Financial Accounting Exam

Chris's Maid Service began the year with total liabilities of $125,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total liabilities at the end of the year were $225,000. How much are total assets at the end of the year? $95,000 $370,000 $150,000 $335,000 $385,000

$335,000

Henson Company began the year with retained earnings of $330,000. During the year, the company issued $20,000 of additional common stock, recorded revenues of $500,000, recorded expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year? $450,000 $430,000 $490,000 $410,000 $790,000

$410,000

The financial records for Harold Corporation included the following information: Accounts receivable, $55,000 Accounts payable, $20,000 Cash, $25,000 Common stock, $25,000 Dividends, $15,000 Sales revenue, $90,000 Salaries and wages expense, $30,000 Supplies expense, $10,000 Based on this information, how much was its net income? $35,000 $50,000 $80,000 $55,000 $65,000

$50,000

Jackson Company recorded the following cash transactions for the year: Paid $150,000 for salaries. Paid $45,000 to purchase inventory. Borrowed $10,000 from a bank. Collected $265,000 from customers. What is the company's net cash from operating activities for the year? $80,000 $125,000 $70,000 $265,000 $115,000

$70,000

At the end of the year, Stoneland Corporation has liabilities of $6,000 and equity of $2,000. How much are the company's assets at the end of the year? $4,000 $1,000 $5,500 $0 $8,000

8,000

The right to receive money in the future is called a(n) unearned revenue. liability. account receivable. account payable. revenue.

Account receivable

Which of the following is an asset? Revenue Supplies expense Retained earnings Dividends Accounts receivable

Accounts receivable

Which of the following statements is true regarding the Sarbanes-Oxley Act (SOX)? None of these SOX required increased independence of the certified public accountants hired to audit a company's financial statements. SOX increased the penalties for financial fraud. Penalties may include fines and imprisonment. All of these SOX eliminated the requirement that company management certify the accuracy of the company's financial statements.

All of these

Which of the following statements is true? All of these Amounts received from issuing stock are reported on the income statement. Amounts paid out as dividends are not expenses. Net income appears on both the income statement and the statement of cash flows. Amounts received from issuing stock are revenues.

Amounts paid out as dividends are not expenses.

What type of account or account classification is Retained Earnings? Equity Asset Expense Liability Revenue

Asset

Easy transfer of ownership is a characteristic of which form of business organization? Corporation Sole proprietorship Sole proprietorships and partnerships Partnerships and corporations Partnership

Corporation

Which of the following is considered to be an internal user of accounting data for a given business? Management Taxing authorities, such as the Internal Revenue Service Creditors Owners None of these

Management

If the retained earnings account decreases from the beginning of the year to the end of the year, then which of the following must be true? There was a net income and no dividends. Additional investments are less than net losses. Net income is less than dividends. Dividends must have been paid during the year. Net income is greater than dividends.

Net income is less than dividends.

Which of the following is not a principal type of business activity? All of these are equally considered to be principal activities of a business. Investing Operating Financing Ordering

Ordering

Which of the following is comprised of two parts: (1) common stock and (2) retained earnings? Stockholders' equity Liabilities Expenses Assets Revenues

Stockholders' equity

Which of the following best describes stockholders' equity? Stockholders' equity is the cash collected from owners. Stockholders' equity is the difference between revenues and expenses. Stockholders' equity are the claims of owners. Stockholders' equity are the claims of creditors. Stockholders' equity are the economic resources of the firm.

Stockholders' equity are the claims of owners.

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

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

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 financial statements. auditor's opinion. management discussion and analysis. balance sheet. income statement.

auditor's opinion.

Information about the significant accounting policies and methods used in preparing the financial statements would be found in the management analysis section. balance sheet. general ledger. an auditor's report. notes to the financial statements.

notes to the financial statements.

The income statement: reports the amounts and causes of changes in retained earnings for a specific period of time such as a year. 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. summarizes the cash inflows and cash outflows for a period of time partitioned into operating, investing, and financing activities.

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