Accounting Midterm
150) On January 1, ABC started the year with a $492,000 balance in Retained Earnings and a $605,000 balance in Common Stock. During the year, the company reported net income of $92,000, paid a dividend of $15,200, and issued more common stock for $27,500. What is total stockholders' equity at the end of the year? A) $1,201,300. B) $1,588,300. C) $1,097,000. D) $1,231,700.
A) $1,201,300.
239) Assume that ABC had a retained earnings balance of $10,000 on April 1, and that the company had the following transactions during April. Issued common stock for cash, $5,000. Provided services to customers on account, $2,000. Provided services to customers in exchange for cash, $900. Purchased equipment and paid cash, $4,300. Paid April rent, $800. Paid employees' salaries for April, $700. What was ABC's retained earnings balance at the end of April? A) $11,400. B) $16,400. C) Some other amount. D) $12,100.
A) $11,400.
196) Following are transactions of ABC, a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. What was the total amount of ABC's liabilities following these six transactions? A) $12,300. B) $15,500. C) $27,300. D) $22,600
A) $12,300.
200) For the past five years, ABC reported the following annual net income and dividend amounts: (Look at PDF for table) If ABC had Retained Earnings of $88,000 at the end of year 5, what was the company's Retained Earnings at the beginning of Year 1? A) $13,000. B) $7,000. C) $1,000. D) $25,000.
A) $13,000.
52) The following financial information is from ABC. All debt is due within one year unless stated otherwise. (Look at table in PDF) What is the amount of current liabilities? A) $28,000. B) $22,000. C) $45,600. D) $63,000.
A) $28,000.
99) ABC paid dividends of $2,410, $0, $1,570 and $1,060 over the first four years of the company's existence. If Retained Earnings after year four has an ending balance of $9,700, what is the average annual amount of net income (loss) over the past four years for ABC? A) $3,685. B) $840. C) $1,260. D) $14,740.
A) $3,685.
58) ABC had the following final balances after the first year of operations: assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the amount of ABC's liabilities? A) $30,000. B) $13,000. C) $7,000. D) $55,000.
A) $30,000
216) DW has an ending Retained Earnings balance of $51,100. If during the year DW paid dividends of $4,300 and had net income of $22,500, then what was the beginning Retained Earnings balance? A) $32,900. B) $69,300. C) $24,300. D) $300.
A) $32,900.
9) If total change in cash = $44,000, net operating cash flows = $22,000, and net investing cash flows = ($13,000); then net financing cash flows = A) $35,000. B) $45,000. C) $15,000. D) $25,000.
A) $35,000
233) Given the following, stockholders' claims to the company's resources amount to: (Look at table on PDF) A) $400,000. B) $800,000. C) $1,200,000. D) $250,000.
A) $400,000.
111) The Accounts Receivable account has a beginning balance of $10,000 and the company provides services of $50,000 on account during the month. The ending balance was $12,000. How much did the company receive from customers during the month? A) $48,000. B) $52,000. C) $50,000. D) $62,000.
A) $48,000.
76) ABC had the following net income (loss) the first three years of operation: $7,100, ($1,600), and $3,600. If the Retained Earnings balance at the end of year three is $1,100, what was the total amount of dividends paid over these three years? A) $8,000. B) $500. C) $0. D) $9,100.
A) $8,000.
182) The following table contains financial information for ABC before closing entries: (Look at PDF) What is the amount of ABC's total assets? A) $83,500. B) $82,500. C) $68,500. D) $81,500.
A) $83,500.
62) On March 3, ABC purchased a desk for $450 on account. On March 22, ABC purchased another desk for $500 also on account, and then on March 24, ABC paid $400 on account. At the end of March, what amount should ABC report for desks (assuming these two desks were the only desks they had)? A) $950. B) $50. C) $450. D) $500.
A) $950.
65) Which of the following statements is NOT correct about the financial statements? A) A balance sheet reports assets, liabilities, revenues, and expenses. B) The statement of stockholders' equity presents common stock, dividends, and retained earnings information. C) An income statement reports revenues, expenses, and net income information. D) The statement of cash flows shows cash inflows and outflows from operating, financing, and investing activities.
A) A balance sheet reports assets, liabilities, revenues, and expenses.
11) Which of the following are made ONLY at year end (This question may have multiple answers) A) Adjusting Entries B) Closing Entries C) Transaction Entries
A) Adjusting Entries B) Closing Entries
105) Subsidiary Accounts and Master Accounts A) Are reported in the Financial Statmnts B) Are only used in the Income Statement C) Are bookkeeping devices D) Are only used in the Balance Sheet
A) Are reported in the Financial Statmnts C) Are bookkeeping devices
12) In the Allowance Method when we we collect on a previously written off receivable A) Assets stay the same, Net Income stays the same. B) Assets increase, Net Income increases. C) It depends D) Assets decrease, Net Income decreases
A) Assets stay the same, Net Income stays the same.
242) A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense? A) August. B) Evenly over the three months. C) July. D) June.
A) August.
35) Usually we measure Accounts Receivable at A) Benefit Value B) Sacrifice Value C) $0
A) Benefit Value
236) The usual balance in a Contra-Asset account is a: A) CR B) DR C) It depends
A) CR
103) Which of the following items would not appear in an income statement? A) Cash. B) Service revenue. C) Salaries expense. D) Advertising expense.
A) Cash
14) Before the 1st step in the Operating Cycle, the firm has? A) Cash B) Receivable C) Inventory
A) Cash
56) Which of the following is not a major section in the statement of cash flows? A) Cash flows from customers. B) Cash flows from operating activities. C) Cash flows from investing activities. D) Cash flows from financing activities.
A) Cash flows from customers.
