ACCT 200 Module 1- WVU Summer 2020

Which financial statement reports how much was sold during the period? A) Income Statement B) Statement of Shareholders' Equity C) Statement of Cash Flows D) Balance Sheet

A

Which one of the following financial statements reports information about a company at a single point in time? A) Balance Sheet B) Statement of Cash Flows C) Statement of Shareholders' Equity D) Income Statement

A

Borrowing from a bank is a(n) ______. A) operating activity B) investing activity C) financing activity D) expense

C

Costco is a ______. A) service firm B) manufacturing company C) merchandising company

C

If a company borrows money by issuing a note payable at the beginning of the accounting period, as a result, it will report ________. A) Interest Revenue on the balance sheet B) Interest Expense on the balance sheet C) Interest Expense on the income statement D) Interest Payable on the income statement

C

Lawn & Order borrowed cash from a bank by issuing a $10,000 promissory note. The effect on Lawn & Order's accounting equation is as follows: A) Assets and shareholders' equity increase B) Assets and liabilities decrease C) Assets and liabilities increase D) Assets and shareholders' equity decrease

C

Moral hazard occurs when A) corporations take excessive risk B) management behaves unethically C) management makes decisions that are not in the best interest of the shareholders D) shareholders are exposed to unlimited liability

C

Paying a cash dividend to shareholders is a(n) ______. A) operating activity B) investing activity C) financing activity D) expense

C

Retained Earnings appears on the ______. A) Statement of Shareholders' Equity B) Statement of Cash Flows C) More than one of these statements D) Income Statement E) Balance Sheet

C

The statement of shareholders' equity reports the ______. A) cash collected and cash paid during the period B) revenues minus expenses for the accounting period C) changes that occurred in shareholders' equity during the accounting period D) economic resources, obligations, and net worth

C

What is the effect on total assets when a company purchases a cash register for a cash payment of $1,200? A) Increase B) Decrease C) No effect

C

Which of the following is the accounting equation? A) Revenue - Expenses = Net Income B) Assets + Liabilities = Shareholders' Equity C) Assets = Liabilities + Shareholders' Equity D) Assets = Liabilities + Net Income E) Revenue + Expenses = Net Income F) Assets - Liabilities = Net Income

C

If a company's total assets equals $90,000 and its shareholders' equity equals $30,000, then its liabilities must equal $______.

$60,000

Purses, Inc., sold 2 purse(s) that cost $30 each to its customers for a price of $80 each. The Gross Profit amount on the income statement will equal $______.

$100

Company 1 Asset- ? Liability- $40,000 Shareholders' Equity- $60,000

$100,000

Whistler Company had retained earnings of $456,000 at the end of Year 1. During Year 2, Whistler had net income of $132,000. Retained earnings were $470,000 at December 31, Year 2. The amount of dividends for Year 2 must have been:

$118,000

Florist Grump, Inc., had beginning retained earnings of $148,000. During the year, Florist Grump had net income of $57,000 and declared and paid dividends of $38,000. What will be shown for ending retained earnings on Florist Grump's year-end balance sheet?

$167,000

Florist Grump, Inc., had beginning retained earnings of $162,000. During the year, Florist Grump had net income of $73,000 and declared and paid dividends of $17,000. What will be shown for ending retained earnings on Florist Grump's year-end balance sheet?

$218,000

If a company's total assets equals $60,000 and its shareholders' equity equals $30,000, then its liabilities must equal $______.

$30,000

At December 31, Year 1, Lord of the Fries, Inc.'s assets were $60,000 and liabilities were $40,000. At December 31, Year 2, its assets are $110,000 and liabilities are $50,000. During the year, it did not issue new stock and did not declare or pay dividends. Calculate net income for Year 2.

$40,000

Company 3 Asset- $50,000 Liability- $10,000 Shareholders' Equity- ?

$40,000

At December 31, Year 1, Sea the World Cruises, Inc.'s assets were $50,000 and liabilities were $40,000. At December 31, Year 2, its assets are $110,000 and liabilities are $50,000. During the year, it did not issue new stock, and it declared and paid $100 dividend. Calculate net income for Year 2.

$50,100

If a company's total assets equals $80,000 and its shareholders' equity equals $20,000, how much are the creditors' claims to the company's assets?

$60,000

Jim's Jungle Gyms reported the following information in its year ended December 31 financials: Net Income... $8,000 Sales Revenue... $86,000 Retained Earnings - beginning balance... $24,000 Dividends... $4,000 What were the company's total Expenses for the current year?

