Accounting Quiz 1-3 questions

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

Assets = Liabilities + Stockholders' Equity.

Debits decrease assets and increase liabilities. increase both assets and liabilities. decrease both assets and liabilities. increase assets and decrease liabilities.

increase assets and decrease liabilities.

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? Reduced legal liability for investors. Lower taxes. Harder to transfer ownership. Most common form of organization.

reduced legal liability for investors

The best definition of assets is the collections of resources belonging to the company and the claims on these resources. cash owned by the company. owners' investment in the business. resources belonging to a company that have future benefit to the company.

resources belonging to a company that have future benefit to the company.

Dividends are reported on the income statement and balance sheet. income statement. retained earnings statement. balance sheet.

retained earnings statement

The normal balance of any account is the right side. side which increases that account. side which decreases that account. left side.

side which increases that account.

The left side of an account is a description of the account. the debit side. the balance of the account. blank.

the debit side

Swifty Corporation began the year by issuing $121000 of common stock for cash. The company recorded revenues of $1235000, expenses of $958000, and paid dividends of $58000. What was Swifty's net income for the year? $277000 $398000 $219000 $340000

$277000

Sheffield Corp. started the year with $63600 in its Common Stock account and a credit balance in Retained Earnings of $46600. During the year, the company earned net income of $50900, and declared and paid $21200 of dividends. In addition, the company sold additional common stock amounting to $29700. As a result, the balance in retained earnings at the end of the year would be $169600. $76300. $106000. $139900.

$76300.

Which of the following financial statements is concerned with the company at a point in time? Balance sheet Statement of cash flows Income statement Retained Earnings statement

Balance sheet

Which of the following is the best definition of an internal user of accounting information? Managers who use accounting information to plan, organize, and run a business. Creditors, such as banks, that use accounting information to evaluate the risk of lending money. Investors who use accounting information to decide whether to buy or sell stock. Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits.

Managers who use accounting information to plan, organize, and run a business

Ending retained earnings for a period is equal to beginning Retained earnings - Net income + Dividends Retained earnings + Net income + Dividends Retained earnings - Net income - Dividends Retained earnings + Net income - Dividends

Retained earnings + Net income - Dividends

Which accounts normally have credit balances? Revenues, liabilities, and retained earnings Revenues, liabilities, and dividends Revenues, liabilities, and assets Revenues, liabilities, and expenses

Revenues, liabilities, and retained earnings

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

a net loss results

A T-account is a special account used instead of a journal. a way of depicting the basic form of an account a special account used instead of a trial balance. used for accounts that have both a debit and credit balance.

a way of depicting the basic form of an account

An account will have a credit balance if the last transaction entered was a credit. credits exceed the debits. first transaction entered was a credit. debits exceed the credits.

credits exceed the debits.

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

account payable

The usual sequence of steps in the transaction recording process is analyze, journalize, post to the ledger. journalize, post to the ledger, analyze. journalize, analyze, post to the ledger. post to the ledger, journalize, analyze.

analyze, journalize, post to the ledger.

Nash's Trading Post, LLC received a cash advance of $370 from a customer. As a result of this event, Both assets and equity increased by $370. equity increased by $370. assets increased by $370. liabilities decreased by $370.

assets increased by $370.

If total liabilities decreased by $3520, then assets must have decreased by $3520, or stockholders' equity must have increased by $3520. assets and stockholders' equity each increased by $1760. stockholders' equity must have decreased by $3520. assets must have increased by $3520.

assets must have decreased by $3520, or stockholders' equity must have increased by $3520.

If services are rendered for cash, then liabilities will increase. stockholders' equity will decrease. assets will increase. liabilities will decrease.

assets will increase.

A balance sheet shows revenues, expenses, and dividends. revenues, liabilities, and stockholders' equity. assets, liabilities, and stockholders' equity. expenses, dividends, and stockholders' equity.

assets, liabilities, and stockholders' equity.

Waterway Industries provided consulting services and billed the client $2750. As a result of this event, total assets remained unchanged. assets increased by $2750. both assets and equity increased by $2750. equity increased by $2750

both assets and equity increased by $2750.

If a company pays dividends of $10600, retained earnings will be reduced by $10600. both retained earnings and total stockholders' equity will be reduced by $10600. total stockholders' equity will be reduced by $10600. net income will be reduced by $10600.

both retained earnings and total stockholders' equity will be reduced by $10600.

Borrowing money is an example of a(n) investing activity operating activity delivering activity financing activity

financing activity

The purchase of an asset on credit increases assets and stockholders' equity. leaves total assets unchanged. increases assets and liabilities. decreases assets and increases liabilities.

increases assets and liabilities.

Buying assets needed to operate a business is an example of a(n) investing activity delivering activity operating activity financing activity

investing activity

A revenue account has a normal balance of a debit. is increased by credits. is decreased by credits. is increased by debits.

is increased by credits.

A business organized as a corporation: requires that stockholders be personally liable for the debts of the business. has tax advantages over a proprietorship or partnership. is owned by its stockholders. is not a separate legal entity in most states.

is owned by its stockholders

An income statement presents the revenues and expenses for a specific period of time. summarizes the changes in retained earnings for a specific period of time. reports the changes in assets, liabilities, and stockholders' equity over a period of time. reports the assets, liabilities, and stockholders' equity at a specific date.

presents the revenues and expenses for a specific period of time.