Accounting Final

McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year? A) $257,000 B) $116,000 C) $398,000 D) $323,000

A) $257,000

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. Revenue earned $16,000 Accounts receivable 3,000 Expenses incurred 7,250 Accounts payable (related to expenses) 750 Supplies purchased with cash 1,800 A) $8,750 B) $11,000 C) $6,500 D) $9,200

A) $8,750

Otto's Tune-Up Shop follows the revenue recognition principle. Otto services a car on August 31. The customer picks up the vehicle on September 1 and mails the payment to Otto on September 5. Otto receives the check in the mail on September 6. When should Otto show that the revenue was recognized? A) August 31 B) August 1 C) September 5 D) September 6

A) August 31

Which of the following financial statements is concerned with the company at a point in time? A) Balance sheet B) Income statement C) Retained earnings statement D) Statement of cash flows

A) Balance sheet

Budke Corporation paid dividends of $5,000. As a result of this event, the A) Dividends account was increased by $5,000. B) Dividends account was decreased by $5,000. C) Cash account was increased by $5,000. D) Cash was increased and the Dividends account was decreased by $5,000.

A) Dividends account was increased by $5,000.

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

A) a net loss results

Powers Corporation received a cash advance of $500 from a customer. As a result of this event, A) assets increased by $500. B) equity increased by $500. C) liabilities decreased by $500. D) Both assets and equity increased by $500.

A) assets increased by $500.

Reporting a net income of $95,000 will A) increase retained earnings. B) decrease retained earnings. C) increase common stock. D) decrease common stock.

A) increase retained earnings.

The two fundamental qualities of useful information are A) relevance and faithful representation. B) verifiability and timeliness. C) comparability and flexibility. D) understandability and consistency.

A) relevance and faithful representation.

Dividends appear on A) the retained earnings statement only. B) the income statement only. C) both the retained earnings statement and the balance sheet. D) the balance sheet only.

A) the retained earnings statement only.

Gilkey Corporation began the year with retained earnings of $465,000. During the year, the company issued $630,000 of common stock, recorded expenses of $1,800,000, and paid dividends of $120,000. If Gilkey's ending retained earnings was $495,000, what was the company's revenue for the year? A) $1,830,000 B) $1,950,000 C) $2,460,000 D) $2,580,000

B) $1,950,000

Jimmy's Repair Shop started the year with total assets of $200,000 and total liabilities of $160,000. During the year the business recorded $420,000 in revenues, $220,000 in expenses, and dividends of $40,000. Stockholders' equity at the end of the year was A) $240,000. B) $200,000. C) $160,000. D) $180,000.

B) $200,000.

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200 and the total of the credit entries to the Cash account amounted to $900. The Cash account has a A) $900 credit balance. B) $300 debit balance. C) $1,200 debit balance. D) $300 credit balance

B) $300 debit balance.

Based on the following data, what is the amount of current assets? Accounts payable $62,000 Accounts receivable 100,000 Cash 50,000 Intangible assets 100,000 Inventory 138,000 Long-term investments 160,000 Long-term liabilities 200,000 Short-term investments 80,000 Notes payable 56,000 Property, plant, and equipment 1,340,000 Prepaid insurance 2,000 A) $212,000 B) $370,000 C) $232,000 D) $230,000

B) $370,000

Henson Company began the year with retained earnings of$330,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year? A) $490,000 B) $410,000 C) $790,000 D) $450,000

B) $410,000

If total liabilities decreased by $75,000 and stockholders' equity increased by $25,000 during a period of time, then total assets must change by what amount and direction during that same period? A) $100,000 increase B) $50,000 decrease C) $50,000 increase D) $75,000 decrease

B) $50,000 decrease

Elston Company compiled the following financial information as of December31,2014: Service revenue $700,000 Common stock 150,000 Equipment 200,000 Operating expenses 625,000 Cash 175,000 Dividends 50,000 Supplies 25,000 Accounts payable 100,000 Accounts receivable 75,000 Retained earnings, 1/1/14 375,000 Elston's stockholders' equity on December 31, 2014 is A) $525,000. B) $550,000. C) $400,000. D) $600,000.

B) $550,000.

Marvin Services Corporation had the following accounts and balances: Accounts payable $18,000 Accounts receivable 3,000 Buildings ? Cash 9,000 Equipment $21,000 Land 21,000 Unearned service revenue 6,000 Total stockholders' equity ? If the balance of the Buildings account was $42,000 and $3,000 of Accounts Payable were paid in cash, what would be the balance of the total stockholders' equity? A) $81,000 B) $72,000 C) $102,000 D) $78,000

B) $72,000

Which of the following is not a step for solving an ethical dilemma? A) Identifying the alternatives and weighing the impact of each alternative on various stakeholders. B) Certifying the ethical accuracy of the financial information. C) Identifying and analyzing the principal elements in the situation. D) Recognizing the ethical situation and issues involved.

B) Certifying the ethical accuracy of the financial information.

The agency of the United States Government that oversees the U.S. financial markets is the A) Internal Revenue Service. B) Security Exchange Commission. C) Financial Accounting Standards Board. D) International Auditing Standards Committee.

B) Security Exchange Commission.

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

B) Stockholders' equity, credit

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

B) account receivable

The cost of assets consumed or services used is also known as A) a revenue. B) an expense. C) a liability. D) an asset.

B) an expense

Declaring a cash dividend will A) increase retained earnings. B) decrease retained earnings. C) increase common stock. D) decrease common stock.

B) decrease retained earnings.

