Accounting Final Chapter 1

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) a. account payable. b. account receivable. c. revenue. d. expense.

A

When expenses exceed revenues, which of the following is true? a. a net loss results b. a net income results c. assets equal liabilities d. assets are increased

A

Which of the following is not a satisfactory statement of the accounting equation? a. Assets = Stockholders' Equity - Liabilities b. Assets = Liabilities + Stockholders' Equity c. Assets - Liabilities = Stockholders' Equity d. Assets - Stockholders' Equity = Liabilities

A

Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries. Paid $60,000 to purchase office equipment. Paid $15,000 for utilities. Paid $6,000 in dividends. Collected $275,000 from customers. What was Jackson's net cash provided by operating activities? a. $125,000 b. $65,000 c. $140,000 d. $119,000

A Solution: $275,000 - $135,000 - $15,000 = $125,000

132. If total liabilities increased by $90,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $120,000 decrease b. $120,000 increase c. $150,000 increase d. $180,000 increase

A Solution: $90,000 + $30,000 = $120,000 (Tot. liab. inc. + st. eq inc.)

103. Dividends are reported on the a. income statement. b. retained earnings statement. c. balance sheet. d. income statement and balance sheet.

B

The accounting equation may be expressed as a. Assets = Stockholders' Equity - Liabilities. b. Assets = Liabilities + Stockholders' Equity. c. Assets + Liabilities = Stockholders' Equity. d. Assets + Stockholders' Equity = Liabilities.

B

The proprietorship form of business organization a. must have at least two owners in most states. b. generally receives favorable tax treatment relative to a corporation. c. combines the records of the business with the personal records of the owner. d. is classified as a separate legal entity.

B

Which of the following is an asset? a. Mortgage payable b. Investments c. Common stock d. Retained earnings

B

Jimmy's Repair Shop started the year with total assets of $300,000 and total liabilities of $240,000. During the year the business recorded $630,000 in revenues, $330,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was a. $360,000. b. $300,000. c. $240,000. d. $270,000.

B Solution: ($300,000 -$240,000) +($630,000 - $330,000) - $60,000 =$300,000 [Beg. tot. assets - beg. tot. liab.) + (rev.- exp.) - div.]

161. Marvin Services Corporation had the following accounts and balances: Accounts payable $30,000 Equipment $35,000 Accounts receivable 5,000 Land 35,000 Buildings ? Unearned service revenue 10,000 Cash 15,000 Total stockholders' equity ? If the balance of the Buildings account was $70,000 and $5,000 of Accounts Payable were paid in cash, what would be the balance of the total stockholders' equity? a. $135,000 b. $120,000 c. $170,000 d. $130,000

B Solution: ($5,000 +$70,000 + $10,000 + $35,000 +$35,000) - ($25,000 + $10,000) =$120,000 [A/R + Bldg. bal. + (cash bal. - A/P pd.) + equip. + land] - [(A/P bal - A/P pd.) + un. ser. rev.]

82. Which of the following activities involves collecting the necessary funds to support the business? a. Operating b. Investing c. Financing d. Delivering

C

Which activities involve acquiring the resources to run the business? a. Delivering b. Financing c. Investing d. Operating

C

Which of the following external groups uses accounting information to determine whether the company can pay its obligations? a. Investors in common stock b. Marketing managers c. Creditors d. Chief Financial Officer

C

Which of the following is not one of the three forms of business organization? a. Corporations b. Partnerships c. Proprietorships d. Investors

D

Which of the following would not be considered an internal user of accounting data for the Xanadu Company? a. President of the company b. Production manager c. Merchandise inventory clerk d. President of the employees' labor union

D

163. Marvin Services Corporation had the following accounts and balances: Accounts payable $30,000 Equipment $35,000 Accounts receivable 5,000 Land 35,000 Buildings ? Unearned service revenue 10,000 Cash 15,000 Total stockholders' equity ? If total stockholder's equity was $95,000, what would be the balance of the Buildings Account? a. $35,000 b. $135,000 c. $145,000 d. $45,000

D Solution: ($30,000 + $10,000 + $95,000) - ($5,000 + $15,000 + $35,000 + $35,000) =$45,000 (A/P + un. ser. rev. + tot. st eq.) - (A/R + cash + equip. + land)

Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt? a. Only Jack is personally liable for the debt, since he has been the managing partner during that time. b. Only Jill is personally liable for the debt of the business, since Jack has been working and she has not. c. Both Jack and Jill are personally liable for the business debt. d. Neither Jack nor Jill is personally liable for the business debt, since the partnership is a separate legal entity.

c