ACCT 3110 ENTRANCE EXAM

What is the effect on total assets and​ stockholders' equity of paying the telephone bill as soon as it is received each​ month? Total assets ​Stockholders' equity A. Decrease No effect B. Decrease Decrease C. No effect No effect D. No effect Decrease

B. Decrease Decrease

What item flows from the statement of retained earnings to the balance​ sheet? A. Cash B. Retained earnings C. Net income D. Dividends

B. Retained earnings

The costs of doing business are classifed​ as: A. assets. B. expenses. C. liabilities. D. revenues.

B. expenses.

Assets are usually reported at their A. appraised value. B. historical cost. C. current market value. D. none of the above.

B. historical cost.

Business Ethics Leadership Alliance (BELA) holds four values vital to all their practices. Which of the following is one of the core value of BELA? Accountability Transparency Legal compliance All of these are values considered vital by BELA.

All of these are values considered vital by BELA.

a new​ company, completed these transactions. 1. Stockholders invested $ 50,000 cash and inventory with a fair value of $ 33,000. 2. Sales on​ account, $ 21,000. What will Cartex​'s total assets​ equal? A. $ 71,000 B. $ 83,000 C. $ 104,000 D. $ 50,000

C. $ 104,000 (50+33+21)

Accounts Receivable will appear on which of the following financial​ statements? A. Statement of retained earnings B. Income statement C. Balance sheet D. Statement of cash flows

C. Balance sheet

On which financial statement would the ending balance of the account​ "accounts receivable" be​ found? A. Income statement B. Statement of retained earnings C. Balance sheet D. Statement of cash flows

C. Balance sheet

A doctor purchases medical supplies of​ $640 and pays​ $290 cash with the remainder on account. The journal entry for this transaction would be which of the​ following? A. Debit Supplies Debit Accounts Payable Credit Cash B. Debit Supplies Debit Accounts Receivable Credit Cash C. Debit Supplies Credit Accounts Payable Credit Cash D. Debit Supplies Credit Accounts Receivable Credit Cash

C. Debit Supplies Credit Accounts Payable Credit Cash

Which statement is​ false? A. Liabilities are decreased by debits. B. Revenues are increased by credits. C. Dividends are increased by credits. D. Assets are increased by debits.

C. Dividends are increased by credits.

Where is a transaction first​ recorded? A. Trial balance B. Account C. Journal D. Ledger

C. Journal

If the credit to record the payment of an account payable is not​ posted, A. cash will be understated. Your answer is not correct.B. expenses will be understated. C. cash will be overstated. D. liabilities will be understated.

C. cash will be overstated.

During​ February, assets increased by $ 86,000 and liabilities increased by $ 30,000. Equity must have A. decreased by $ 116,000. B. increased by $ 116,000. C. increased by $ 56,000. D. decreased by $ 56,000.

C. increased by $ 56,000.

Cash paid to purchase a building appears on the statement of cash flows among the A. financing activities. B. operating activities. C. investing activities. D. ​stockholders' equity.

C. investing activities.

If the credit to record the purchase of supplies on account is not​ posted, A. ​stockholders' equity will be understated. B. expenses will be overstated. C. liabilities will be understated. D. assets will be understated.

C. liabilities will be understated.

Which is the correct sequence for recording transactions and preparing financial​ statements? A. ​Ledger, trial​ balance, journal, financial statements B. Financial​ statements, trial​ balance, ledger, journal C. ​Journal, ledger, trial​ balance, financial statements D. ​Ledger, journal, trial​ balance, financial statements

C. ​Journal, ledger, trial​ balance, financial statements

Going Concern Assumption

A business is said to be a going-concern if they will remain in business for the foreseeable future.

Nicholas is a software engineer and is starting a consulting practice. What form of business organization limits his liability to the amount he has invested in the​ business? A. Corporation B. Proprietorship C. Partnership D. None of the above.

