MGMT Exam 1

Margot starts a new business and contributes $20,000 in cash; she also borrows $25,000 from her local bank. She utilizes the cash to purchase supplies for $5,000 and a computer system for $10,000. After these transactions, the company's total resources are:

45,000 (The cash is exchanged for other resources so the total resource amount is $45,000. cash ($20,000 + $25,000 - $5,000 - $10,000) + equipment $10,000 + supplies $5,000 = $45,000)

Which of the following aspects relate to the information provided in an income statement?

Ability to earn profit from its operations during current period

Which of the following appears on the balance sheet

Accounts receivable, common stock, utilities payable

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as

Assets - Liabilities

Which of the following appear on the statement of stockholders' equity?

Beginning balance of retained earnings Dividends Net income

Which of the following describes the information reported in the statement of stockholders' equity?

Change in stockholders' equity through changes in common stock and retained earnings.

On November 1, 2021, a company receives cash of $6,000 from a customer for services to be provided evenly over the next six months. Deferred revenue is recorded at that time. Which of the following adjusting entries is needed on December 31, 2021?

Debit Deferred Revenue for $2,000; Credit Service Revenue for $2,000.

The adjusting entry to record supplies used during the period includes a:

Debit to Supplies Expense

The revenue recognition principle states that companies typically record revenue:

In the period in which we provide goods and services to customers

Why does financial accounting have a positive impact on our society?

It allows investors and creditors to redirect their resources to successful companies and away from unsuccessful companies.

Financial accounting helps with:

Maintaining records of multiple business transactions. Incorrect Exchange of goods and services among individuals. Development of more complex societies.

Which of the following are attributes of FASB? (Select all that apply.)

Private sector organization Full-time board members Independence

Public accounting firms refer to

Professional service firms that traditionally focus on auditing and tax preparation.

Which of the following is an example of an accrued revenue?

Providing services to a customer without having yet collected the cash.

In a classified balance sheet, liabilities are separated into two categories based on

The length of time until the obligation is expected to be satisfied—less than one year versus more than one year.

Which of the following best describes an important function of financial accounting?

To support the efficient distribution of society's resources.

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as

accounting

Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n):

accured expense

Financial statements are prepared from which of the following trial balances?

adjusted trial balance

Management discussion and analysis and note disclosures to the financial statements are included in the

annual report

The financial statement that displays a firm's financial position on a particular date is the

balance sheet

Which of the following financial statements shows a firm's financial position on a particular date?

balance sheet

The primary functions of accounting are to:

communicate information to decision makers and measure a company's activities

Which of the following lends money to a company and expects the company to repay the debt?

creditor

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting?

december 20

competitors

decide market share and profitability

regulators

decide on social welfare issues

managers

decide production and expansion

creditors

decide whether to lend money

customers

decide whether to purchase products

investors

decide whether to purchse stock

suppliers

determine the ability to pay for goods

Section 404 of the Sarbanes-Oxley Act requires companies to:

document and assess internal controls

Stockholders' equity arises primarily from amounts invested by shareholders and amounts ______.

earned by the coorperation

The balance of retained earnings in the adjusted trial balance:

euals the balance of retained earnings at the beginning of the accounting period

Under cash-basis accounting, companies typically record revenue:

in the period in which we received cash from customers for goods and services.

In which financial statement does a company report its expenses?

income statement

closing entries are

made to transfer the balances of temporary accounts to retained earnings

accounting deals with the concepts and methods used to provide information to an organization's internal users.

management

On May 5, Johnson Plumbing receives a phone call from a customer needing a new water heater and schedules a service visit for May 7. On May 7, Johnson installs the new water heater. The customer pays for services on May 10. According to the revenue recognition principle, on which date should Johnson record service revenue?

may 7

Which of the following describes the information reported in the statement of cash flows?

net cash flows from operating, investing, and financing activities

In addition to the financial statements, which of the following must be included in the annual reports?

notes disclosure, management discussion and analysis

which of these would be found on a company's balance sheet?

notes payable, equipment, accounts recievable

In response to widespread fraudulent reporting in the late 1990's and early 2000's, Congress:

passed the Sarbanes-oxley act

Which of the following accounts is listed in a post-closing trial balance

salaries payable

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows

Who is ultimately responsible for the establishment and success of a company's internal control system?

the companies top executives