MGT 11A - Chapter 1 Practice Quiz

Ending liabilities were $67,000, beginning equity was $87,000, common stock issued during year totaled $31,000, expenses for the year were $22,000, dividends declared totaled $13,000, ending equity for the year was $181,000, and beginning assets for the year were $222,000. What are the ending assets for the year?

A. $154,000 B. $134,000 C. $212,000 D. $248,000 E. $155,000 --- Correct Answer: D Explanation: $67,000 + $181,000 = $248,000

Ending liabilities were $67,000, beginning equity was $87,000, common stock issued during year totaled $31,000, expenses for the year were $22,000, dividends declared totaled $13,000, ending equity for the year was $181,000, and beginning assets for the year were $222,000. What were beginning liabilities for the year?

A. $154,000 B. $155,000 C. $212,000 D. $248,000 E. $135,000 --- Correct Answer: E Explanation: $222,000 - $87,000 = $135,000

Beginning assets were $437,600, beginning liabilities were $262,560, common stock issued during the year totaled $45,000, revenue for the year was $414,250, expenses for the year were $280,000, dividends declared were $22,700, and ending liabilities were $350,000. What were the ending assets for the year?

A. $700,160 B. $612,560 C. $787,600 D. $681,590 E. $1,159,410 --- Correct Answer: B Explanation: ($437,600 - $262,560) + $45,000 + $414,250 - $280,000 - $22,700 = $331,590 (end. equity) + $350,000 = $681,590

Beginning assets were $437,600, beginning liabilities were $262,560, common stock issued during the year totaled $45,000, revenue for the year was $414,250, expenses for the year were $280,000, dividends declared were $22,700, and ending liabilities were $350,000. What was the beginning equity for the year?

A. $700,160 B. $787,600 C. $187,600 D. $612,560 E. $175,040 --- Correct Answer: E Explanation: $437,600 - $262,560 = $175,040

Rent expense that is paid with cash appears on which of the following statements?

A. Balance sheet. B. Income statement. C. Statement of retained earnings. D. Schedule of accounts receivable. E. Statement of cash received. --- Correct Answer: B

The income statement reports all of the following except:

A. Revenues earned by a business. B. Expenses incurred by a business. C. Assets owned by a business. D. Net income or loss earned by a business. E. The time period over which the earnings occurred. --- Correct Answer: C

Which of the following statements is not true about assets?

A. They are economic resources owned or controlled by the business. B. They are expected to provide future benefits to the business. C. They appear on the balance sheet. D. They appear on the statement of retained earnings. E. Claims on them are shared between creditors and owners. --- Correct Answer: D

A financial statement providing information that helps users understand a company's financial status and lists the types and amounts of assets, liabilities, and equity as of a specific date is called a(n):

Balance Sheet

Businesses can take all of the following forms except:

Common Stock

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the amount of cash or cash equivalent given in exchange is the:

Cost Principle

Which of the following accounting principles would prescribe that all goods and services purchased are recorded at cost?

Cost Principle

The private board that currently has the authority to establish U.S. generally accepted accounting principles is the:

FASB

Why are ethics crucial to accounting?

For accounting information to be useful, it must be trusted and therefore the result of ethical decisions.

The principle prescribing that financial statements reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

Going-concern Principle

The organization that attempts to create more harmony among the accounting practices of different countries by identifying preferred practices and encouraging their worldwide acceptance is the:

IASB

The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called a(n):

Income Statement

Recording the items on the financial statements in dollars is done because of the:

Monetary Unit Principle

The accounting guideline prescribing that financial statement information be supported by independent, unbiased evidence other than someone's belief or opinion is the:

Objectivity Principle

Which of the following elements are found on the balance sheet?

Retained Earnings

The principle that (A) requires revenue to be recognized at the time it is earned, (B) allows the inflow of assets associated with revenue to be in a form other than cash, and (C) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services is called the:

Revenue Recognition Principle

Which of the following elements are found on the income statement?

Salaries Expense

Cash investments by owners in exchange for stock are listed on which of the following statements?

Statement of Cash Flows

The financial statement that describes where a company's cash came from and how it was spent during the period is the:

Statement of Cash Flows

Which accounting assumption assumes that all accounting information can be reported monthly or yearly?

Time Period Assumption

Expenses:

are the costs of assets or services used to earn revenues

Resources owned or controlled by a company that are expected to yield benefits are:

assets

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n):

financing activity

Technological Advancement _________.

has freed accounting professionals to concentrate more on the analysis and interpretation of information

The owners of a partnership:

have unlimited liability

Congress passed the Sarbanes-Oxley Act to

help curb financial abuses at companies that issue their stock to the public

The International Accounting Standards Board (IASB):

hopes to create harmony among accounting practices of different countries

A limited partnership:

includes a general partner with unlimited liability

Generally accepted accounting Principles:

intend to make information on the financial statements relevant, reliable, and comparable

A company acquires equipment for $75,000 cash. This represents a(n):

investing activity

Social responsibility:

is a concern for the impact of one's actions on society as a whole

U.S. government bonds are:

low-risk and low-return investments

Internal users of accounting information always include:

managers

The objectivity principle:

means that information is supported by independent, unbiased evidence

Another name for equity is:

net assets

An example of a financing activity is:

obtaining a long-term loan.

The major activities of a business include:

operating, investing, financing

An example of an operating activity is:

paying wages

The primary objective of financial accounting is to:

provide financial statements to help external users analyze and interpret an organization's activities

An example of an investing activity is:

purchasing land

Increases in retained earnings from a company's earnings activities are:

revenues

An asset is:

something the company owns

Ethical behavior requires:

that an auditor's pay not depend on the figures in the client's reports

A balance sheet lists:

the types and amounts of assets, liabilities and equity of a business as of a specific date

Which of the following statements best describes the relationship of U.S. GAAP and IFRS?

they are similar but not identical

What is the primary purpose of accounting?

to identify, record, and communicate business transactions