A. Corporation

Which financial statement would show how well a company performed over the past​ year? A. Income statement B. Balance sheet C. Statement of cash flows D. Statement of retained earnings

A. Income statement

Which of the following is a true statement about International Financial Reporting​ Standards? A. They are converging gradually with U.S. standards. B. They are not being applied anywhere in the world​ yet, but soon they will be. C. They are more exact​ (contain more​ rules) than U.S. generally accepted accounting principles. D. They are considered to be the single strongest set of accounting standards in the world.

A. They are converging gradually with U.S. standards.

In a​ double-entry accounting​ system, A. a debit entry is recorded on the left side of a​ T-account. B. half of all the accounts have a normal credit balance. C. ​liabilities, stockholders'​ equity, and revenue accounts all have normal debit balances. D. both a and b are correct.

A. a debit entry is recorded on the left side of a​ T-account.

The journal entry to record the purchase of supplies on account A. debits Supplies and credits Accounts Payable. B. credits Supplies and debits Cash. C. credits Supplies and debits Accounts Payable. D. debits Supplies Expense and credits Supplies.

A. debits Supplies and credits Accounts Payable.

The primary objective of financial reporting is to provide information A. useful for making investment and credit decisions. B. on the cash flows of the company. C. to the federal government. D. about the profitability of the enterprise.

A. useful for making investment and credit decisions.

Equity=

Assets - Liabilities

A business makes a cash payment of $12,000 to a creditor. Which of the following occurs? Cash is credited for $12,000. Both Cash and Accounts Payable are credited for $12,000. Cash is debited for $12,000. Accounts Payable is credited for $12,000.

Cash is credited for $12,000.

Which of the following factors should influence business and accounting​ decisions? A. Economic B. Ethical C. Legal D. All of the above

D. All of the above

Financial statements can be used by which of the following​ groups? A. Individuals B. Investors and creditors C. Regulatory bodies D. All of the above.

D. All of the above.

Purchasing a laptop computer on account will A. increase total assets. B. increase total liabilities. C. have no effect on​ stockholders' equity. D. All of the listed choices are correct.

D. All of the listed choices are correct.

Net income appears on which financial​ statement(s)? A. Balance sheet B. Income statement C. Statement of retained earnings D. Both b and c

D. Both b and c

Sue Mason owns a bagel shop as a sole proprietorship. Sue includes her personal home, car, and boat on the books of her business. Which of the following is violated? The stable-monetary-unit assumption Entity assumption Going-concern assumption Cost principle

Entity assumption

____________ represents the "insider claims" of business. Revenue Divdends Liabilities Equity

Equity

Accounting Equation

Equity= Assets - Liabilities

Which of the following events increases the equity in a business? Sale of inventory Purchase of inventory Payment of interest on a loan Investments from stockholders Payment of rent

Investments from stockholders

Which sequence of actions correctly summarizes the accounting process?

Journalize transactions, post to the accounts, prepare a trial balance

A trial balance is which of the following?

List of all the accounts with their balances

During the current year, a corporation earned income of $20,000, sold common stock for cash of $30,000, paid dividends of $15,000, and paid off debt of $5,000. The retained earnings account ________.

Net income - dividends (20,000 - 15,000) = 5,000

Decreases the Walt Disneys stockholder's equity

Net loss dividends

Which of the following statements regarding business organizations is NOT correct? Owners of a corporation are called members. The business is liable for company debts in a Limited Liability Company. In a limited liability partnership, each partner is only liable for partnership debts to the extent of his or her investment in the partnership. The owner of a proprietorship is personally liable for all the business debts.

Owners of a corporation are called members.

Which of the following accounts increases with a credit? Cash Dividends Rent Expense Retained Earnings

Retained Earnings

Net Income (loss)

Revenues - Expenses

Income Statement

Revenues - Expenses = Net Income

How much in resources does Willow have to work​ with?

That means to look at the Asset part of the Acct. equation.