17) The usual balance in a Contra-Owners' Equity account is a: A) DR B) It depends C) CR
A) DR
18) The usual balance in a Contra-Revenue account is a: A) DR B) It depends C) CR
A) DR
237) Accounts Receivable are like A) Dead Fish B) a Fine Wine
A) Dead Fish
106) Which of the following is recorded upon receipt of a payment on April 7, 2018, by a customer who pays a $900 invoice dated March 3, 2018, with terms 2/10, n/60? A) Debit Cash $900. B) Debit Sales Discounts $18. C) Credit Accounts Receivable $882. D) Credit Purchase Discounts $18.
A) Debit Cash $900.
140) Which of the following is not a possible journal entry? A) Debit assets; Debit stockholders' equity. B) Credit revenues; Debit assets. C) Debit expenses; Credit liabilities. D) Credit assets; Debit expenses.
A) Debit assets; Debit stockholders' equity.
10) For a journal entry with only two lines, the following entry is valid: Decrease in Revenue, Increase in Dividends. A) False B) True
A) False
100) For a journal entry with only two lines, the following entry is valid: Increase in one Liability, Increase Owners' Equity. A) False B) True
A) False
102) For a journal entry with only two lines, the following entry is valid: Decrease in Owners' Equity, Increase in Dividends. A) False B) True
A) False
132) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Decrease in a Owners' Equity. A) False B) True
A) False
145) For a journal entry with only two lines, the following entry is valid: Increase in a Liability, Increase in Revenue. A) False B) True
A) False
157) For a journal entry with only two lines, the following entry is valid: Increase in Owners' Equity, Decrease in Expense. A) False B) True
A) False
161) Separation of duties occurs when two or more people act in coordination to circumvent internal controls. A) False B) True
A) False
166) For a journal entry with only two lines, the following entry is valid: Decrease in Owners' Equity, Increase in Expense. A) False B) True
A) False
189) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Decrease in Revenue. A) False B) True
A) False
194) For a journal entry with only two lines, the following entry is valid: Decrease in one Liability, Decrease in a second second liability. A) False B) True
A) False
215) For a journal entry with only two lines, the following entry is valid: Increase in Expense, Increase in Dividends. A) False B) True
A) False
219) For a journal entry with only two lines, the following entry is valid: Increase in one Expense, Increase in another Expense. A) False B) True
A) False
231) For a journal entry with only two lines, the following entry is valid: Decrease in a liability, Decrease in Revenue. A) False B) True
A) False
244) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Increase in Revenue. A) False B) True
A) False
29) The Income Statement always balances. A) False B) True
A) False
45) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Decrease in an Expense A) False B) True
A) False
50) Separation of duties refers to auditors not being allowed to perform both audit and nonaudit services for the same client. A) False B) True
A) False
64) For a journal entry with only two lines, the following entry is valid: Decrease in one Owners' Equity, Decrease in a second Owners' Equity. A) False B) True
A) False
7) For a journal entry with only two lines, the following entry is valid: Increase in one Revenue, Increase in another Revenue. A) False B) True
A) False
73) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Increase in an Expense. A) False B) True
A) False
81) For a journal entry with only two lines, the following entry is valid: Increase in Owners' Equity, Increase in Revenue. A) False B) True
A) False
227) For which step in the Operating cycle is there a difference between manufacturers and retailers? A) First B) Fourth C) Second D) Third
A) First
169) After the 1st step in the Operating Cycle, the firm has? A) Inventory B) Receivable C) Cash
A) Inventory
84) After the First STEP in the Operating Cycle the firm has? A) Inventory B) Cash C) Account Receivable D) None of the other three
A) Inventory
201) The primary focus for financial accounting information is to provide information useful for: A) Investment decisions and credit decisions. B) Credit decisions but not investment decisions. C) Investment decisions but not credit decisions. D) Neither investment decisions nor credit decisions
A) Investment decisions and credit decisions
26) Choose one: A) It is possible for the Income Statement to balance B) The Income Statement always balances C) The Income Statement never balances
A) It is possible for the Income Statement to balance
74) Which of the following is not possible when recording a transaction? A) Liabilities increase and assets decrease. B) Stockholders' equity increases and assets increase. C) Stockholders' equity decreases and assets decrease. D) One asset increases and another asset decreases.
A) Liabilities increase and assets decrease.
4) Unearned revenue is what type of account? A) Liability B) Revenue C) Expense D) Asset
A) Liability
42) Duality of Asset Valuation is primarily as issue in A) Measuring Assets B) Measuring Income
A) Measuring Assets
222) When a company pays cash for equipment, what is the effect on the accounting equation for that company? A) No change. B) Increase assets and increase liabilities. C) Decrease assets and decrease liabilities. D) Increase assets and increase stockholders' equity.
A) No change.
123) Look at PDF for T-Account. The $3,100 amount could represent which of the following? A) Payment for salaries. B) Purchase of supplies on account. C) Ending balance of cash. D) Collection from customers.
A) Payment for salaries.
178) Which statement below best describes the accounting equation? A) Resources of the company equal creditors' and owners' claims to those resources. B) The change in retained earnings equals net income less dividends. C) Equality of revenue and expense transactions over time. D) Financing activities equal investing and operating activities.
A) Resources of the company equal creditors' and owners' claims to those resources.
185) Which of the following is not a balance sheet item? A) Revenues. B) Assets. C) Retained earnings. D) Common stock.
A) Revenues.
128) For most businesses what is the critical event? A) Sale of Inventory B) Collecting Cash for Receivables C) Acquiring Inventory
A) Sale of Inventory
213) How many of the above accounts have a normal debit balance? A) Six. B) Five. C) Four. D) Seven.
A) Six.