$68,000

At December 31, Year 1, Lord of the Fries, Inc.'s assets were $60,000 and liabilities were $40,000. At December 31, Year 2, its assets are $150,000 and liabilities are $50,000. During the year, it did not issue new stock and did not declare or pay dividends. Calculate net income for Year 2.

$80,000

Company 2 Asset- $150,000 Liability- ? Shareholders' Equity- $60,000

$90,000

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity. 1) Cash 2) Notes Payable 3) Equipment A) Asset B) Liability C) Shareholders' Equity

1) A 2) B 3) A

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity. 1) Inventory 2) Bonds Payable 3) Accounts Payable A) Asset B) Liability C) Shareholders' Equity

1) A 2) B 3) B

Classify the Balance Sheet accounts listed below as an Asset, Liability, or Shareholders' Equity. 1) Land 2) Accounts Payable 3) Stock A) Asset B) Liability C) Shareholders' Equity

1) A 2) B 3) C

Match each characteristic with the appropriate business organization. 1) Partnerships 2) Sole Proprietorships and Partnerships 3) Corporations A) Legal liability is the responsibility of two or more owners. B) Owners have unlimited liability. C) Owners have limited liability.

1) A 2) B 3) C

Match each item with the appropriate description. 1) General Ledger System 2) ERP 3) Managerial Account A) Includes the accounting part of the integrated information system. B) Includes both financial and non-financial information for all areas of the business. C) Uses accounting information for external reporting. D) Uses accounting information for internal reporting. E) Is a subset of the non-financial integrated accounting system.

1) A 2) B 3) E

Burrows, Inc. issued a note payable to the bank at the beginning of the month. Show the effect of the entry to record the amount of interest it owes on the note at the end of the month. (The interest is not going to be paid until later.) IF THERE IS NO EFFECT, SELECT "0 NO EFFECT. 1) Assets 2) Liabilities 3) Shareholders' Equity A) No Effect B) Decrease C) Increase

1) A 2) C 3) B

Over Armour, Inc., sold 5 shirts that cost $6 each to its customer for $10 each. Over Armour should record a total of $______ as an expense for the cost of the goods sold.

30, (30), -30

Match the definition with each of the elements of the accounting equation. 1) Assets 2) Liabilities 3) Shareholders' Equity A) Economic resources that will provide future benefit B) Owners' claims to economic resources C) Creditors' claims to economic resources

1) A 2) C 3) B

Record the transaction: Wok n' Roll paid $50,000 cash for 10 acres of land. 1) Assets 2) Liabilities 3) Stock 4) Retained Earnings A) 0 No Effect B) 50,000 Land; (50,000) Cash C) (50,000) Cost of Goods Sold D) (50,000) Inventory E) (50,000) Land F) (50,000) Cash; (50,000) Cost of Goods Sold G) (50,000) Cash

1) B 2) A 3) A 4) A

Match each item below with the appropriate description using each one only once. 1) Corporation 2) Sole proprietorship 3) Partnership A) Unlimited Liability B) Limited Liability C) Mutual Agency

1) B 2) A 3) C

Match each item below with the appropriate description using each one only once. 1) Income Statement 2) Statement of Shareholders' Equity 3) Statement of Cash Flows 4) Balance Sheet 5) Notes (or footnotes) A) Reports additional information needed to better understand the financial statements B) Reports a summary of all revenues minus all expenses during a period C) Reports the changes that took place in the amount of the owners' investment during a period D) Reports a summary of cash collected and cash paid during a period E) Reports the assets, liabilities and shareholders' equity of a company at a specific point in time

1) B 2) C 3) D 4) E 5) A

Show the effect of the transaction: Jim's Jambs, Inc., recorded $150 of depreciation on its equipment for the month. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." 1) Assets 2) Liabilities 3) Shareholders' Equity A) (150) Cash B) (150) Accumulated Depreciation C) 150 Notes Payable D) 0 No Effect E) 150 Cash F) (150) Depreciation Expense G) 150 Accumulated Depreciation H) 150 Depreciation Expense

1) B 2) D 3) F

Indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity. 1) Issued $10,000 of stock. 2) Purchased $1,000 of inventory. 3) Purchased land for $1,000. A) Operating Activity B) Investing Activity C) Financing Activity

1) C 2) A 3) B

Indicate whether each activity for Anudu Hair Salon would be classified as an operating, investing, or financing activity. A) Received $40,000 from its owners in exchange for stock. B) Purchased a barber's chair and sink for $35,000. C) Paid $100 for advertising in the local paper. A. Operating B. Investing C. Financing