Cost principle assumption

The cost principle requires assets to be recorded on the books at their cost.

stable-monetary-unit assumption

The stable-monetary-unit assumption requires accountants to assume the dollars purchasing power is stable over time.

Which of the following statements regarding financial statements is NOT correct? The statement of cash flows reports cash flows from operating, investing, and capital activities. Revenues and expenses are only reported on the income statement. The ending balance of retained earnings is shown on both the statement of retained earnings and the balance sheet. Assets and liabilities are only reported on the balance sheet.

The statement of cash flows reports cash flows from operating, investing, and capital activities.

Which of the following is the correct journal entry for a purchase of equipment for $50,000 cash?

debit equipment (50,000) credit cash (50,000)

Liabilities are ________.

debts and obligations owed to creditors

Statement of Cash Flows

net operating cash flow +/- net investment CF +/- net financial CF= Increase/decrease in cash

Ravel Co. purchased supplies with $200,000 of its cash. As a result, there was __________.

no change in the total assets (B/c they are exchanging an asset for another)

The owner of Shady Grove Company has the bookkeeper write company checks to pay for his personal items. This violates __________. the matching principle the stable-monetary-unit assumption the entity assumption the materiality concept

the entity assumption

Retained earnings can be found on ________. the statement of retained earnings only the income statement and statement of cash flows the statement of retained earnings and the balance sheet the balance sheet only

the statement of retained earnings and the balance sheet

All of the following events at a sandwich shop are transactions except A. A representative from the local university contacts the manager of the shop to get a list of catering services. B. A customer purchases a sandwich. C. The accountant for the sandwich shop pays the electric bill. D. A delivery of coffee beans purchased on account from the local roaster is received.

A. A representative from the local university contacts the manager of the shop to get a list of catering services.

Which statement is​ false? A. A trial balance is the same as a balance sheet. B. A trial balance lists all the accounts with their current balances. C. A trial balance can be taken at any time. D. A trial balance can verify the equality of debits and credits.

A. A trial balance is the same as a balance sheet.

The following accounts have normal debit​ balances: A. Assets B. Revenues C. Liabilities D. All of the listed accounts have a normal debit balance.

A. Assets

Which of the following is the most accurate statement regarding ethics as applied to decision making in​ accounting? A. Ethics involves making difficult choices under pressure and should be kept in mind in making every​ decision, including those involving accounting. B. It is impossible to learn ethical decision​ making, since it is just something you decide to do or not to do. C. Ethics is becoming less and less important as a field of study in business. D. Ethics has no place in​ accounting, because accounting deals purely with numbers.

A. Ethics involves making difficult choices under pressure and should be kept in mind in making every​ decision, including those involving accounting.

What item flows from the income statement to the statement of retained​ earnings? A. Net income B. Inventory C. Dividends D. Cash

A. Net income

To be​ useful, information must have which of the following fundamental qualitative​ characteristics? A. Relevance and faithful representation B. Expediency and relevance C. Timeliness and affordability D. Faithful representation and diversity

A. Relevance and faithful representation

A credit entry to an account will A. increase liabilities. B. decrease revenues. C. increase expenses. D. increase assets.

A. increase liabilities.

Thorpe Corporation purchases a new delivery truck and signs a note payable at the truck dealership for the total cost. The impact of this transaction on Thorpe Corporation A. increases assets and increases liabilities. B. increases assets and increases​ stockholders' equity. C. decreases assets and increases liabilities. D. increases assets and decreases​ stockholders' equity.

A. increases assets and increases liabilities.

Blake Company completed a consulting job and billed the customer​ $5,000. The impact on Blake Company from this transaction A. increases assets and increases​ stockholders' equity. B. increases liabilities and decreases​ stockholders' equity. C. increases assets and increases liabilities. D. decreases liabilities and increases​ stockholders' equity.

