Question 1

If a company has a profit:

Accepted Answer

A) Assets will be equal to liabilities plus owners' equity. 
B) Assets will be less than liabilities plus owners' equity. 
C) Assets will be greater than liabilities plus owners' equity. 
D) Owners' equity will be greater than its assets. 
A) Assets will be equal to liabilities plus owners' equity. 
B) Assets will be less than liabilities plus owners' equity. 
C) Assets will be greater than liabilities plus owners' equity. 
D) Owners' equity will be greater than its assets.

Question 2

At the end of the current year,the owners' equity in Barclay Bakery is $246,000.During the year,the assets of the business had increased by $120,000 and the liabilities had increased by $72,000.Owners' equity at the beginning of the year must have been:

Accepted Answer

A) $198,000. 
B) $174,000. 
C) $284,000. 
D) $438,000. 
A) $198,000. 
B) $174,000. 
C) $284,000. 
D) $438,000.

Question 3

The going concern principle assumes that the business will continue indefinitely.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following describes the proper form of a balance sheet?

Accepted Answer

A) Owners' equity is always the first section listed because it is the most important to external users. 
B) Cash is always the first asset listed,followed by permanent assets (such as land and buildings),and finally by assets such as receivables and supplies. 
C) Liabilities are listed before owners' equity. 
D) A subtotal for total assets plus total liabilities is shown. 
A) Owners' equity is always the first section listed because it is the most important to external users. 
B) Cash is always the first asset listed,followed by permanent assets (such as land and buildings),and finally by assets such as receivables and supplies. 
C) Liabilities are listed before owners' equity. 
D) A subtotal for total assets plus total liabilities is shown.

Question 5

[The following information applies to the questions displayed below.]
During the month of August,Boyce Company had the following transactions:
(1)Revenues of $120,000 were earned and received in cash.
(2)Bank loans of $18,000 were paid off.
(3)Equipment of $40,000 was purchased with cash.
(4)Expenses of $73,600 were paid.
(5)Stockholders purchased additional shares for $44,000 cash.
-A statement of cash flows for August would report an increase in cash of:

Accepted Answer

A) $26,000. 
B) $32,400. 
C) $40,000. 
D) $46,400. 
A) $26,000. 
B) $32,400. 
C) $40,000. 
D) $46,400.

Question 6

List the following accounts in the order that they would appear in a balance sheet.
Capital Stock
Equipment
Accounts Receivable
Retained Earnings
Revenue
Accounts Payable
Cash
Rent Expense

Accepted Answer

Cash,Accounts Receivable,Equip

Question 7

If during the current year,liabilities of Corbett's Store increased by $220,000 and owners' equity increased by $160,000,then:

Accepted Answer

A) Assets at the end of the year total $380,000. 
B) Assets at the end of the year total $60,000. 
C) Assets increased during the year by $380,000. 
D) Assets decreased during the year by $60,000. 
A) Assets at the end of the year total $380,000. 
B) Assets at the end of the year total $60,000. 
C) Assets increased during the year by $380,000. 
D) Assets decreased during the year by $60,000.

Question 8

Which of the following liabilities would most likely be listed last on a statement of financial position?

Accepted Answer

A) Bonds payable,due in 20 years. 
B) Accounts payable. 
C) Note payable,due in 3 years. 
D) Income taxes payable. 
A) Bonds payable,due in 20 years. 
B) Accounts payable. 
C) Note payable,due in 3 years. 
D) Income taxes payable.

Question 9

On the statement of financial position,how are assets and liabilities normally presented?

Accepted Answer

A) Assets are presented in their order of permanence;liabilities are presented in the order in which they become due. 
B) Assets are presented in the order in which they become due;liabilities are presented in their order of permanence. 
C) Assets are presented in order of profitability;liabilities are presented in order of liquidity. 
D) Assets are presented in order of liquidity;liabilities are presented in order of profitability. 
A) Assets are presented in their order of permanence;liabilities are presented in the order in which they become due. 
B) Assets are presented in the order in which they become due;liabilities are presented in their order of permanence. 
C) Assets are presented in order of profitability;liabilities are presented in order of liquidity. 
D) Assets are presented in order of liquidity;liabilities are presented in order of profitability.

Question 10

Total assets plus total liabilities must equal total owners' equity.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is correct when a corporation uses cash to pay for an expense?

Accepted Answer

A) Total assets will decrease. 
B) Retained earnings will increase. 
C) Owners' equity will increase. 
D) Liabilities will increase. 
A) Total assets will decrease. 
B) Retained earnings will increase. 
C) Owners' equity will increase. 
D) Liabilities will increase.

Question 12

Which business organization is recognized as a separate legal entity under the law?

Accepted Answer

A) Corporation. 
B) Sole proprietorship. 
C) Partnership. 
D) All business organizations are separate legal entities. 
A) Corporation. 
B) Sole proprietorship. 
C) Partnership. 
D) All business organizations are separate legal entities.

Question 13

Which of the following is the primary objective of an income statement?