1) C 2) B 3) A

Match the financial statement that reports each of the following. 1) Assets 2) Net Income 3) Investing Activities A) Statement of Cash Flows B) Income Statement C) Balance Sheet

1) C 2) B 3) A

Indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity. 1) Paid a $100 dividend to its shareholders. 2) Repaid a $5,000 loan to the bank (creditor). 3) Paid $500 to its employees. A) Operating Activity B) Investing Activity C) Financing Activity

1) C 2) C 3) A

Show the effect of the transaction: Cap & Trade, Inc., paid $1,000 to its employees for the work they performed during the month. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." 1) Assets 2) Liabilities 3) Retained Earnings A) (1,000) Cost of Goods Sold B) (1,000) Wages Expense C) (1,000) Cash D) 1,000 Cash E) 1,000 Wages Expense F) (1,000) Inventory G) 0 No Effect

1) C 2) G 3) B

Show the effect of the transaction: Cap & Trade, Inc., purchased 500 baseball caps @ $6 each. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." 1) Assets 2) Liabilities 3) Retained Earnings A) (3,000) Cost of Goods Sold B) 0 No effect C) (3,000) Cash D) (3,000) Cash; 3,000 Inventory E) (3,000) Inventory F) 3,000 Inventory

1) D 2) B 3) B

Match each statement below with the appropriate financial statement being summarized. 1) Statement 1 For the Period Ended December 31 Revenues... xxx Expenses... xxx Net Income... xxx 2) Statement 2 For the Period Ended December 31 Beginning RE... xxx Net Income... xxx Dividends... xxx Ending Retained Earnings... xxx 3) Statement 3 At December 31 Assets... xxx Liabilities... xxx Stock... xxx Retained Earnings... xxx A) Statement of Cash Flows B) Statement of Shareholders' Equity C) Balance Sheet D) Income Statement

1) D 2) B 3) C

Planet of the Grapes, Inc., hired an employee promising to pay the employee $15 an hour. Show the effect of the entry below. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." 1) Assets 2) Liabilities 3) Stockholders' Equity A) 600 Wages Expense B) (600) Cash C) (600) Wages Expense D) 0 No Effect E) 600 Cash

1) D 2) D 3) D

Offsets, Inc., purchased land for $100,000 by issuing an $80,000 note and paying the remainder with cash. What is the net effect of this transaction for each column in the accounting equation? 1) Assets 2) Liabilities 3) Shareholders' Equity A) $100,000 increase B) No effect C) $20,000 increase D) $80,000 decrease E) $20,000 decrease F) $80,000 increase

1) F 2) F 3) B

Show the effect of the transaction: Cap & Trade, Inc., sold 300 baseball caps that cost $6 each to customers for $3,000 cash. IF THERE IS NO EFFECT, SELECT "0 NO EFFECT." 1) Assets 2) Liabilities 3) Retained Earnings A) 0 No effect B) (1,800) Cost of Goods Sold C) 3,000 Sales Revenue; (1,800) Cost of Goods Sold D) (1,800) Inventory E) 3,000 Cash F) 3,000 Sales Revenue G) 3,000 Cash; (1,800) Inventory

1) G 2) A 3) C

An asset is an amount ______, while a liability is an amount ______. A) owned; owed B) owed; owned

A

Collecting cash from customers is a(n) ______. A) operating activity B) investing activity C) financing activity D) expense

A

Dewey, Cheatum and Howe, LLC, is a legal firm and a ______. A) service firm B) merchandising company C) manufacturing company

A

Expenses appear on the ______. A) Income Statement B) Statement of Shareholders' Equity C) Statement of Cash Flows D) Balance Sheet E) More than one of these statements

A

Financial information needed to manage a company is provided by a(n) ______ system. A) accounting B) corporate C) tax D) equity financing

A

The statement of cash flows reports the ______. A) cash collected and cash paid during the period B) economic resources, obligations, and net worth C) changes that occurred in shareholders' equity during the accounting period D) revenues minus expenses for the accounting period

A

What is the effect on total assets when a company buys a building in exchange for a 20-year note payable? A) Total assets will increase. B) Total liabilities will decrease. C) Total shareholders' equity will increase. D) There is no effect.