A. increases assets and increases​ stockholders' equity.

Company has current assets of $ 40,000 and​ long-term assets of $ 75,000. Its total liabilities equal $ 15,000. ​Stockholders' equity​ is: A. $ 130,000 B. $ 100,000 C. $ 90,000 D. $ 115,000

B. $ 100,000

Amounts owed to a company by its customers would​ be: A. Inventory. B. Accounts Receivable. C. Prepaid Expenses. D. Accounts Payable.

B. Accounts Receivable.

Assume that a business is headed for certain bankruptcy and it is evident that its liabilities greatly exceed its assets. Which principle would be violated if its financial statements were prepared using standard U.S.​ GAAP? A. Entity assumption B. Continuity assumption C. Historical cost principle D. ​Stable-monetary-unit assumption

B. Continuity assumption

Which type of business organization provides the least amount of protection for bankers and other creditors of the​ company? A. Proprietorship B. Corporation C. Partnership D. Both a and c

B. Corporation

Which of the following transactions will increase an asset and increase​ stockholders' equity? A. Collecting cash from a customer on an account receivable B. Performing a service on account for a customer C. Purchasing supplies on account D. Borrowing money from a bank

B. Performing a service on account for a customer

Purchasing a building for $ 105,000 by paying cash of $ 30,000 and signing a note payable for $ 75,000 will A. decrease total assets and increase total liabilities by $ 30,000. B. increase both total assets and total liabilities by $ 75,000. C. increase both total assets and total liabilities by $ 105,000. D. decrease both total assets and total liabilities by $ 30,000.

B. increase both total assets and total liabilities by $ 75,000.

Revenues are A. increases in​ paid-in capital resulting from the owners investing in the business. B. increases in retained earnings resulting from selling products or performing services. C. decreases in liabilities resulting from paying off loans. D. all of the above

B. increases in retained earnings resulting from selling products or performing services.

An investment of cash by stockholders into the business will A. have no effect on total assets. B. increase​ stockholders' equity. C. decrease total assets. D. decrease total liabilities.

B. increase​ stockholders' equity.

If a corporation purchases a delivery van for​ $35,000 cash, the net impact of this transaction will be A. an increase in both assets and liabilities of​ $35,000. B. no impact on total assets. C. a decrease in total assets of​ $35,000. D. an increase in total assets of​ $35,000.

B. no impact on total assets.

An​ organization's investors and creditors will primarily use information provided​ by: A. the Internal Revenue Service. B. the​ organization's financial accounting system. C. the​ organization's managerial accounting system. D. the Financial Accounting Standards Board.

B. the​ organization's financial accounting system.

The accounts receivable account had a beginning balance of $100,000, cash received on account was $120,000, and sales on account were $50,000. The ending Accounts Receivable balance was ________.

Beg- 100,000 + Sales on account- 50,000 = $150,000 - cash received on acct (120,000) = $30,000

Statement of Retained Earnings

Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

During the​ year, EcoDry Corporation has $ 310,000 in​ revenues, $ 120,000 in​ expenses, and $ 9,000 in dividend declarations and payments. Net income for the year​ was: A. $ 129,000. B. $ 199,000. C. $ 190,000. D. $ 310,000.

C. $ 190,000.

The​ stockholders' equity of Merkovsky Company at the beginning and end of 2018 totaled $ 117,000 and $ 131,000​, respectively. Assets at the beginning of 2018 were $ 146,000. If the liabilities of Merkovsky Company increased by $ 67,000 in 2018​, how much were total assets at the end of 2018​? Use the accounting equation. A. $ 213,000 B. $ 210,000 C. $ 227,000 D. $ 65,000

C. $ 227,000

Which of the following transactions will increase an asset and increase a​ liability? A. Paying an account payable B. Issuing stock C. Buying equipment on account D. Purchasing office equipment for cash

C. Buying equipment on account

How would the issuance of common stock for cash affect the accounting​ equation? A. Increase liabilities and decrease​ stockholders' equity B. Decrease assets and decrease liabilities C. Increase assets and increase liabilities D. Increase assets and increase​ stockholders' equity

D. Increase assets and increase​ stockholders' equity

Which of the following debit and credit rules is​ correct? A. Decreases in assets and liabilities are credited. B. Increases in assets and liabilities are debited. C. Increases in liabilities and​ stockholders' equity are debited. D. Increases in liabilities and​ stockholders' equity are credited.

