accounting

A measure of profitability is the current ratio. debt to assets ratio. earnings per share. working capital.

earnings per share.

Which activities involve putting the resources of the business into action to generate a profit? Delivering Financing Investing Operating

Operating

For 2022, Kuhl Co. reported net income of $36000, net sales $400000, and average share outstanding of 16000. No preferred dividends were paid. Earnings per share is $2.25 $0.44 $25.00 $0.09

$2.25

Which of the following is not a liability? Unearned Service Revenue Accounts Payable Accounts Receivable Interest Payable

Accounts Receivable

Which one of the following represents the expanded basic accounting equation? Assets = Liabilities + Common Stock + Dividends - Revenue - Expenses Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues Assets - Liabilities - Dividends = Common Stock + Revenues - Expenses Assets = Revenues + Expenses - Liabilities

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

Which accounts normally have debit balances? Assets, expenses, and revenues Assets, expense, and retained earnings Assets, liabilities, and dividends Assets, expenses, and dividends

Assets, expenses, and dividends

Which of the following financial statements is concerned with the company at a point in time? Balance sheet Income statement Retained Earnings statement Statement of cash flows

Balance sheet

A business organized as a separate legal entity is a

Corporation

Which one of the following is true? Intangible assets are current assets that do not have physical substance. Obligations expected to be paid after one year are classified as expenses. Current assets are assets that a company expects to convert to cash or use up within the longer of one year or its operating cycle. Property, plant, and equipment are assets with relatively long useful lives that are held for resale purposes.

Current assets are assets that a company expects to convert to cash or use up within the longer of one year or its operating cycle.

A retailer sells prepaid gift cards under its own brand to customers, which are popular during the Holidays. If a company sells $200 worth of gift cards to a customer before Xmas but the same are not used to purchased goods until after the New Year's, how should the retailer record this transaction? Debit cash and credit Unearned Revenue. Credit cash and debit Unearned Revenue. Debit cash and credit Accounts Payable. Debit cash and credit Revenue.

Debit cash and credit Unearned Revenue.

A credit is not the normal balance for which account listed below? Common Stock Revenue Accounts Payable Dividends

Dividends

Which of the following is not considered an asset? Equipment Dividends Accounts receivable Inventory

Dividends

Which one of the following accounts is closed at the end of an accounting period? Retained Earnings Dividends Unearned Sales Revenue Accumulated Depreciation

Dividends

Budke Corporation paid dividends of $5000. As a result of this event, the Dividends account was increased by $5000. Dividends account was decreased by $5000. Cash account was increased by $5000. Cash account was increased and the Dividends account was decreased by $5000.

Dividends account was increased by $5000.

On April 1, 2022, nPropel Corporation paid $48000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $48000 for the calendar year ending December 31, 2022. Which accounting principle has been violated? Depreciation principle. No principle has been violated. Cash principle. Expense recognition principle.

Expense recognition principle.

Which one of the following represents the correct order of the three business activities for a new company? Financing, investing, operating Investing, financing, operating Operating, investing, financing Financing, operating, investing

Financing, investing, operating

Which of the following describes the timing of when revenue is recognized? In the period in which the related expenses are paid In the period in which the performance obligation is satisfied In the period in which payment is received for goods sold or work performed In the period in which the costs associated with earning the revenue are incurred and payment is received for goods sold or work performed

In the period in which the performance obligation is satisfied

In which balance sheet section would trademarks be reported? Intangible assets Investments Property, plant, and equipment Current assets

Intangible assets

Which of the following is an asset? Mortgage payable Investments Common stock Retained earnings

Investments

Which of the following is not one of the three forms of business organization? Corporations Partnerships Proprietorships Investors

Investors

Which one of the following is true as it relates to the Accumulated Depreciation account? It is a contra account. It is offset against an asset account on the income statement. It represents the portion of the cost of a long-lived asset that has been allocated as a cost during the current accounting period. It is an operating expense.

It is a contra account.

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account? Asset, debit Liability, credit Revenues, credit Expense, debit

Liability, credit

Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not? Yes, they are treated as revenue at the time of receipt because the company has access to the cash. No, the amount of revenue cannot be adequately determined until the company completes the work. Yes, The intent of the company is to perform the work and the customer is confident that the services will be completed. No, revenue cannot be recognized until the performance obligation is satisfied.

