ACCT 201 -1

Earnings per share is a A) profitability ratio. B) liquidity ratio. C) solvency ratio. D) trending ratio.

a

Generally accepted accounting principles are: A) a set of standards and rules that are recognized as a general guide for financial reporting. B) usually established by the Internal Revenue Service. C) the guidelines used to resolve ethical dilemmas. D) fundamental truths that can be derived from the laws of nature.

a

On a classified balance sheet, trademarks are classified as A) an intangible asset. B) property, plant, and equipment. C) a current asset. D) a long-term investment.

a

Posting: A) transfers journal entries to ledger accounts. B) transfers ledger transaction data to the journal. C) is an optional step in the recording process. D) normally occurs before journalizing.

a

Which accounting principle requires that companies disclose all circumstances and events that would make a difference to financial statement users? A) Full Disclosure Principle B) Historical Cost Principle C) Monetary Unit Principle D) All of the above

a

Which of the following is not a satisfactory statement of the accounting equation? A) Assets = Stockholders' Equity - Liabilities B) Assets = Liabilities + Stockholders' Equity C) Assets - Liabilities = Stockholders' Equity D) Assets - Stockholders' Equity = Liabilities

a

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

b

On a classified balance sheet, land is classified as A) an intangible asset. B) property, plant, and equipment. C) a current asset. D) a long-term investment.

b

The current ratio is a A) profitability ratio. B) liquidity ratio. C) solvency ratio. D) trending ratio.

b

Which of the following is not a long-term liability? A) Bonds payable. B) Current maturities of long-term debt. C) Long-term notes payable. D) Mortgages payable.

b

Which of the following would not be considered an external user of accounting data for the Julian Company? A) Internal Revenue Service agents B) Management C) Creditors D) Customers

b

On a classified balance sheet, cash is classified as A) an intangible asset. B) property, plant, and equipment. C) a current asset. D) a long-term investment.

c

Retained Earnings appear in which section of the balance sheet? A) Assets B) Liabilities C) Stockholders' Equity D) None of the above

c

The belief that a company will continue to operate for the foreseeable future is which of the following assumptions? A) Full disclosure assumption. B) Monetary unit assumption. C) Going concern assumption. D) Periodicity assumption.

c

The first required step in the accounting cycle is: A) adjusting entries. B) journalizing transactions. C) analyzing transactions. D) posting transactions.

c

What is the primary criterion by which accounting information can be judged? A) Consistency B) Predictive value. C) Usefulness for decision making. D) Comparability

c

Which of the following is not an advantage of the corporate form of business organization? A) No personal liability B) Easy to transfer ownership C) Favorable tax treatment D) Easy to raise funds

c

Which of the following items has no effect on retained earnings? A) Expense B) Dividends C) Land purchase D) Revenue

c

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

If total liabilities decreased by $105,000 and stockholders' equity increased by $35,000 during a period of time, then total assets must change by what amount and direction during that same period? A) $140,000 increase B) $70,000 increase C) $140,000 decrease D) $70,000 decrease

d

One limitation of the trial balance is that it may balance even when: A) a transaction is not journalized. B) incorrect accounts are used in journalizing or posting. C) offsetting errors are made in recording the amount of a transaction. D) All of the above are limitations of the trial balance.

d

The Statement of Cash Flows answers which of the following questions? A) Where did cash come from during the period? B) How was cash used during the period? C) What was the change in the cash balance during the period? D) All of the above

d

The practice of preparing financial statements at regular intervals is which of the following assumptions? A) Full disclosure assumption. B) Monetary unit assumption. C) Going concern assumption. D) Periodicity assumption.

d

Which accounts normally have credit balances? A) Assets, expenses, and revenues B) Assets, expenses, and dividends C) Liabilities, assets and dividends D) Liabilities, equity and revenues

d

Which of the following organizations issues accounting standards for countries outside the United States? A) SEC B) GAAP C) FASB D) IASB

d