D. Increases in liabilities and​ stockholders' equity are credited.

Identify the asset from the following list of​ accounts: A. Retained Earnings B. Common Stock C. Notes Payable D. Inventory

D. Inventory

Which of the following is an​ asset? A. Salary Expense B. Common Stock C. Service Revenue D. None of the listed accounts is an asset.

D. None of the listed accounts is an asset.

Performing a service on account will A. increase​ stockholders' equity. B. increase total assets. C. increase total liabilities. D. accomplish both a and b.

D. accomplish both a and b.

All of the following are current assets except A. accounts receivable. B. prepaid expenses. C. inventory. D. accounts payable.

D. accounts payable.

The amount a company expects to collect from customers appears on the A. statement of cash flows. B. balance sheet in the​ stockholders' equity section. C. income statement in the expenses section. D. balance sheet in the current assets section.

D. balance sheet in the current assets section.

The journal entry to record a payment on account will A. debit Cash and credit Expenses. B. debit Accounts Payable and credit Retained Earnings. C. debit Expenses and credit Cash. D. debit Accounts Payable and credit Cash.

D. debit Accounts Payable and credit Cash.

Receiving cash from a customer on account will A. decrease liabilities. B. increase​ stockholders' equity. C. increase total assets. D. have no effect on total assets.

D. have no effect on total assets.

Purchasing computer equipment for cash will A. decrease both total assets and​ stockholders' equity. B. decrease both total liabilities and​ stockholders' equity. C. increase both total assets and total liabilities. D. have no effect on total​ assets, total​ liabilities, or​ stockholders' equity.

D. have no effect on total​ assets, total​ liabilities, or​ stockholders' equity.

The financial statement that reports revenues and expenses is called the A. statement of cash flows. B. balance sheet. C. statement of retained earnings. D. income statement.

D. income statement.

Adam Corporation issues stock to Cara Riley in exchange for​ $24,000 cash. The impact on Adam​ Corporation's assets from this transaction A. decreases assets. B. Not enough information is provided to determine the impact on assets. C. does not have any impact on assets. D. increases assets.

D. increases assets.

Another name for the balance sheet is the A. statement of operations. B. statement of earnings. C. statement of profit and loss. D. statement of financial position.

D. statement of financial position.

Which of the following statements is correct? managerial accounting provides information for decision makers outside the entity. Financial accounting provides information for decision makers outside the entity. Financial accounting provides information for decision makers inside the entity, such as business managers. Financial and managerial accounting information are analyzed together by both internal and external users of accounting information.

Financial accounting provides information for decision makers outside the entity.

Which of the following statements is correct regarding correcting accounting errors?

Mistakenly posting a $400 debit as a $40 debit while correctly recording the credit is a SLIDE ERROR that can be uncovered by dividing the trial balance difference by 9.

Increases the Walt Disneys stockholder's equity

Net Income Sale of Stock

Jason Jewelers reported the following in its statement of cash flows: Net cash provided by operating activities $140,000 Net cash provided by investing activities 120,000 Net cash used by financing activities 150,000 What is the total net increase or decrease in cash reported by Jason Jewelers? Net decrease of $210,000 Net increase of $210,000 Net increase of $110,000 Net decrease of $10,000

Net increase of $110,000 (140+120-150)

JayBird Jewelers reported the following in its statement of cash flows: Net cash provided by operating activities $147,000 Net cash used by investing activities 122,000 Net cash provided by financing activities 15,000 What is the total net increase or decrease in cash reported by JayBird? Net increase of $284,000 Net increase of $254,000 Net decrease of $10,000 Net increase of $40,000

Net increase of $40,000 (147-122+15)

Which of the following statements about cash is true? None of the answers are true. Revenue is earned only when cash is collected. Increases in cash and net income will always be the same during an accounting period. Cash is part of shareholders' equity.