54) The Balance Sheet is a: A) Snapshot B) Video
A) Snapshot
167) When a company makes an end-of-period adjusting entry, which includes a debit to Supplies Expense, the usual credit entry is made to: A) Supplies. B) Retained Earnings. C) Cash. D) Accounts Payable.
A) Supplies.
48) In a sale on account, who is undertaking a financial risk of non-payment? A) The seller B) Both the buyer and the seller C) Neither the buyer nor the seller D) The buyer
A) The seller
85) How many types of Cash Flow are there on the Cash Flow statement A) Three B) Four C) Two D) One
A) Three
208) Consider the following list of accounts: Accounts Payable Cash Prepaid Rent Common Stock Salaries Payable Equipment Supplies Rent Expense How many of these accounts have a normal credit balance? A) Three. B) Four. C) Five. D) Two.
A) Three.
144) For which of the following must Debits equal Credits (This question may have multiple answers) A) Transaction Entries B) Closing Entries C) Adjusting Entries
A) Transaction Entries B) Closing Entries C) Adjusting Entries
93) Investors and Creditors are interested in which of these entries? (This question may have multiple answers) A) Transaction Entries B) Closing Entries C) Adjusting Entries
A) Transaction Entries C) Adjusting Entries
118) For a journal entry with only two lines, the following entry is valid: Decrease in Expense, Increase in Dividends. A) True B) False
A) True
129) For a journal entry with only two lines, the following entry is valid: Increase in one asset, Decrease in a second asset. A) True B) False
A) True
130) For a journal entry with only two lines, the following entry is valid: Decrease in Revenue, Decrease in Expense. A) True B) False
A) True
136) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Increase in an Expense. A) True B) False
A) True
165) For a journal entry with only two lines, the following entry is valid: Decrease in Revenue, Decrease in Dividends. A) True B) False
A) True
184) For a journal entry with only two lines, the following entry is valid: Increase in one Expense, Decrease in another Expense. A) True B) False
A) True
202) For a journal entry with only two lines, the following entry is valid: Decrease in Owners' Equity, Decrease in Dividends. A) True B) False
A) True
206) An example of separation of duties would be not allowing an employee who receives cash to also be responsible for depositing that cash in the bank account. A) True B) False
A) True
21) For a journal entry with only two lines, the following entry is valid: Increase in a Liability, Decrease Owners' Equity. A) True B) False
A) True
221) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Decrease in a Owners' Equity. A) True B) False
A) True
25) For a journal entry with only two lines, the following entry is valid: Increase in a liability, Increase in an Expense. A) True B) False
A) True
63) For a journal entry with only two lines, the following entry is valid: Increase in a liability, Decrease in Revenue. A) True B) False
A) True
68) For a journal entry with only two lines, the following entry is valid: Increase in Revenue, Increase in Expense. A) True B) False
A) True
72) For a journal entry with only two lines, the following entry is valid: Increase in one Liability, Decrease in a second second liability. A) True B) False
A) True
79) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Decrease in a liability. A) True B) False
A) True
8) For a journal entry with only two lines, the following entry is valid: Decrease in Owners' Equity, Decrease in Expense. A) True B) False
A) True
96) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Decrease in a Owners' Equity. A) True B) False
A) True
98) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Decrease in Dividends. A) True B) False
A) True
159) Look at PDF. How many of the above accounts are permanent? A) Three. B) Five. C) Four. D) Six
D) Six
164) The Income Statement is a: A) Video B) Snapshot
A) Video
230) In Outsourcing, a firm A) hires a firm to do some work it was doing itself B) increase revenue C) increases expenses D) changes accounting firms
A) hires a firm to do some work it was doing itself
248) ABC had a net income of $8,000, $5,000, $12,000, and $10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $3,000, what is the ending retained earnings balance? A) $35,000. B) $23,000. C) $7,000. D) $47,000.
B) $23,000.
163) The ending Retained Earnings balance of ABC decreased by $1.0 million from the beginning of the year. The company declared a dividend of $5.4 million during the year. What was the net income for the year? A) $6.4 million. B) $4.4 million. C) $7.5 million. D) $1.0 million.
B) $4.4 million.
91) We always sell pens at $8. We sold a pen for $7 because it was damaged. Record the sale at A) It depends B) $7 C) $8
B) $7
139) A company provides services on account. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues. A) (1) No effect, (2) No effect (3) No effect B) (1) Increase, (2) Increase (3) Increase C) (1) No effect, (2) Increase (3) Increase D) (1) Increase, (2) No effect (3) Increase
B) (1) Increase, (2) Increase (3) Increase
113) A company has 1,184 customers they extend credit to, how many accounts receivable will they have on their books? A) 1 B) 1,185 C) None of the other three D) 1,184
B) 1,185
179) The owner of an office building should report rent collected in advance as a debit to Cash and a credit to: A) Revenue. B) A liability. C) An asset other than Cash. D) Stockholders' equity.
B) A liability.
53) After the Second STEP in the Operating Cycle the firm has? A) Inventory B) Account Receivable C) Cash D) None of the other three
B) Account Receivable
92) Which of the following accounts would normally have a credit balance? A) Salaries Payable, Deferred Revenue, Delivery Expense. B) Accounts Payable, Service Revenue, Common Stock. C) Cash, Repairs and Maintenance Expense, Dividends. D) Income Tax Payable, Service Revenue, Dividends.
