Financial accounting chapter 2

Which of the following statements shows the dividends paid during the accounting period: statement of financial position, statement of retained earnings, income statement, b and c

statement of retained earnings

Retained earnings are the earnings that a company saves and reinvests; they can be used whenever the company needs cash.

false

The capital stock account combined with the retained earnings account reflect the valuation the open market places on the company.

false

The money spent to buy equipment is called an expense

false

The statement of financial position shows how well a company has performed over a period of time.

false

The statement of retained earnings shows the revenues, expenses, and net income of an enterprise over a period of time.

false

Arial Corp incorporated on Jan 1, 2012. The capital stock account at that time was 100k. Losses for 2012, 2013, and 2014 totaled 60k. The retained earnings account at the end of 2014 was 40k, 160k, 60k, -60k

-60k

Goober Pyle purchased machinery for his auto shop at a cost of 5000 with a note from the bank. Accordingly, (a) liabilities increased 5k and assets increased 5k (b) liabilities increased 5k and oe decreased by 5k (c) assets and oe both increased by 5k (d) none of these

a

Owners equity can also be shown on the balance sheet as net worth, net assets, stockholders equity, a and b, a b and c

a b and c

The retained earnings account could take the form of accounts receivable, inventory, plant and equipment, a b and c

a b and c

Current assets are a firms resources that are expected to be converted into cash within a year. The basis of this rule is the matching principle, the going concern principle, accounting convention, the monetary concept

accounting convention

Which of the following is a liability? accounts payable, inventory, investments, prepaid insurance, none of the above

accounts payable

The cash account includes cash on hand, checks on hand that have not been deposited, cash in the bank, all of these

all of these

The operating expenses shown on an income statement usually include: COGS, salaries, administration, a and b, b and c

b and c

A corporation's fiscal year does not always coincide with the calendar year. The most common reason for this disparity is (a) that most corporations don't begin operations of Jan 1 (b) that the SEC assigns fiscal years for public corps (c) to favorably present the results of operations of seasonable enterprises

c

One purpose of the statement of retained earnings is to show (a) how well a company performed in the previous year (b) the financial position of a company at a point in time (c) distribution of earnings to the stockholders (d) claims on the company's resources (e) none of the above

c

Which of the following accounts represents the original investment of the shareholders? capital stock, retained earnings, liabilities, assets, none of these

capital stock

Investments representing short-term holding of securities would appear on the balance sheet as long term liabilities, long term assets, current assets, current liabilities, none of these

current assets

A company's property holdings are usually listed at fair market value on the balance sheet.

false

Allison Corporation had net income of $18,000 for 2014. At the end of 2014, Allison paid out $10K in dividends. This payment left Allison with $8K cash in retained earnings

false

An asset is only a tangible, economic resource of a firm that can be measured in monetary terms

false

Capital stock represents the market's value of the company.

false

Current assets almost always equal current liabilities.

false

Current assets are properly listed in order of liquidity on a balance sheet as shown in the following example: Cash, Accounts Receivable, Prepaid Insurance, Inventory

false

Dividends are one of the largest expenses that a corporation incurs.

false

Dividends can be paid to stockholders only following a year in which a company has generated net income.

false

Which of the following accounts represents the market valuation of the company? assets, liabilities, net assets, retained earnings, none of these

none of these

Which of the following is a liability? cash, accounts receivable, inventory, none of these

none of these

Which of the following is a snapshot of the financial position of the company? income statement, statement of retained earnings, cash flow statement, inventory statement, none of these

none of these

Which of the following is an asset? salaries payable, taxes payable, accounts payable, none of these

none of these

Depreciation can be considered an allocated cost of using an asset with a life of more than one year.

true

Liabilities are the claims of creditors to a company's resources.

true

One application of the conservatism principle is that inventory is valued on the balance sheet at either its original cost or market value, whichever is lower.

true

Stockholders' equity is the same as owners' equity.

true

The "net worth" of a firm is shown on the company's balance sheet.

true

The balance maintained in a checking account (also called a demand deposit or D.D.A. account) is considered a part of a company's cash account.

true

liabilities= assets- owners' equity

true