None of the answers are true.

All of the following represent business transactions except: cash dividends were paid. common stock was sold for cash. the owner paid her personal home mortgage. a car was given to the business in exchange for common stock.

the owner paid her personal home mortgage.

During the year, Patriot Partners had $245,000 in revenues, $120,000 in expenses, and $40,000 in declared dividends. What was the total change in Retained Earnings during the year? $125,000 increase $165,000 decrease $165,000 increase $85,000 increase

$85,000 increase (245-120-40)

Vaughn-Williams Co. has total assets of $800,000 and stockholders' equity of $300,000. It purchased $100,000 of supplies on account and collected $50,000 on account from its customers. As a result, the company's total assets would now be __________.

$900,000 (800,000 + 100,000)

During the year, Patriot Partners had $245,000 in revenues, $120,000 in expenses, and $40,000 in declared dividends. What was Patriot's net income for the year? $245,000 $205,000 $125,000 $85,000

125,000

Barton Industries had the following asset accounts at year end: Cash-$10,000 Accounts Receivable-2,500 Supplies-750 Equipment-12,000 Building-70,000 Land-112,000 What are Barton's total current assets? $13,250 $25,250 $83,250 $10,750

13,250 (10,000+2500+750) bc the rest would be considered LT assets

A​ firm's beginning Cash balance was $ 3,000. At the end of the​ period, the balance was $ 4,000. If total cash paid out during the period was $ 29,000​, the amount of cash receipts was

30,000 3k + (29k)= (26k) (26k) + x = 4k x= 30k

Why is the income statement the first financial report prepared? The income statement is prepared first because accounts included on the income statement are all temporary accounts that must be closed before preparing the remaining financial statements. The income statement is prepared first because its result, Net Income, is the most important financial measurement used by decision makers. The income statement is prepared first because its result, Net Income, is needed as part of the other financial statements. There is no required order for preparing financial statements. The income statement can be completed at any point in the financial reporting process.

The income statement is prepared first because its result, Net Income, is needed as part of the other financial statements.

A company in its first year of business earned revenues of $100,000 but collected only $80,000 in cash from its customers. Which of the following is correct?

The income statement will show revenues of $100,000, the balance sheet will show accounts receivable of $20,000, and the statement of cash flows will show cash collected from customers of $80,000.

the entity assumption

implies that accounting data from the business is isolated and will be the same regardless of the personal finances of its owners.

The journal entry to record the acquisition of land and a building by issuing common stock A. debits Common Stock and credits Land and Building. B. debits Land and credits Common Stock. C. debits Land and Building and credits Common Stock. D. debits​ Land, Building, and Common Stock.

c. debits Land and Building and credits Common Stock.

Current assets include __________. cash and land prepaid expenses and building cash and accounts receivable accounts receivable and equipment

cash and accounts receivable

Frost Enterprise buys a warehouse for $ 510,000 to use for its East Coast distribution operations. On the date of the​ purchase, a professional appraisal shows a value of $ 600,000 for the warehouse. The seller had originally purchased the building for $ 485,000. Frost has a similar warehouse on the West Coast that has a book value of $ 524,000. Under the historical cost​ principle, Frost should record the building for a- 524000 b-600000 c-485000 d-510000

d-510000

Which of the following is the correct journal entry for purchasing $5,000 worth of supplies on account

debit supplies credi acct payable

An attorney performs services of​ $1,100 for a client and receives​ $400 cash with the remainder on account. The journal entry for this transaction would A. debit​ Cash, debit Service​ Revenue, credit Accounts Receivable. B. debit​ Cash, credit Accounts​ Receivable, credit Service Revenue. C. debit​ Cash, credit Service Revenue D. debit​ Cash, debit Accounts​ Receivable, credit Service Revenue.

debit​ Cash, debit Accounts​ Receivable, credit Service Revenue.