ACC 255 - Exam 1 - Ch 1 MC

Ch 1 Balance Sheet Equation

A = L + SE

Ch 1 Retained Earnings Statement Equation

Beg RE + NI - D = End RE

Ch 1 Income Statement Equation

NI = R - E

Ch 1 Auditor's Report

a report prepared by an independent outside auditor and states the auditor's opinion as to the fairness of the presentation of the financial statements.

Ch 1 Which statement about users of accounting information is incorrect? a. Regulatory authorities are considered internal users b. Management is considered an internal user c. Taxing authorities are considered external users d. Present creditors are considered external users

a. Regulatory authorities are considered internal users

Ch 1 Which of the following is the most appropriate definition of accounting information? a. The information system that identifies, records, and communicates the economic events of an organization to interested users b. A means of collecting information c. The interconnected network of subsystems necessary to operate a business d. Electronic collection and organization of vast amounts of financial information

a. The information system that identifies, records, and communicates the economic events of an organization to interested users

Ch 1 Resources owned by a business are referred to as a. assets b. stockholders' equity c. liabilities d. revenues

a. assets

Ch 1 The financial statements for Harold Corporation contained the following information: 5,000 Accounts Receivable 75,000 Sales Revenue 15,000 Cash 20,000 Salaries and Wages Expense 10,000 Rent Expense How much was Harold's net income? a. $65,000 b. $45,000 c. $60,000 d. $15,000

b. $45,000

Ch 1 In which forms of business organization are the owners personally liable for all the debts of the business? a. Sole proprietorships and corporations b. Sole proprietorships and partnerships c. Partnership and corporation d. All of the answer choices are correct

b. Sole proprietorships and partnerships

Ch 1 Which of the following did NOT result from the Sarbanes-Oxley Act? a. Auditors cannot provide non-audit services to the same client b. Tax rates on corporations increased c. Top management must now certify the accuracy of financial information d. Penalties for fraudulent activity increased

b. Tax rates on corporations increased

Ch 1 The segment of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the... a. income statement b. auditor's opinion c. balance sheet d. financial statements

b. auditor's opinion

Ch 1 As of December 31, 2017, Stoneland Corporation has assets of $3,500 and stockholders' equity of $2,000. How much are the liabilities for Stoneland Corporation as of December 31, 2017? a. $1,000 b. $2,500 c. $1,500 d. $2,000

c. $1,500

Ch 1 If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $10,000 increase b. $20,000 increase c. $10,000 decrease d. $15,000 decrease

c. $10,000 decrease

Ch 1 Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year? a. $150,000 b. $130,000 c. $110,000 d. $135,000

c. $110,000

Ch 1 Which of the following is NOT one of the three primary business activities? a. Investing b. Financing c. Advertising d. Operating

c. Advertising

Ch 1 Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion? a. Notes to the financial statements b. Financial statements c. Management discussion and analysis d. Auditor's report

c. Management discussion and analysis

Ch 1 Which is an advantage of corporations relative to partnerships and sole proprietorships? a. Harder to transfer ownership b. Increased difficulty of raising funds c. Reduced legal liability for investors d. Most common form of organization

c. Reduced legal liability for investors

Ch 1 Which forms of business organization are considered to be separate accounting entities? a. Sole proprietorships and partnerships only b. Partnerships and corporations only c. Sole proprietorships, corporations, and partnerships d. Only corporations

c. Sole proprietorships, corporations, and partnerships

Ch 1 In terms of the principal types of business activities, paying salaries expense is an example of a. financing activities b. investing activities c. operating activities d. advertising activities

c. operating activities

Ch 1 Net income will result during a time period when a. expenses exceed revenues b. assets exceed liabilities c. revenues exceed expenses d. assets exceed revenues

c. revenues exceed expenses

Ch 1 To which of the following questions will internal users want answers? a. What selling price for our product will maximize the company's net income? b. Which product line is most profitable? c. Is cash sufficient to pay dividends to stockholders? d. All of the answer choices are correct

d. All of the answer choices are correct

Ch 1 Which statement presents information as of a specific point in time? a. Statement of cash flows b. Retained earnings statement c. Income statement d. Balance sheet

d. Balance sheet

Ch 1 Which of the following is an example of a financing activity? a. Buying inventory b. Selling goods on account c. Buying delivery equipment d. Issuing shares of common stock

d. Issuing shares of common stock

Ch 1 The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet. The ending retained earnings balance appears on... a. the retained earnings statement only. b. the balance sheet only c. the income statement and the retained earnings statement d. both the retained earnings statement and the balance sheet

d. both the retained earnings statement and the balance sheet

Ch 1 Stockholders' equity represents... a. claims of creditors b. the difference between revenues and expenses c. economics resources to be used in the future d. claims of owners

d. claims of owners

Ch 1 The segment of a corporation's annual report that describes the corporation's accounting methods is the... a. auditor's report b. income statement c. management discussion and analysis d. notes to the financial statements

d. notes to the financial statements