No, revenue cannot be recognized until the performance obligation is satisfied.

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? Reduced legal liability for investors. Harder to transfer ownership. Lower taxes. Most common form of organization.

Reduced legal liability for investors.

Ending retained earnings for a period is equal to beginning Retained earnings + Net income + Dividends. Retained earnings - Net income - Dividends. Retained earnings + Net income - Dividends. Retained earnings - Net income + Dividends.

Retained earnings + Net income - Dividends.

Which statement is true concerning the accrual basis of accounting? Revenues are recognized when earned and expenses are recognized when paid. Revenues are recognized when earned and expenses are recognized when incurred. Revenues are recognized when received from customers and expenses are recognized when incurred. Revenues are recognized when received from customers and expenses are recognized when paid.

Revenues are recognized when earned and expenses are recognized when incurred.

Which of the following describes the classification and normal balance of the Retained Earnings account? Asset, debit Stockholders' equity, credit Revenues, credit Expense, debit

Stockholders' equity, credit

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

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

For what purpose is the current ratio used? To assess profitability To determine the composition of a company's assets To measure the short-term ability of a company to pay its obligations To measure the profitability of operations

To measure the short-term ability of a company to pay its obligations

Which one of the following is not a part of an account? Credit side Trial balance Debit side Title

Trial balance

When expenses exceed revenues, which of the following is true? a net loss results a net income results assets equal liabilities assets are increased

a net loss results

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

account receivable.

Adjusting entries can be classified as: postponements and advances. accruals and deferrals. deferrals and postponements. accruals and advances.

accruals and deferrals.

An adjusting entry: affects two balance sheet accounts. affects two income statement accounts. affects a balance sheet account and an income statement account. is always a compound entry.

affects a balance sheet account and an income statement account.

The usual sequence of steps in the transaction recording process is journalize, analyze, post to the ledger. analyze, journalize, post to the ledger. journalize, post to the ledger, analyze. post to the ledger, journalize, analyze.

analyze, journalize, post to the ledger.

An investment by the stockholders in a business increases assets and stockholders' equity. assets and liabilities. liabilities and stockholders' equity. assets only.

assets and stockholders' equity.

If total liabilities decreased by $4000, then stockholders' equity must have decreased by $4000. assets must have decreased by $4000, or stockholders' equity must have increased by $4000. assets and stockholders' equity each increased by $2000. assets must have increased by $4000.

assets must have decreased by $4000, or stockholders' equity must have increased by $4000.

If a company fails to adjust for accrued revenues: liabilities will be understated and revenues will be understated. liabilities will be overstated and revenues will be understated. assets will be overstated and revenues will be understated. assets will be understated and revenues will be understated.

assets will be understated and revenues will be understated.

If expenses are paid in cash, then assets will increase. liabilities will decrease. stockholders' equity will increase. assets will decrease.

assets will decrease.

Which of the following has the advantage of enabling a business to raise funds most easily?Entity, Sole proprietorship, Corporation, Partnership

corporation

On a classified balance sheet, short-term investments are classified as intangible assets. property, plant, and equipment. current assets. long-term investments.

current assets.

In a classified balance sheet, assets are usually classified as current assets; long-term assets; property, plant, and equipment; and intangible assets. current assets; long-term investments; property, plant, and equipment; and common stocks. current assets; long-term investments; tangible assets; and intangible assets. current assets; long-term investments; property, plant, and equipment; and intangible assets.

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

Liabilities are generally classified on a balance sheet as small liabilities and large liabilities. present liabilities and future liabilities. tangible liabilities and intangible liabilities. current liabilities and long-term liabilities.

current liabilities and long-term liabilities.

Current assets divided by current liabilities is known as the working capital. current ratio. profit margin. capital structure.

current ratio.

