ACC EXAM 1
Which term describes a distribution of the business's assets back to the owners of the business?
Multiple Choice Retained earnings Liability Common stock ***Dividend
Emerald Company was established in January, Year 1. During Year 1 the company experienced the following events: Collected $56,000 cash from the issue of common stock. Borrowed $45,000 cash from the state bank. Earned $200,000 of cash revenue. Paid $280,000 cash expenses. The company was liquidated at the end of Year 1. Based on this information:
the creditor (the bank) would receive $21,000.
Which of the following is false regarding managerial accounting information? Multiple Choice A. It is more detailed than financial accounting information. B. It can include nonfinancial information. C. It is often used by investors. D. It focuses on divisional rather than overall profitability.
*** C. It is often used by investors.
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $25,000; Liabilities = ?; Common Stock = $5,500; Revenue = $12,000; Dividends = $1,000; Beginning Retained Earnings = $4,000; Ending Retained Earnings = $7,500. The amount of liabilities reported on the end-of-period balance sheet was:
12000
The balance sheet of the Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, what is the amount of retained earnings?
13000
Turner Company reported assets of $20,000 (including cash of $9,000), liabilities of $8,000, common stock of $7,000, and retained earnings of $5,000. Based on this information, what can be concluded? Multiple Choice 25% of Turner's assets are the result of prior earnings. $5,000 is the maximum dividend that can be paid to shareholders. 40% of Turner's assets are the result of borrowing from creditors. 25% of Turner's assets are from prior earnings, $5,000 is the maximum possible dividend, and 40% of assets are the result of borrowed resources.
25% of Turner's assets are from prior earnings, $5,000 is the maximum possible dividend, and 40% of assets are the result of borrowed resources.
If Ballard Company reported assets of $500 and liabilities of $200, Ballard's stockholders' equity equals:
300
As of December 31, Year 2, Bristol Company had $100,000 of assets, $40,000 of liabilities and $25,000 of retained earnings. What percentage of Bristol's assets were obtained from investors?
35%
Ellen Gatsby and her siblings, Ben and Sarah, started Gatsby Company when they each invested $100,000 in the company. After the investments there will be how many reporting entities
4
Finn Company reported assets of $1,000 and stockholders' equity of $600. What amount will Finn report for liabilities?
400
The accounting records of Coastal Company contained the following account balances. Cash$540 Land$860 Notes Payable$270 Common Stock$440 The records also contained an account titled Retained Earnings. Based on this information the balance of the retained earnings account must be
690
At the time of liquidation, Fairchild Company reported assets of $200,000, liabilities of $120,000, common stock of $90,000 and retained earnings of ($10,000). What amount of Fairchild's assets are the shareholders entitled to receive?
80000
Jackson Company had a net increase in cash from operating activities of $10,000 and a net decrease in cash from financing activities of $2,000. If the beginning and ending cash balances for the company were $4,000 and $11,000, respectively, what is the net cash change from investing activities? Multiple Choice Zero An inflow or increase of $1,000 An inflow or increase of $2,000 An outflow or decrease of $1,000
An outflow or decrease of $1,000
Jackson Company had a net increase in cash from operating activities of $9,500 and a net decrease in cash from financing activities of $3,250. If the beginning and ending cash balances for the company were $4,500 and $14,000, respectively, what is the net cash change from investing activities? Multiple Choice An outflow or decrease of $3,250 An inflow or increase of $1,250 An inflow or increase of $3,250 Zero
An outflow or decrease of $3,250
Wing Company provided services for $30,000 cash. Which of the following shows the impact of this transaction on Wing's accounting equation?
Assets + Liab NA SE +
Wing Company borrowed $70,000 cash from Metropolitan Bank. Which of the following shows the impact of this transaction on Wing's accounting equation?
Assets + Liabilities + SE NA
Wyatt Company was formed on January 1, Year 1, when it acquired $50,000 cash from issuing common stock. Which of the following shows the impact of this transaction on Wyatt's accounting equation?
Assets + Liabilities NA SE +
Which of the following could describe the effects of an asset exchange transaction on the accounting equation? Assets +/- Liab NA SE NA Assets + Liab NA SE + Assets - Liab NA SE - Assets + Liab + SE NA
Assets +/- Liab NA SE NA
Wing Company paid $5,000 cash to purchase land. Which of the following shows the impact of this transaction on Wing's accounting equation?
Assets +/- Liab NA SE NA
Wing Company paid $20,000 cash in salaries to its employees. Which of the following shows the impact of this transaction on Wing's accounting equation?
Assets - Liab NA SE -
The transaction, "provided services for cash," affects which two accounts?
