ACCT 203

The Dividends account

is increased with debits and decreased with credits.

After transaction information has been recorded in the journal, it is transferred to the

ledger.

Debts and obligations of a business are referred to as

liabilities

An income statement

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

Net income will result during a time period when

revenues exceed expenses.

If accounting information has relevance, it is useful in making predictions about

the future events of a company

Information presented in a clear and concise fashion so that users can comprehend its meaning is an application of

understandability.

Tamarisk, Inc. began the year with retained earnings of $944000. During the year, the company issued $1307000 of common stock, recorded expenses of $3535000, and paid dividends of $245000. If Tamarisk ending retained earnings was $1004000, what was the company's revenue for the year?

3840000

Which of the following is not classified properly as a current asset?

A receivable from the sale of an asset to be collected in two years.

An accountant has debited an asset account for $860 and credited a liability account for $430. What can be done to complete the recording of the transaction?

Credit a different asset account for $430.

Which of the following is not an advantage of the corporate form of business organization?

Favorable tax treatment

Which of the following activities involves collecting the necessary funds to support the business?

Financing

Which of the following groups uses accounting information to determine whether the company's net income will result in a stock price increase?

Investors in common stock

Why are financial statement users interested in the statement of cash flows?

It provides information about an important company resource.

Which of the following clarifies information presented in the financial statements, as well as expanding upon it where additional detail is needed?

Notes to the financial statements

Garrison Company prepares quarterly reports, which it distributes to all stockholders and other entities that rely on its accounting information. Which of the following is the best term for the key assumption in financial reporting that Garrison is following?

Periodicity assumption

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Reduced legal liability for investors

Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

Regulatory agencies

Which of the following accounts is increased with a credit?

Sales Revenue

The agency of the United States Government that oversees the U.S. financial markets is the

Security Exchange Commission.

Liabilities

are debts and obligations.

The management discussion and analysis (MD&A) section of the annual report covers all of the following aspects except the

certification criteria of the company's auditors.

Accounting information is relevant to business decisions because it

confirms prior expectations.

Equipment costing $15200 is purchased by paying $3800 cash and signing a note payable for the remainder. The journal entry should include a

credit to Notes Payable.

In a classified balance sheet, assets are usually classified as

current assets; long-term investments; property, plant, and equipment; and intangible assets.

Liabilities are generally classified on a balance sheet as

current liabilities and long-term liabilities.

Current assets divided by current liabilities is known as the

current ratio.

When a company receives a utility bill but will not pay it right away, it should

debit Utilities Expense and credit Accounts Payable.

When a company has performed a service but has not yet received payment, it

debits accounts receivable and credits service revenue.

A company that receives money in advance of performing a service

debits cash and credits unearned service revenue

Windsor, Inc. has assets of $4291000, common stock of $1098000, and retained earnings of $662000. What are the creditors' claims on their assets?

$2531000

Which one of the following represents the expanded basic accounting equation?

Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues

In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement?

Dividends represent a portion of corporate profits that are paid to the shareholders. They belong on the retained earnings statement.

When a service has been performed, but no cash has been received, which of the following statements is true?

The entry includes a debit to accounts receivable

Different companies using the same accounting principles is an application of

comparability.

A measure of profitability is the

earning per share

Stockholders' equity

includes retained earnings and common stock.

Buying and selling products are examples of

operating activities.