N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets? A) $2,695,000 B) $1,255,000 C) $1,745,000 D) $3,305,000

C) $1,745,000

Elston Company compiled the following financial information as of December31,2014: Service revenue $700,000 Common stock 150,000 Equipment 200,000 Operating expenses 625,000 Cash 175,000 Dividends 50,000 Supplies 25,000 Accounts payable 100,000 Accounts receivable 75,000 Retained earnings, 1/1/14 375,000 Elston's retained earnings on December 31, 2014 are A) $375,000. B) $450,000. C) $400,000. D) $ 25,000.

C) $400,000.

A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be recognized? A) December 5 B) December 10 C) November 30 D) December 1

C) November 30

Which of the following statements is not true regarding the Sarbanes-Oxley Act(SOX)? A) The Act calls for increased oversight responsibilities for boards of directors. B) The Act has resulted in increased penalties for financial fraud by top management. C) The Act calls for decreased independence of outside auditors reviewing corporate financial statements. D) The Act is meant to decrease the likelihood of unethical corporate behavior.

C) The Act calls for decreased independence of outside auditors reviewing corporate financial statements.

The quality of consistency enhances A) relevance. B) materiality. C) comparability. D) faithful representation.

C) comparability.

Under the accrual basis of accounting: A) cash must be received before revenue is recognized. B) net income is calculated by matching cash outflows against cash inflows. C) events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. D) the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

C) events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

Debits A) increase both assets and liabilities. B) decrease both assets and liabilities. C) increase assets and decrease liabilities. D) decrease assets and increase liabilities.

C) increase assets and decrease liabilities.

An advantage of the corporate form of business is that A) it has limited life. B) its owner's personal resources are at stake. C) its ownership is easily transferable via the sale of shares of stock. D) it is simple to establish.

C) its ownership is easily transferable via the sale of shares of stock.

A payment of a portion of an accounts payable will A) not affect total assets. B) increase liabilities. C) not affect stockholders' equity. D) decrease net income.

C) not affect stockholders' equity.

The normal balance of any account is the A) left side. B) right side. C) side which increases that account. D) side which decreases that account.

C) side which increases that account.

Courtney Company purchased equipment for $1,800 cash. As a result of this event, A) equity decreased by $1,800. B) assets increased by $1,800. C) total assets remained unchanged. D) Both assets and equity decreased by $1,800.

C) total assets remained unchanged.

In a service-type business, revenue is recognized: A) at the end of the month. B) at the end of the year. C) when the service is performed. D) when cash is received.

C) when the service is performed.

These are selected account balances on December 31,2014. Land $100,000 Land (held for future use) 150,000 Buildings 800,000 Inventory 200,000 Equipment 450,000 Furniture 100,000 Accumulated Depreciation 300,000 What is the total amount of property, plant, and equipment that will appear on the balance sheet? A) $1,500,000 B) $1,300,000 C) $1,800,000 D) $1,150,000

D) $1,150,000

For 2014 Fielder Corporation reported net income of$30,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2014 earnings per share? A) $0.08 B) $0.53 C) $25.00 D) $1.88

D) $1.88

LaMore Company had the following transactions during 2013: • Sales of $4,500 on account • Collected $2,000 for services to be performed in 2014 • Paid $1,875 cash in salaries for 2013 • Purchased airline tickets for $250 in December for a trip to take place in 2014 What is La More's 2013 net income using accrual accounting? A) $2,875 B) $4,875 C) $4,625 D) $2,625

D) $2,625

If total liabilities increased by $46,000 during a period of time and stockholders' equity decreased by $18,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n) A) $46,000 increase. B) $64,000 increase. C) $28,000 decrease. D) $28,000 increase.

D) $28,000 increase.

Marvin Services Corporation had the following accounts and balances: Accounts payable $18,000 Accounts receivable 3,000 Buildings ? Cash 9,000 Equipment $21,000 Land 21,000 Unearned service revenue 6,000 Total stockholders' equity ? If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000, what would be the total of stockholders' equity? A) $39,000 B) $54,000 C) $69,000 D) $75,000

D) $75,000

Which type of corporate information is readily available to investors? A) Financial comparison of operating alternatives B) Marketing strategies for a product that will be introduced in eighteen months C) Forecasts of cash needs for the upcoming year D) Amount of net income retained in the business

D) Amount of net income retained in the business

Comstock Company provided consulting services and billed the client $2,500. As a result of this event A) assets remained unchanged. B) assets increased by $2,500. C) equity increased by $2,500 D) Both assets and equity increased by $2,500.

D) Both assets and equity increased by $2,500.

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? A) Nothing further must be done. B) Debit a stockholders' equity account for $500. C) Debit another asset account for $500. D) Credit a different asset account for $500.

D) Credit a different asset account for $500.

An accountant has debited an asset account for $800 and credited a liability account for $700. Which of the following would be an incorrect way to complete the recording of the transaction? A) Credit an asset account for $100. B) Credit another liability account for $100. C) Credit a stockholders' equity account for $100. D) Debit a stockholders' equity account for $100.

D) Debit a stockholders' equity account for $100.

What organization issues U.S. accounting standards? A) Security Exchange Commission B) International Accounting Standards Committee C) International Auditing Standards Committee D) Financial Accounting Standards Board

D) Financial Accounting Standards Board

A company spends $20million dollars for an office building. Over what period should the cost be written off? A) When the $20 million is expended in cash. B) All in the first year. C) After $20 million in revenue is earned. D) None of these answer choices are correct.

D) None of these answer choices are correct.

The statement of cash flows would disclose the payment of a dividend A) nowhere on the statement. C) in the investing activities section. B) in the operating activities section. D) in the financing activities section.

D) in the financing activities section.

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

D) increase in the asset.

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

D) is increased by credits.