Cash and Revenue
Which of the following items appears in the investing activities section of the statement of cash flows? Multiple Choice Cash inflow from the issuance of common stock Cash inflow from interest revenue Cash outflow for the purchase of land Cash outflow for the payment of dividends
Cash outflow for the purchase of land
Which of the following items is an example of revenue? Multiple Choice Cash received from investors from the sale of common stock Cash received from the sale of land for its original selling price Cash received from customers at the time services were provided Correct Cash received from a bank loan
Cash received from customers at the time services were provided
Which of the following does not describe the effects of an asset use transaction on the accounting equation? Assets = Liabilities + Equity Revenue − Expense = Net Income A. − = − + NA NA − NA = NA −OA B. − = − + NA NA − NA = NA −FA C. − = NA + − NA − + = − −OA D. NA = + + NA + − + = − NA
D
Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden Wheels. Jack transferred $650,000 of the cash he borrowed to Wooden Wheels on the first day of the year. Which of the following appropriately reflects the cash transactions between these reporting entities?
Jack increase 150000 Wooden increase 650000 walt bank decrese 800000
Which term describes assets generated through operations that have been reinvested into the business?
Multiple Choice ***Retained earnings Common stock Dividend Liability
Which of the following is an accurate definition of the term "asset?"
Multiple Choice A. A transfer of wealth from the business to its stockholders B. An obligation to creditors C. A sacrifice incurred from operating the business ***D. A resource that will be used to produce revenue
Which type of accounting information is intended to satisfy the needs of external users of accounting information?
Multiple Choice A. Cost accounting ***B. Financial accounting C. Managerial accounting D. Tax accounting
Which of the following is (are) source(s) of assets to a business?
Multiple Choice A. Creditors B. Investors C. Operations D. All the answers represent sources of assets.
Financial accounting standards are known collectively as GAAP. What does that acronym stand for?
Multiple Choice A. Governmentally Approved Accounting Practices ***B. Generally Accepted Accounting Principles C. Generally Authorized Auditing Principles D. Generally Applied Accounting Procedures
International accounting standards are formulated by the IASB. What does that acronym stand for?
Multiple Choice A. International Accountability Standards Bureau B. Internationally Accepted Standards Board C. International Accounting and Sustainability Board ***D. International Accounting Standards Board
Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden Wheels. Jack transferred $650,000 of the cash that he borrowed to the store on the first day of the year. How many reporting entities exist in this scenario?
Multiple Choice A. One reporting entity ***B. Three reporting entities C. Two reporting entities D. Four reporting entities
Which resource providers lend financial resources to a business with the expectation of repayment with interest?
Multiple Choice A. Owners ***B. Creditors C. Consumers D. Investors
The Heritage Company is a manufacturer of office furniture. Which term best describes Heritage's role in society?
Multiple Choice A. Regulatory agency B. Consumer C. Resource owner ***D. Business
Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?
Multiple Choice A. Securities and Exchange Commission B. International Accounting Standards Board C. U.S. Congress ***D. Financial Accounting Standards Board
Which of the following is an accurate depiction of the accounting equation?
Multiple Choice Assets = Liabilities + Common Stock − Expenses Assets = Liabilities + Common Stock + Dividends ***Assets = Liabilities + Common Stock + Retained Earnings Assets = Liabilities + Retained Earnings − Dividends
Hazeltine Company issued common stock for $200,000 cash. As a result of this event, which of the following statements is true?
Multiple Choice Claims increased. Stockholders' equity increased. ***Assets, claims, and stockholders' equity all increased. Assets increased.
If total assets decrease, then which of the following statements is true?
Multiple Choice Liabilities must increase and retained earnings must decrease. Liabilities, common stock, or retained earnings must increase. Common stock must decrease and retained earnings must increase. ***Liabilities, common stock, or retained earnings must decrease.
Which of the following statements about liabilities is true?
Multiple Choice They represent obligations to repay debts. They may increase when assets increase. They are found on the claims side of the accounting equation. ***All of the answers are characteristics of liabilities.
Which of the following is not an element of the accounting equation? Multiple Choice Assets Stockholders' Equity Liabilities Net income
Net income
Which of the following is not an asset use transaction? Multiple Choice Paying off the principal of a loan Paying cash dividends Paying cash to purchase land Paying cash expenses
Paying cash to purchase land
Which of the following cash transactions results in an increase to one asset account and a decrease to another asset account? Multiple Choice Purchasing land for cash Providing services for cash Issuing common stock for cash Borrowing cash from a bank
Purchasing land for cash
Li Company paid cash to purchase land. As a result of this accounting event, which of the following statements is true? Multiple Choice Total assets decreased. Total assets were unaffected. Total stockholders' equity decreased. Both assets and total stockholders' equity decreased.
Total assets were unaffected.
Borrowing cash from the bank is an example of which type of transaction? Multiple Choice Asset source Asset exchange Claims exchange Asset use
asset source
During the year, Millstone Company earned $6,500 of cash revenue, paid cash dividends of $1,000 to stockholders and paid $4,000 for cash expenses. Liabilities were unchanged. Which of the following accurately describes the effect of these events on the elements of the company's financial statements? Assets ...
assets increased by 1500
Watt Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $7,300 cash from the issue of common stock. Borrowed $4,500 cash from the state bank. Earned $4,800 of cash revenue. Paid $2,300 cash expenses. The company was liquidated at the end of Year 1. Based on this information:
creditor bank gets 4500 and stockholders get 9800