Accepted Answer

A) Providing managers with detailed information about where the enterprise stands at a specific date. 
B) Providing users outside the business organization with information about the company's operating results for a period of time. 
C) Reporting to the Internal Revenue Service the company's taxable income. 
D) Indicating to investors in a particular company the current market values of their investments. 
A) Providing managers with detailed information about where the enterprise stands at a specific date. 
B) Providing users outside the business organization with information about the company's operating results for a period of time. 
C) Reporting to the Internal Revenue Service the company's taxable income. 
D) Indicating to investors in a particular company the current market values of their investments.

Question 14

The statement of cash flows provides a link between two balance sheets by showing how net income (or loss)has changed owners' equity from one balance sheet date to the next.

Accepted Answer

A) True 
 B)False

Question 15

Profitability may be defined as:

Accepted Answer

A) The ability to pay the debts of the company as they become due. 
B) The ability to increase retained earnings. 
C) Distributing dividends out of retained earnings. 
D) Having excess cash. 
A) The ability to pay the debts of the company as they become due. 
B) The ability to increase retained earnings. 
C) Distributing dividends out of retained earnings. 
D) Having excess cash.

Question 16

[The following information applies to the questions displayed below.]
Astoria Co.had the following transactions during the month of August 2018:
(1)Cash received from bank loans was $20,000.
(2)Dividends of $9,500 were paid to stockholders in cash.
(3)Revenues earned and received in cash amounted to $33,500.
(4)Expenses incurred and paid were $26,000.
-What amount of net income will be reported on an income statement for the month of August?

Accepted Answer

A) $20,000. 
B) $7,500. 
C) $0. 
D) $33,500. 
A) $20,000. 
B) $7,500. 
C) $0. 
D) $33,500.

Question 17

Deerpark Corporation recently borrowed $70,000 cash from its bank.Which of the following was unaffected by this transaction?

Accepted Answer

A) Assets. 
B) Liabilities. 
C) Owners' equity. 
D) Cash. 
A) Assets. 
B) Liabilities. 
C) Owners' equity. 
D) Cash.

Question 18

Which of the following is not a generally accepted accounting principle relating to the valuation of assets?

Accepted Answer

A) The cost principle - in general,assets are valued at cost,rather than at estimated market values. 
B) The objectivity principle - accountants prefer to use objective,rather than subjective,information as the basis for accounting information. 
C) The safety principle - assets are valued at no more than the value for which they are insured. 
D) The going-concern assumption - one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them. 
A) The cost principle - in general,assets are valued at cost,rather than at estimated market values. 
B) The objectivity principle - accountants prefer to use objective,rather than subjective,information as the basis for accounting information. 
C) The safety principle - assets are valued at no more than the value for which they are insured. 
D) The going-concern assumption - one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them.

Question 19

[The following information applies to the questions displayed below.]
During the month of February,Fadness Company had the following transactions:
(1)Revenues of $225,000 were earned and received in cash.
(2)Bank loans of $18,000 were paid off.
(3)New bank loans of $15,000 were incurred.
(4)Equipment of $40,000 was purchased with cash.
(5)Equipment was sold for its book value of $36,000.Cash was received.
(6)Expenses of $171,400 were paid.
(7)Stockholders purchased additional shares for $50,000 cash.
-A statement of cash flows for February would report net cash flows from operating activities of:

Accepted Answer

A) $ 4,000. 
B) $35,600. 
C) $53,600. 
D) $96,600. 
A) $ 4,000. 
B) $35,600. 
C) $53,600. 
D) $96,600.

Question 20

[The following information applies to the questions displayed below.]
During the month of August,Boyce Company had the following transactions:
(1)Revenues of $120,000 were earned and received in cash.
(2)Bank loans of $18,000 were paid off.
(3)Equipment of $40,000 was purchased with cash.
(4)Expenses of $73,600 were paid.
(5)Stockholders purchased additional shares for $44,000 cash.
-A statement of cash flows for August would report net cash flows from operating activities of:

Accepted Answer

A) $26,000. 
B) $32,400. 
C) $40,000. 
D) $46,400. 
A) $26,000. 
B) $32,400. 
C) $40,000. 
D) $46,400.

Exam 2: Basic Financial Statements

If a company has a profit:

At the end of the current year,the owners' equity in Barclay Bakery is $246,000.During the year,the assets of the business had increased by $120,000 and the liabilities had increased by $72,000.Owners' equity at the beginning of the year must have been:

The going concern principle assumes that the business will continue indefinitely.

Which of the following describes the proper form of a balance sheet?

List the following accounts in the order that they would appear in a balance sheet. Capital Stock Equipment Accounts Receivable Retained Earnings Revenue Accounts Payable Cash Rent Expense

If during the current year,liabilities of Corbett's Store increased by $220,000 and owners' equity increased by $160,000,then:

Which of the following liabilities would most likely be listed last on a statement of financial position?

On the statement of financial position,how are assets and liabilities normally presented?

Total assets plus total liabilities must equal total owners' equity.

Which of the following is correct when a corporation uses cash to pay for an expense?

Which business organization is recognized as a separate legal entity under the law?

Which of the following is the primary objective of an income statement?

The statement of cash flows provides a link between two balance sheets by showing how net income (or loss)has changed owners' equity from one balance sheet date to the next.

Profitability may be defined as:

Deerpark Corporation recently borrowed $70,000 cash from its bank.Which of the following was unaffected by this transaction?

Which of the following is not a generally accepted accounting principle relating to the valuation of assets?

Accounting: Information for Decision Making

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

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