B) Accounts Payable, Service Revenue, Common Stock
88) Which statement is true? A) All Balance Sheet accounts are Temporary B) All Balance Sheet accounts are Permanent C) Some Balance Sheet accounts are Temporary and some are Permanent
B) All Balance Sheet accounts are Permanent
195) Which statement is true? A) Some Income Statement accounts are Temporary and some are Permanent B) All Income Statement accounts are Temporary C) All Income Statement accounts are Permanent
B) All Income Statement accounts are Temporary
190) Prepaid Rent is what kind of account? A) Revenue B) Asset C) Expense D) Liability
B) Asset
137) On September 30, ABC Co. paid employee salaries of $7,000, including $1,000 it owed to its employees last month. What are the effects of this transaction on the accounting equation? A) Expenses increased, liabilities increased, and assets increased. B) Assets decreased, liabilities decreased, and expenses increased. C) Expenses decreased, liabilities decreased, and assets decreased. D) Assets decreased, expenses decreased, and liabilities increased. E) Assets increased, expenses increased, and liabilities decreased.
B) Assets decreased, liabilities decreased, and expenses increased.
224) When a company provides services on account, the accounting equation would be affected as follows: A) Revenues increase. B) Assets increase and stockholders' equity increases. C) Assets increase and liabilities decrease. D) Assets increase.
B) Assets increase and stockholders' equity increases.
226) An alternative form of the accounting equation is: A) Net Income = Revenues − Expenses. B) Assets − Liabilities = Stockholders' Equity. C) Stockholders' Equity = Assets + Liabilities. D) Assets = Liabilities − Stockholders' Equity.
B) Assets − Liabilities = Stockholders' Equity.
33) Which of the accounts are increased with a debit and decreased with a credit? A) Liabilities, stockholders' equity, and revenues. B) Assets, dividends, and expenses. C) Expenses, dividends, and stockholders' equity. D) Dividends, liabilities, and assets.
B) Assets, dividends, and expenses.
218) The usual balance in a Contra-Dividend account is a: A) It depends B) CR C) DR
B) CR
211) After the 3rd step in the Operating Cycle, the firm has? A) Inventory B) Cash C) Receivable
B) Cash
134) Which of the following is a balance sheet item? A) Net Income. B) Cash. C) Utilities Expense. D) Dividends.
B) Cash.
246) Which of the following are made AFTER the financial statements are prepared? A) Transaction Entries B) Closing Entries C) Adjusting Entries
B) Closing Entries
176) The usual balance in a Contra-Liability account is a: A) CR B) DR C) It depends
B) DR
22) When the company pays stockholders a dividend, what is the effect on the accounting equation for that company? A) Decrease assets and decrease liabilities. B) Decrease assets and decrease stockholders' equity. C) Decrease stockholders' equity and increase assets. D) Increase liabilities and increase assets.
B) Decrease assets and decrease stockholders' equity.
61) Which of the following is possible for a particular business transaction? A) Increase assets; Decrease liabilities B) Decrease assets; Increase assets C) Decrease assets; Increase stockholders' equity D) Decrease liabilities; Increase expenses
B) Decrease assets; Increase assets
109) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Increase in a liability. A) True B) False
B) False
122) For a journal entry with only two lines, the following entry is valid: Decrease in a liability, Increase in Dividends. A) True B) False
B) False
124) For a journal entry with only two lines, the following entry is valid: Decrease in one Revenue, Decrease in another Revenue. A) True B) False
B) False
135) For a journal entry with only two lines, the following entry is valid: Increase in a liability, Decrease in Dividends. A) True B) False
B) False
138) For a journal entry with only two lines, the following entry is valid: Increase in Revenue, Decrease in Dividends. A) True B) False
B) False
141) For a journal entry with only two lines, the following entry is valid: Increase in one Liability, Increase in a second second liability. A) True B) False
B) False
143) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Increase in a Owners' Equity. A) True B) False
B) False
151) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Decrease in a liability. A) True B) False
B) False
170) For a journal entry with only two lines, the following entry is valid: Increase in one Owners' Equity, Increase in a second Owners' Equity. A) True B) False
B) False
181) For a journal entry with only two lines, the following entry is valid: Increase in Owners' Equity, Decrease in Dividends. A) True B) False
B) False
183) For a journal entry with only two lines, the following entry is valid: Decrease in Revenue, Increase in Expense. A) True B) False
B) False
186) For a journal entry with only two lines, the following entry is valid: Decrease in Expense, Decrease in Dividends. A) True B) False
B) False
191) For a journal entry with only two lines, the following entry is valid: Increase in Owners' Equity, Decrease in Revenue. A) False B) True
B) False
214) For a journal entry with only two lines, the following entry is valid: Increase in Revenue, Decrease in Expense. A) True B) False
B) False
217) For a journal entry with only two lines, the following entry is valid: Decrease in a Liability, Decrease in Owners' Equity. A) True B) False
B) False
240) In a Balanced set of Accounting Records, EVERY Account must balance. A) True B) False
B) False
36) For a journal entry with only two lines, the following entry is valid: Increase in a liability, Decrease in an Expense. A) True B) False
B) False
6) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Increase in Dividends. A) True B) False
B) False
67) For a journal entry with only two lines, the following entry is valid: Decrease in Owners' Equity, Decrease in Revenue. A) True B) False
B) False
86) For a journal entry with only two lines, the following entry is valid: Decrease in a liability, Increase in an Expense. A) True B) False
B) False
94) For a journal entry with only two lines, the following entry is valid: Decrease in one Expense, Decrease in another Expense. A) True B) False
B) False
97) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Decrease in Dividends. A) True B) False
B) False
16) The assumption that a business will continue to operate into the future is the: A) Economic entity assumption. B) Going concern assumption. C) Monetary unit assumption. D) Periodicity assumption.
B) Going concern assumption.