A

Which business organization's owner has unlimited liability? A) Sole proprietorship B) Unlimited liability corporation C) Limited liability corporation D) Corporation

A

You can copy and paste the text and tables in the question from the assessment into the spreadsheet so that you can use it to help you solve the problem. Be sure to delete after each problem or close the spreadsheet and open a new one by clicking on the link above. This is to avoid the Excel from slowing down your browser. A) True B) False

A

______ purchase goods that are primarily in completed form. A) Merchandising companies B) Manufacturing companies C) Service firms

A

How many of the following accounts are assets: Supplies Expense, Retained Earnings, Cash, Notes Payable, Stock, Equipment A) 2 B) 3 C) 4 D) 5 E) 6

A (Cash, Equipment)

How many of the following line items are on the Balance Sheet: Supplies Expense, Retained Earnings, Notes Payable, Depreciation Expense, Accumulated Depreciation, Interest Expense A) Three B) Two C) One D) None E) Four

A (Retained Earnings, Notes Payable, Accumulated Depreciation)

Identify the ways in which a business may be organized. (Select all that apply.) A) Sole Proprietorship B) Unlimited Liability Corporation C) Corporation D) Partnership C) Unlimited Entity

A,C,D

Businesses earn profits by ______. (Select all that apply.) A) having revenues greater than expenses B) selling goods or services at more than they cost C) issuing stock to owners for cash D) borrowing from creditors

A,B

Which of the following are possible effects on the accounting equation when recording a transaction that increases an asset by $100? (Select all that apply.) A) A liability account increases by $100 B) A shareholders' equity account increases by $100 C) A liability account decreases by $100 D) An asset decreases by $100 E) A shareholders' equity account decreases by $100

A,B,D

Which of the following accounts are liabilities? (Select all that apply.) A) Notes Payable B) Wages Payable C) Stock D) Cash E) Taxes Payable

A,B,E

Financial statements can be prepared ______. (Select all that apply.) A) annually B) only at the end of the calendar year C) quarterly D) monthly

A,C,D

Cycle Path, Inc., sold 100 bikes to its customers at $400 each. The bikes cost $250. The entry to record this sale includes a ______. (Select all that apply.) A) (25,000) Cost of Goods Sold B) 25,000 Cost of Goods Sold C) 40,000 Sales Revenue D) 15,000 Gross Profit E) 25,000 Inventory F) 40,000 Cash G) (25,000) Inventory

A,C,F,G

Each transaction ______. (Select all that apply.) A) may affect either assets, liabilities, and/or shareholders' equity B) affects both assets and liabilities C) affects both assets and shareholders' equity D) affects assets only E) has at least two effects on the accounting equation

A,E

A ________ sells goods they have produced. A) merchandising company B) manufacturing company C) service firm

B

A balance sheet reports the ______. A) is a list of all the cash collected and cash paid during a period B) describes the financial situation of a company at a specific point in time C) is a summary of all of the revenues minus all of the expenses for an accounting period D) shows the changes that took place in shareholders' equity during a period

B

Account titles are ______. A) never capitalized B) the names given to the items exchanged in transactions based on a company's chart of accounts C) inherited by some of the nobility in France D) listed in alphabetical order on the balance sheet

B

How many of the following line items are on the Statement of Shareholders' Equity: Supplies Expense, Beginning Retained Earnings, Notes Payable, Dividends, Stock Issued, Proceeds from Loans A) Four B) Three C) Two D) One E) None

B

Liabilities are ______. A) amounts that the company owes to shareholders B) amounts that the company owes to creditors C) economic resources expected to benefit the company in the future D) expenses incurred to help generate revenues

B

On May 1, Lord of the Fries, Inc., hires an employee to begin work next month. On May 1, Lord of the Fries will ______. A) increase its assets B) not record anything C) decrease its shareholders' equity D) increase its liabilities

B

The income statement reports the ______. A) economic resources, obligations, and net worth B) revenues minus expenses for the accounting period C) changes that occurred in shareholders' equity during the accounting period D) cash collected and cash paid during the period

B

The main goal of an accounting system is to ______. A) provide initial financing for a new start-up B) capture information about a business so that it can be reported to decision makers C) earn a profit for the company's shareholders D) prove that assets equal liabilities plus shareholders' equity

B

When a company earns Net Income, its Retained Earnings will ______. A) decrease B) increase C) convert to cash D) be paid to shareholders

B

How many of the following line items are on the Statement of Cash Flows: Supplies Expense, Beginning Retained Earnings, Notes Payable, Dividends Paid, Cash Collected from Customers, Proceeds from Loans A) Four B) Three C) Two D) One E) None

B (Dividends Paid, Cash Collected from Customers, Proceeds from Loans)

An accounting system provides ______. (Select all that apply.) A) information about a company's future plans B) financial information needed to report results to outsiders C) financial information needed to manage a company D) assurance that a company cannot fail