The balance in the prepaid rent account before adjustment at the end of the year is $12000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is: debit Prepaid Rent, $4000; credit Rent Expense $4000. debit Prepaid Rent, $8000; credit Rent Expense, $8000. debit Rent Expense, $12000; credit Prepaid Rent, $12000. debit Rent Expense, $4000; credit Prepaid Rent, $4000.

debit Rent Expense, $4000; credit Prepaid Rent, $4000

The Vintage Laundry Company purchased $8500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1500 on hand. The adjusting entry that should be made by the company on June 30 is: debit Supplies Expense, $1500; credit Supplies, $1500. debit Supplies, $7000; credit Supplies Expense, $7000. debit Supplies, $1500; credit Supplies Expense, $1500. debit Supplies Expense, $7000; credit Supplies, $7000

debit Supplies Expense, $7000; credit Supplies, $7000.

A company that receives money in advance of performing a service debits Cash and credits Unearned Service Revenue. debits Unearned Service Revenue and credits Accounts Payable debits Cash and credits Prepaid Insurance. debits Cash and credits Accounts Receivable.

debits Cash and credits Unearned Service Revenue.

The payment of a liability decreases assets and stockholders' equity. increases assets and decreases liabilities. decreases assets and increases liabilities. decreases assets and liabilities.

decreases assets and liabilities.

A paid dividend decreases assets and stockholders' equity. increases assets and stockholders' equity. increases assets and decreases stockholders' equity. decreases assets and increases stockholders' equity.

decreases assets and stockholders' equity.

If a company fails to make an adjusting entry to record supplies expense, then: stockholders' equity will be understated. expense will be understated. assets will be understated. net income will be understated.

expense will be understated.

Borrowing money is an example of a(n) delivering activity. financing activity. investing activity. operating activity.

financing activity.

Debits increase both assets and liabilities. decrease both assets and liabilities. increase assets and decrease liabilities. decrease assets and increase liabilities.

increase assets and decrease liabilities.

A debit to an asset account indicates a(n) error. credit was made to a liability account. decrease in the asset. increase in the asset.

increase in the asset.

Collection of a $600 Accounts Receivable increases an asset $600; decreases an asset $600. increases an asset $600; decreases a liability $600. decreases a liability $600; increases stockholders' equity $600. decreases an asset $600; decreases a liability $600.

increases an asset $600; decreases an asset $600.

Buying assets needed to operate a business is an example of a(n) delivering activity. financing activity. investing activity. operating activity.

investing activity.

A revenue account is increased by debits. is decreased by credits. has a normal balance of a debit. is increased by credits.

is increased by credits.

The right side of an account is the correct side. reflects all transactions for the accounting period. shows all the balances of the accounts in the system. is the credit side.

is the credit side.

The purchase of an asset for cash increases assets and stockholders' equity. increases assets and liabilities. decreases assets and increases liabilities. leaves total assets unchanged.

leaves total assets unchanged.

Debts and obligations of a business are referred to as assets. equities. liabilities. expenses.

liabilities

The Unearned Service Revenue account is classified as a(n) asset. revenue. expense. liability.

liability

An income statement summarizes the changes in retained earnings for a specific period of time. 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.

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

Ratios that measure the income or operating success of a company for a given period of time are liquidity ratios. profitability ratios. solvency ratios. trending ratios.

profitability ratios.

Dividends are reported on the income statement. retained earnings statement. balance sheet. income statement and balance sheet.

retained earnings statement.

The normal balance of any account is the left side. right side. side which increases that account. side which decreases that account.

side which increases that account.

In recording an accounting transaction in a double-entry system, the number of debit accounts must equal the number of credit accounts. there must always be entries made on both sides of the accounting equation. the amount of the debits must equal the amount of the credits. there must only be two accounts affected by any transaction.

the amount of the debits must equal the amount of the credits.

The left side of an account is blank. a description of the account. the debit side. the balance of the account.

the debit side.

The periodicity assumption states that: a transaction can only affect one period of time. estimates should not be made if a transaction affects more than one time period. adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. the economic life of a business can be divided into artificial time periods.

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

When collection is made on Accounts Receivable, total assets will remain the same. stockholders equity will increase. total assets will increase. total assets will decrease.

total assets will remain the same.

An accounting record that includes a list of accounts and their balances at a given time is called a trial balance. general journal. general ledger. chart of accounts.

trial balance.