115) Choose one: A) The Statement of Cash Flows never balances B) It is possible for Cash Inflows to balance Cash Outflows on the Statement of Cash Flows C) The Statement of Cash Flows always balances
B) It is possible for Cash Inflows to balance Cash Outflows on the Statement of Cash Flows
126) Which of the accounts are decreased on the debit side and increased on the credit side? A) Expenses, dividends, and stockholders' equity. B) Liabilities, stockholders' equity, and revenues. C) Dividends, liabilities, and assets. D) Assets, dividends, and expenses.
B) Liabilities, stockholders' equity, and revenues.
199) Allocation is primarily as issue in A) Both Measuring Assets and Income B) Measuring Income C) Measuring Assets D) None of the other three
B) Measuring Income
24) Which of the following are classified as Accounts Receivable? (This question may have multiple answers) A) Tax refunds owed to us by the IRS. B) Monies that customers owe us for providing a service. C) Monies that customers owe us from sale of merchandise. D) Loans we made to a customer
B) Monies that customers owe us for providing a service. C) Monies that customers owe us from sale of merchandise.
152) Which of the following has the single greatest impact on stock prices? A) Total dividends. B) Net income. C) Total revenues. D) Total assets.
B) Net income.
Is it possible to make an entry which changes only one account? A) Yes B) No
B) No
47) On January 1, ABC sold $30,000 in products to a customer on account. Then on January 10, ABC collected the cash on that account. What is the impact on ABC's accounting equation from the collection of cash on January 10? A) Assets decrease and liabilities decrease. B) No net effect on the accounting equation. C) Assets increase and stockholders' equity increases. D) Assets increase and liabilities decrease.
B) No net effect on the accounting equation.
175) Following are transactions of ABC, a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. How many of these transactions decreased ABC's total assets? A) Four. B) One. C) Two. D) Three.
B) One.
249) Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Provided services to customers on account. Collected cash from customers on account. How many of these four transactions increased the given company's total liabilities? A) Two. B) One. C) Four. D) Three.
B) One.
83) Following are transactions of ABC., a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. How many of these transactions decreased ABC's total assets? A) Three. B) One. C) Two. D) Four.
B) One.
229) What is usually a better predictor of future cash flow to the firm? A) Past Cash Flows B) Past Income
B) Past Income
23) Which of the following would increase assets and increase liabilities? A) Provide services to customers on account. B) Purchase office supplies on account. C) Pay dividends to stockholders. D) Receive a utility bill but do not pay it immediately.
B) Purchase office supplies on account.
32) When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent, the debit is usually made to: A) Cash. B) Rent Expense. C) Rent Receivable. D) Rent Payable.
B) Rent Expense
104) When Managers report they A) Always try to look bad B) Sometimes like to look good, and sometimes like to look bad C) Always try to look good
B) Sometimes like to look good, and sometimes like to look bad
241) During a Sale in the operating cycle, what happens to cash? A) Increases B) Stays the Same C) It depends D) Decreases
B) Stays the Same
112) In Cash Flow reporting at the point of Sale A) There is a Loss B) There is no Loss and no Gain C) There is a Gain D) It depends on the measuring system
B) There is no Loss and no Gain
39) When you develop an entry A) Debits are on top, Credits are on the bottom B) There is no required ordering of Debits and Credits C) Credits are on top, Debits are on the bottom
B) There is no required ordering of Debits and Credits
107) How many of the following transactions are operating activities? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750 Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock A) Four. B) Three. C) One. D) Two.
B) Three.
173) If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect total assets for the current period? A) Not possible to determine. B) Total assets will be correct. C) Total assets will be too low. D) Total assets will be too high.
B) Total assets will be correct.
101) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Increase in Revenue. A) False B) True
B) True
121) For a journal entry with only two lines, the following entry is valid: Decrease in a liability, Decrease in an Expense. A) False B) True
B) True
125) For a journal entry with only two lines, the following entry is valid: Decrease in a Liability, Increase Owners' Equity. A) False B) True
B) True
131) For a journal entry with only two lines, the following entry is valid: Increase in Owners' Equity, Increase in Dividends. A) False B) True
B) True
146) For a journal entry with only two lines, the following entry is valid: Decrease in Owners' Equity, Increase in Revenue. A) False B) True
B) True
160) For a journal entry with only two lines, the following entry is valid: Increase in one revenue, Decrease in another revenue. A) False B) True
B) True
180) For a journal entry with only two lines, the following entry is valid: Increase in Revenue, Increase in Dividends. A) False B) True
B) True
210) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Increase in Dividends. A) False B) True
B) True
212) For a journal entry with only two lines, the following entry is valid: Increase in Owners' Equity, Increase in Expense. A) False B) True
B) True
234) For a journal entry with only two lines, the following entry is valid: Increase in a liability, Increase in Dividends. A) False B) True
B) True
3) For a journal entry with only two lines, the following Decrease in a liability, Decrease in Dividends. A) False B) True
B) True
44) For a journal entry with only two lines, the following entry is valid: Increase in Expense, Decrease in Dividends. A) False B) True
B) True
46) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Increase in a Owners' Equity. A) False B) True
B) True
70) For a journal entry with only two lines, the following entry is valid: Increase in one Owners' Equity, Decrease in a second Owners' Equity. A) False B) True
B) True
80) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Decrease in an Expense. A) False B) True
B) True
87) For a journal entry with only two lines, the following entry is valid: Increase in an asset, Increase in a liability. A) False B) True
B) True
31) How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employees' salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance A) Three. B) Two. C) One. D) Four.
