ACCT Exam 1

Jo-Bob Company began the year by issuing $80,000 of common stock for cash. The company recorded revenues of $740,000, expenses of $640,000, and paid dividends of $40,000. What was Jo-Bob's net income for the year?

$100,000

AR

ASSET

CASH

ASSET

EQUIPMENT

ASSET

SUPPLIES

ASSET

Which one of the following is not a justification for adjusting entries?

Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Applies the same accounting principles over time.

Consistency

What organization issues U.S. accounting standards?

Financial Accounting Standards Board

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

Financing

Confirms or corrects prior decisions.

Going concern

AP

LIABILITY

NOTES PAYABLE

LIABILITY

Providing information that would make a difference in a business decision.

Relevance

Provide information that accurately depicts what really happened

Reliability

COMMON STOCK

SE

RETAINED EARNINGS

SE

Providing information that can be reproduced by independent observers.

Verifiable

If total liabilities increased by $3,400, then

assets must have increased by $3,400, or stockholders' equity must have decreased by $3,400.

Buying and selling products are examples of

operating activities.

Equipment is classified on the balance sheet as

property, plant, and equipment.

The two fundamental qualities of useful information are

relevance and reliability.

A small neighborhood barber shop that is operated by its owner would likely be organized as a

sole proprietorship.

The historical cost principle requires that when assets are acquired, they are recorded at

the amount paid to acquire them.

The periodicity assumption states that

the economic life of a business can be divided into artificial time periods.

Which of the following is a measure of liquidity?

working capital

The adjusting entry to an unearned revenue account will

decrease liabilities and increase revenues.

On a classified balance sheet, companies usually list current assets

in the order in which they are expected to be converted into cash.

A gift shop signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $50,000 with annual interest of 6%. What is the adjustment to be made on December 31 for the interest expense accrued to that date, if no adjustments have been made previously for the interest?

increase interest expense $500 decrease cash $500

Buying assets needed to operate a business is an example of a(n)

investing activity.

Which financial statement would best indicate whether the company relies on debt or stockholders' equity to finance its assets?

Balance sheet

Which of the following is not a current liability?

Bonds Payable