B,C

Which of the following are possible effects on the accounting equation when recording a transaction that increases a liability by $100? (Select all that apply.) A) An asset decreases by $100 B) An asset increases by $100 C) A shareholders' equity account decreases by $100 D) A shareholders' equity account increases by $100

B,C

The heading of an income statement should include ______. (Select all that apply.) A) the date on which the statement was prepared B) the title "Income Statement" C) the accounting period covered by the statement D) the name of the business

B,C,D

Which of these would be reported in the financing activities section of the Statement of Cash Flows? (Select all that apply.) A) Cash paid to buy computers B) Cash dividends paid to shareholders C) Cash borrowed from the bank D) Cash paid to reduce the principal borrowed from banks E) Cash paid to buy land

B,C,D

A corporation earns profits for its shareholders by ______. (Select all that apply.) A) ensuring revenues are less than expenses B) selling goods at more than cost C) issuing stock to them for cash D) providing services at more than cost

B,D

Select the financing activities from the list below. (Select all that apply.) A) Purchased land B) Issued stock C) Purchased equipment D) Issued a note payable

B,D

Why do businesses exist? (Select all that apply.) A) To maximize expenses B) To maximize profits C) To maximize legal liability D) To maximize owners' wealth

B,D

Dividends are ______. (Select all that apply.) A) amounts owed to creditors B) reported on the Income Statement C) not an expense incurred to earn revenue D) company profits that are paid to shareholders E) required amounts owed to shareholders

C,D

Which company has the greatest proportion of creditors' claims?

Company 2

Frisky Business's Statement of Cash Flows for the year ended showed the following: Cash from Operating Activities... $1,600 Cash from Investing Activities... $(2,000) Cash from Financing Activities... $ ? Net Change in Cash... $5,500 Cash Flows from Financing Activities were ______. A) $1,900 B) $5,700 C) $9,100 D) $5,900

D

Hard Wok Cafe repays a $1,000 loan. This transaction ______. A) is a financing activity B) causes total liabilities to decrease C) causes total assets to decrease D) all of these are correct E) none of these is correct

D

On October 31, Shoe Fly declares and pays a dividend to its shareholders of $400. The dividend ______ by $400. A) reduces assets B) reduces Retained Earnings on the statement of shareholders' equity C) increases Dividend Expense on the income statement D) both a and b E) both a and c

D

Pete Zah invested $30,000 in Last Piece, Inc., in exchange for its stock. Last Piece now has ______. A) Investments B) a liability C) Net Income D) Stock

D

The governmental agency that monitors the stock market and the financial reporting of firms that trade in the market is the ______. A) Financial Accounting Standards Board (FASB) B) Internal Revenue Service (IRS) C) Public Company Accounting Oversight Board (PCAOB) D) Securities and Exchange Commission (SEC)

D

Using the following information for Morris Lest Co. for the year ended December 31, Year 2 and assuming no new stock was issued during the year, Total Assets at December 31, Year 2 equals _______. Revenues for the year ended December 31, Year 2... $850 Net Income for the year ended December 31, Year 2... $370 Retained Earnings, December 31, Year 1... $280 Retained Earnings, December 31, Year 2... $360 Total Shareholders' Equity at December 31, Year 2... $725 Total Liabilities at December 31, Year 1... $605 Total Liabilities at December 31, Year 2... $40 A) $605 B) $1,330 C) None of the above is correct D) $765 E) $645

D

Which item would be reported as a cash flow from investing activities? A) Cash dividends paid to shareholders B) Cash borrowed from the bank C) Cash received from customers D) Cash paid to buy equipment

D

Which of the following is a characteristic of a sole proprietorship? A) It is considered a separate legal entity. B) It has more than one owner. C) It has to file a corporate charter with the state in which it is going to do business. D) The owner is personally responsible for the debts of the business, even if the debts are more than the owner has invested in the business.

D

The expensing of a long-term asset, such as Equipment, over its useful life causes a(n) ______. (Select all that apply.) A) decrease in liabilities B) increase in shareholders' equity C) increase in assets D) decrease in assets E) increase in liabilities F) decrease in shareholders' equity

D,F

Par for the Course pays $4,500 cash for T-shirts from a supplier. This transaction ______. A) causes an increase in stock B) all of these are correct C) none of these are correct D) causes an increase in total liabilities E) is an operating activity

E

True or false: An exchange of promises is a transaction that affects the accounting equation.

False

True or false: If an asset increased, it must be the case that either a liability or shareholders' equity account also increased by the same amount.

False

______ activities are involved with providing goods and services to the customer (Enter only one word for the blank.)

Operating

______ are earned by selling goods or services to customers.

Revenues, Sales Revenue, Sales