B) Two
158) The Statement of Cash Flows is a: A) Snapshot B) Video
B) Video
209) The Income Statement is a: A) Snapshot B) Video
B) Video
30) If a Trial Balance balances A) all account balances must be correct B) some account balances may be wrong
B) some account balances may be wrong
204) In Cash Flow reporting inventory is measured at A) It depends on the measuring system B) Sacrifice Value C) $0 D) Benefit Value
C) $0
55) ABC engages in the following cash payments: (Look at PDF for payments) What is the total amount of cash paid for operating activities? A) $7,000. B) $6,000. C) $1,500. D) $2,000.
C) $1,500
108) ABC opened for business on January 1, 2018, and paid for two insurance policies effective that date. The liability policy was $36,000 for 18 months, and the crop damage policy was $12,000 for a two-year term. What was the balance in ABC's Prepaid Insurance account as of December 31, 2018? A) $48,000. B) $30,000. C) $18,000. D) $9,000
C) $18,000.
192) The following amounts are reported in the ledger of ABC: (Look at PDF) What is the balance in the Common Stock account? A) $44,000. B) $48,000. C) $32,000. D) $42,000.
C) $32,000.
203) The ending Retained Earnings balance of ABC increased by $3.2 million from the beginning of the year. The company declared a dividend of $1.3 million during the year. What was the net income earned during the year? A) $1.9 million. B) $3.2 million. C) $4.5 million. D) $1.3 million.
C) $4.5 million.
120) The Accounts Payable account has a beginning balance of $12,000 and the company purchased $50,000 of supplies on account during the month. The ending balance was $10,000. How much did the company pay to creditors during the month? A) $50,000. B) $60,000. C) $52,000. D) $62,000.
C) $52,000.
15) What is the amount of current assets, assuming the accounts above reflect normal activity? A) $140,000. B) $20,000. C) $60,000. D) $175,000.
C) $60,000.
59) ABC has the following information: Net credit sales = $400,000 Net income = $100,000 Average total assets = $80,000 Average accounts receivable = $20,000 What is ABC's average collection period (rounded to the nearest whole day)? A) 9 days. B) 5 days. C) 18 days. D) 73 days.
C) 18 days.
117) A company has the following transactions: 1. Pay employees' salaries for the current period. 2. Pay rent in advance. 3. Pay dividends to stockholders in the current period. 4. Receive (but do not pay) a utility bill. 5. Use supplies previously purchased. How many of these transactions result in an expense being reported in the current period using accrual-basis accounting? A) 4. B) 1. C) 3. D) 2.
C) 3
193) The adjusting entry required when amounts previously recorded as deferred revenues are earned by providing goods or services to customers includes: A) A credit to a liability. B) A credit to an asset. C) A debit to a liability. D) A debit to an asset.
C) A debit to a liability.
162) The Trueblood Criterion is used by A) Managers when reporting to the public B) Internal Management reports (Managerial Accounting) C) Accountants D) Managers when reporting to the IRS
C) Accountants
187) In the Allowance Method when we do the year end adjusting entry for Bad Debts A) Assets increase, Net Income increases. B) Assets stay the same, Net Income stays the same. C) Assets decrease, Net Income decreases D) It depends on the balance in the Allowance account before we make the entry.
C) Assets decrease, Net Income decreases
243) Income in the operating cycle equals A) It depends on the Measuring system. B) Benefit Value Plus Sacrifice Value C) Benefit Value Minus Sacrifice Value D) Sacrifice Value Minus Benefit Value
C) Benefit Value Minus Sacrifice Value
155) The usual balance in a Contra-Expense account is a: A) It depends B) DR C) CR
C) CR
188) The third step in the Operating Cycle is called? A) Manufacture B) Sale C) Collection D) Purchase
C) Collection
19) Below is the company's Cash T-account. (Look at PDF for T-account) The $5,200 amount could represent which of the following? A) Ending balance of cash. B) Purchase of supplies on account. C) Collection from customers. D) Payment for salaries.
C) Collection from customers.
153) At the beginning of December, ABC had $2,000 in supplies on hand. During the month, supplies purchased amounted to $3,000, but by the end of the month the supplies balance was only $800. What is the appropriate month-end adjusting entry? A) Debit Supplies $4,200, credit Supplies Expense $4,200. B) Debit Cash $800, credit Supplies $800. C) Debit Supplies Expense $4,200, credit Supplies $4,200. D) Debit Cash $4,200, credit Supplies $4,200.
C) Debit Supplies Expense $4,200, credit Supplies $4,200.
147) When writing formal journal entries A) There is no required ordering of Debits and Credits B) Credits are on top, Debits are on the bottom C) Debits are on top, Credits are on the bottom
C) Debits are on top, Credits are on the bottom
71) ABC estimates uncollectible accounts based on the percentage of accounts receivable. What effect will recording the estimate of uncollectible accounts have on the accounting equation? A) Increase liabilities and decrease stockholders' equity. B) Decrease assets and decrease liabilities. C) Decrease assets and decrease stockholders' equity. D) Increase assets and decrease stockholders' equity.
C) Decrease assets and decrease stockholders' equity.
172) In the lecture, when there is a Purchase or Manufacture in the operating cycle, what happens to cash? A) It depends B) Increases C) Decreases D) Stays the Same
C) Decreases
225) When a magazine sells one-year subscriptions to customers but receives the full amount of cash immediately, it is an example of a(n): A) Accrued revenue. B) Prepaid expense. C) Deferred revenue. D) Accrued expense.
C) Deferred revenue.
66) Consider the following account balances of ABC at the end of the year (Look at PDF for table of balances). How many of these accounts would appear in ABC's year-end balance sheet? A) Three. B) Two. C) Five. D) Four.
C) Five.
