why does a company hire independent auditors?

Which of the following is the amount of revenue reported on the income statement of a retail company?

Revenue is recognized within the income statement during the period in which cash is collected.

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

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Exam 1: Financial Statements and Business Decisions

The auditor can be held liable for malpractice in situations where the investors suffered losses while relying on the financial statements.

Which of the following transactions affects both the income statement and the statement of cash flows?

Which of the following statements is false?

During 2011,Canton Company's assets increased $95,500 and their liabilities decreased $17,300.Canton Company's stockholders' equity on December 31,2011 was $211,500.How much was stockholders' equity on January 1,2011?

The Financial Accounting Standards Board (FASB)has been given the authority by the Securities and Exchange Commission (SEC)to develop generally accepted accounting principles.

What is the objective of the cash flow statement? Describe the three cash flow classifications that are reported within the cash flow statement.

What financial statement would you look at to determine the dividends declared by a business?

Which of the following is considered to be an expense on the income statement?

Which of the following is not provided within the notes that accompany the financial statements?

For a business organized as a general partnership,which statement is true?

Total assets are $37,500,total liabilities are $20,000 and contributed capital is $10,000; therefore,retained earnings are $7,500.

Which of the following is not one of the three steps taken by a corporation to assure the accuracy of its records?

Why does a company hire independent auditors?

Which of the following is the amount of revenue reported on the income statement of a retail company?

Revenue is recognized within the income statement during the period in which cash is collected.

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

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