250) Choose one: A) The Statement of Cash Flows always balances B) The Statement of Cash Flows never balances C) It is possible for Balance in Cash on the Statement of Cash Flows to be zero
C) It is possible for Balance in Cash on the Statement of Cash Flows to be zero
51) Purchasing office equipment on account has what impact on the accounting equation? A) Stockholders' equity decreases and assets increase. B) Assets increase and stockholders' equity increases. C) Liabilities increase and assets increase. D) Assets decrease and liabilities decrease.
C) Liabilities increase and assets increase.
168) ABC sold $500 in widgets to a customer on account on January 1. On January 11 ABC collected the cash from that customer. What is the impact on ABC's accounting equation from the collection of cash? A) Decrease assets and increase liabilities. B) Decrease assets and decrease liabilities. C) No net effect to the accounting equation. D) Increase assets and increase liabilities.
C) No net effect to the accounting equation.
133) Which of the following are made BEFORE a Trial Balance is prepared? A) Closing Entries B) Adjusting Entries C) Transaction Entries
C) Transaction Entries
156) Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Provided services to customers on account. Collected cash from customers on account. How many of these four transactions increased the given company's total liabilities? A) Four. B) Three. C) One. D) Two.
C) One.
37) An example of an adjusting entry would not include: A) Recording unpaid salaries. B) Recording the expiration of prepaid insurance. C) Paying salaries to company employees. D) Recording the use of office supplies.
C) Paying salaries to company employees.
205) Usually we pick up Income at: A) Collection of a Receivable B) Acquisition of Inventory C) Point of Sale
C) Point of Sale
82) Of the following, the most important objective for financial accounting is to provide information useful for: A) Providing accountability. B) Increasing future profits. C) Predicting cash flows. D) Determining taxable income.
C) Predicting cash flows.
116) After the 2nd step in the Operating Cycle, the firm has? A) Cash B) Inventory C) Receivable
C) Receivable
5) Usually we measure inventory at A) Benefit Value B) $0 C) Sacrifice Value
C) Sacrifice Value
177) Prior to year-end adjusting entries, what would explain the Allowance for Uncollectible Accounts having a debit balance? A) The amount of cash collections from customers in the current year was less the amount of cash collections from customers in the prior year. B) The amount of credit sales in the current year was greater than the amount of credit sales made in the prior year. C) The amount of actual uncollectible accounts in the current year was greater than the estimate of uncollectible accounts made at the end of the prior year. D) The amount of actual uncollectible accounts in the current year was less than the estimate of uncollectible accounts made at the end of the prior year.
C) The amount of actual uncollectible accounts in the current year was greater than the estimate of uncollectible accounts made at the end of the prior year.
174) If a company has stockholders' equity of $60,000 at the end of the year, which of the following statements must be true? A) The company has issued $60,000 of common stock. B) Total revenues during the year equal $60,000. C) The company's assets exceed liabilities by $60,000. D) Net income for the year equals $60,000.
C) The company's assets exceed liabilities by $60,000.
40) In Cash Flow reporting at the collection of an Account Receivable A) There is no Loss and no Gain B) There is a Loss C) There is a Gain D) It depends on the measuring system
C) There is a Gain
49) In Cash Flow reporting when the firm acquires inventory A) There is no Loss and no Gain B) There is a Gain C) There is a Loss D) It depends on the measuring system
C) There is a Loss
78) Which of the following are made when the business does something A) Closing Entries B) Adjusting Entries C) Transaction Entries
C) Transaction Entries
89) Which of the following are made BEFORE we start preparing the financial statements? A) Closing Entries B) Adjusting Entries C) Transaction Entries
C) Transaction Entries
75) How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employees' salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance A) Three. B) One. C) Two. D) Four.
C) Two
142) Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Paid rent for the current month. Collected cash from customers on account. How many of these four transactions increased the given company's total assets? A) One. B) Four. C) Two. D) Three.
C) Two.
245) In Cash Flow reporting Accounts Receivable is measured at A) It depends on the measuring system B) Sacrifice Value C) Benefit Value D) $0
D) $0
127) Marketing is involved in which step in the Operating cycle? A) Fourth B) First C) Third D) Second
D) Second
60) Given the information below about ABC, what was the amount of dividends the company paid in the current period? (Look at PDF for balances) A) $13,000. B) $18,000. C) $110,000. D) $28,000.
D) $28,000.
119) If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month, did assets increase or decrease and by how much? A) $76,000 increase. B) $34,000 decrease. C) $55,000 increase. D) $34,000 increase.
D) $34,000 increase.
41) Use the following appropriate amounts to calculate net income: Revenues, $12,000; Liabilities, $5,000; Expenses, $4,000; Assets, $19,000; Dividends, $4,000. A) $14,000. B) $6,000. C) $4,000. D) $8,000.
D) $8,000.
20) ABC reports the following information for the year: (Look at PDF for balances) What is ABC's receivables turnover ratio? A) 5.0. B) 1.2. C) 0.2. D) 6.0.
D) 6.0
154) Receiving a utility bill for costs in the current period but delaying payment until the following period is an example of a(n): A) Deferred revenue. B) Prepaid expense. C) Accrued revenue. D) Accrued expense.
D) Accrued expense.
197) Choose one A) Articulation has to do only with numbers on one statment in multiple years B) Articulation has to do only with numbers on one statment in one year C) Articulation has to do only with multiple statemtns in one year D) Articulation has to do with numbers on multiple statements in multiple years
D) Articulation has to do with numbers on multiple statements in multiple years
223) On September 30, ABC paid employee salaries of $7,000, including $1,000 it owed to its employees last month. What are the effects of this transaction on the accounting equation? A) Expenses increased, liabilities increased, and assets increased. B) Assets decreased, expenses decreased, and liabilities increased. C) Assets increased, expenses increased, and liabilities decreased. D) Assets decreased, liabilities decreased, and expenses increased. E) Expenses decreased, liabilities decreased, and assets decreased.
D) Assets decreased, liabilities decreased, and expenses increased.
57) In the Allowance Method when we write off a receivable A) It depends B) Assets increase, Net Income increases. C) Assets decrease, Net Income decreases D) Assets stay the same, Net Income stays the same.
D) Assets stay the same, Net Income stays the same.
28) After the Third STEP in the Operating Cycle the firm has? A) Inventory B) None of the other three C) Account Receivable D) Cash
D) Cash
148) Which of the following accounts would normally have a debit balance? A) Accounts Payable, Service Revenue, Common Stock. B) Income Tax Payable, Service Revenue, Dividends. C) Salaries Payable, Deferred Revenue, Utilities Expense. D) Cash, Delivery expense, Dividends.
D) Cash, Delivery expense, Dividends.
220) The third step in the operating cycle is: A) Manufacture B) Sale C) Purchase D) Collection
D) Collection
90) Allowance for Bad Debts is what kind of account? A) Expense B) Contra-Expense C) Asset D) Contra-Asset
D) Contra-Asset
238) ABC provides music for special occasions. On January 14, the Smith family hired ABC for an upcoming family wedding for an agreed upon fee of $10,000. The wedding was scheduled for May 23. As part of the agreement, the Smiths paid ABC half of the fee at the end of April with the remaining amount due by the end of June. How would ABC record the receipt of the final payment in June? A) Debit to Deferred Revenue. B) Credit to Service Revenue. C) Credit to Cash. D) Credit to Accounts Receivable.
D) Credit to Accounts Receivable.
149) Assume that cash is paid for rent to cover the next year. The appropriate debit and credit are: A) Debit Rent Expense, credit Cash. B) Debit Prepaid Rent, credit Rent Expense. C) Debit Cash, credit Prepaid Rent. D) Debit Prepaid Rent, credit Cash.
D) Debit Prepaid Rent, credit Cash.
235) Receiving cash from customers before services are performed results in: A) Prepaid Assets. B) Service Revenue. C) Accounts Receivable. D) Deferred Revenues.
D) Deferred Revenues.
228) Which of the following is not a balance sheet item? A) Retained Earnings. B) Assets. C) Liabilities. D) Expenses.
D) Expenses.
232) GAAP is an abbreviation for: A) Generally accepted auditing practices. B) Generally applied accounting procedures. C) Generally authorized accounting procedures. D) Generally accepted accounting principles.
D) Generally accepted accounting principles.
198) The following statements pertain to recording transactions. Which of them are true? I. Total debits should equal total credits. II. It is possible to have multiple debits or credits in one journal entry. III. Assets are always listed first in journal entries. IV. Some journal entries will have debits only. A) I, II, and IV. B) II, III, and IV. C) I only. D) I and II.
D) I and II.
247) Which of the following is NOT possible for a business transaction? A) Decrease assets and increase expense. B) Increase liabilities and increase expense. C) Decrease liabilities and increase revenue. D) Increase assets and decrease revenue.
D) Increase assets and decrease revenue.
110) Look at PDF for balances. ABC has the following balances on December 31 prior to closing entries: A) Increase of $13,000. B) Increase of $12,000. C) Increase of $14,000. D) Increase of $11,000.
D) Increase of $11,000.
13) A company received an order from a customer in June for services to be provided. Those services were provided in July, and the customer paid the full amount in August. According to the revenue recognition principle, in which month should the company record revenue? A) June. B) August. C) Evenly over the three months. D) July.
D) July
38) Which of the following best represents value created for stockholders during the current period? A) Retained earnings. B) Stockholders' equity. C) Total assets. D) Net income.
D) Net income
95) Which of the following transactions would cause an increase in both the assets and liabilities of a company? A) Pay for inventory purchased 90 days ago. B) Services received on account. C) Paying for the current month's rent. D) Purchase of a building by issuing a note payable
D) Purchase of a building by issuing a note payable
171) The second step in the Operating Cycle is called? A) Purchase B) Collection C) Manufacture D) Sale
D) Sale
27) Consider the following list of accounts: (Look at PDF for list of accounts) How many of these accounts have a normal debit balance? A) Four. B) Five. C) Seven. D) Six.
D) Six
114) Which of the following best explains the meaning of total stockholders' equity? A) The difference between total revenues and total expenses, less dividends for the year. B) The amount of common stock less dividends over the life of the company. C) All revenues, expenses, and dividends over the life of the company. D) The amount of capital invested by stockholders plus profits retained over the life of the company.
D) The amount of capital invested by stockholders plus profits retained over the life of the company
43) The ending balance of Retained Earnings can best be described as: A) The amount of net income over the life of the company. B) The amount of dividends paid over the life of the company. C) The amount of cash received from stockholders over the life of the company. D) The amount of net income over the life of the company not paid to owners in the form of dividends.
D) The amount of net income over the life of the company not paid to owners in the form of dividends.
69) A company receives a $50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true? A) The company records service revenue on October 15. B) The company records cash collection on November 20. C) The company records nothing on October 15. D) The company records deferred revenue on October 15
D) The company records deferred revenue on October 15
2) How many of the following transactions would affect operating cash flows reported in the statement of cash flows (all transaction involve cash)? A) Four B) Two C) One D) Three
D) Three
207) How many of these accounts would appear in ABC's year-end Income Statement? A) Four. B) Two. C) Five. D) Three.
D) Three.
34) Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Paid rent for the current month. Collected cash from customers on account. How many of these four transactions increased the given company's total assets? A) Four. B) One. C) Three. D) Two.
D) Two.
77) In a Big Bath, a firm A) increases revenue B) changes accounting firms C) does window dressing D) increases Expenses
D) increases Expenses