C213

If a company has assets of $460,000, liabilities of $100,000, and capital stock of $210,000, what is the amount of retained earnings? A. $150,000 B. $210,000 C. $110,000 D. $310,000

A. $150,000

If a corporation has total assets of $350,000, total liabilities of $150,000, and retained earnings of $100,000, what is the amount of capital stock? A. $150,000 B. $0 C. $100,000 D. $250,000

C. $100,000

Owners of a corporation are referred to as A. Debtors B. Partners C. Stockholders D. Creditors

C. Stockholders

Economic resources that are owned or controlled by an enterprise are called a. Assets b. Liabilities c. Revenues d. Gains

a. Assets

Which of the following accounts is NOT an asset account? a. Equipment b. Accounts Receivable c. Accounts Payable d. Supplies

c. Accounts Payable

Which of the following is generally considered to be an asset? a. Notes payable b. Mortgage payable c. Accounts receivable d. Unearned revenue

c. Accounts receivable

Which of the following generally is NOT considered to be a liability? a. Notes payable b. Taxes payable c. Inventory d. Accounts payable

c. Inventory

The idea that the activities of the entity are to be separated from those of the individual owner is the A. Separate entity concept B. Arm's-length transaction assumption C. Money measurement concept D. Going concern assumption

A. Separate entity concept

Which of the following financial statements shows an entity's cash receipts and payments? A. The statement of financial position B. The statement of cash flows C. The statement of earnings D. The statement of changes in owners' equity

B. The statement of cash flows

Companies prepare classified and comparative financial statements because A. They are required by international accounting principles B. They provide financial statement readers with useful information about trends in financial position and operating performance C. They are required by the IRS D. They show changes in a company's management policies

B. They provide financial statement readers with useful information about trends in financial position and operating performance

The accuracy of the information contained in the financial statements is the responsibility of the A. Stockholders B. Certified Public Accountant C. Management D. Securities and Exchange Commission

C. Management

. In 2012, Rodney Corporation's balance sheet had the following balances: cash, $306,500; accounts receivable, $471,400; and accounts payable, $390,800. During 2013, Rodney had a net increase in cash of $68,600 and net income of $47,800. Given this information, what is the cash balance that will be reported on Rodney's 2013 balance sheet? A. $375,100 B. $237,900 C. $354,300 D. $258,700

A. $375,100

During the year, Roger Company earned revenues of $114,000, incurred $98,000 for various operating expenses, and distributed $5,600 in dividends. If retained earnings for the previous year was $34,600, what is retained earnings for the current year? A. $45,000 B. $24,200 C. $16,000 D. $34,600

A. $45,000

Which of the following financial statements provides a picture of the enterprise at a particular point in time? A. Balance sheet B. Income statement C. Statement of cash flows D. Statement of retained earnings

A. Balance sheet

Which of the following accounts is considered to be the most liquid? A. Cash B. Land C. Accounts Receivable D. Inventory

A. Cash

Current assets usually are listed on a balance sheet in A. Decreasing order of liquidity B. Increasing order of liquidity C. A random fashion D. Decreasing order of profitability

A. Decreasing order of liquidity

Distributions by a corporation to its stockholders are called A. Dividends B. Retained earnings C. Income D. Withdrawals

A. Dividends

The difference between sales and cost of goods sold is called A. Gross profit B. Intermediate profit C. Net income D. Gross income

A. Gross profit

Which of the following classifications refers to those activities associated with buying and selling long-term assets? A. Investing B. Operating C. Borrowing D. Financing

A. Investing

Net assets are equal to A. Total assets minus owners' equity B. Total assets minus net income C. Total assets minus dividends paid D. Total assets minus total liabilities

D. Total assets minus total liabilities

A major source of cash from operating activities is A. Receipts from sale of goods B. Receipts from borrowing C. Receipts from sale of building D. Receipts from investment by owner

A. Receipts from sale of goods

Which of the following is an example of additional information about summary totals that would be explained in the notes to the financial statements? A. The description of all the individual items that comprise notes payable B. The disclosure of quarterly financial information C. The method used to estimate depreciation on a piece of equipment D. The disclosure of the uncertain, potential outcome of a lawsuit

A. The description of all the individual items that comprise notes payable

The idea that both parties to a transaction must be rational and free to act independently is the A. Monetary measurement concept B. Arm's-length transaction assumption C. Going concern assumption D. Cost principle

B. Arm's-length transaction assumption

The total amount invested to acquire an ownership interest in a corporation is called A. Retained earnings B. Capital stock C. Net assets D. Owners' equity

B. Capital stock

Expense and revenue accounts appear on the A. Balance sheet B. Income statement C. Retained earnings statement D. Funds statement

B. Income statement

Which of the following is an example of a nonoperating expense? A. Salary expense B. Interest expense C. Cost of goods sold D. Advertising expense

B. Interest expense

What is the primary limitation of the balance sheet? A. It does not reflect the net assets of a company B. It does not reflect the current value of the company C. It does not reflect the number of shares of capital stock issued D. It does not reflect the undistributed earnings of a company

B. It does not reflect the current value of the company

Which of the following is true of the balance sheet? A. It includes revenue and expense accounts. B. It identifies a company's assets and liabilities as of a specific date. C. It shows the results of operations for an accounting period. D. It discloses the amount of dividends paid.

B. It identifies a company's assets and liabilities as of a specific date.

Which of the following would be classified as a long-term asset? A. Accounts payable B. Land C. Inventory D. Accounts receivable

B. Land

The price that would be paid today for an asset is the A. Book value B. Market value C. Purchase cost D. Economic value

B. Market value

. Which of the following is an overall measure of the performance of a business entity's activities? A. Revenues B. Net income (or net loss) C. Assets D. Owners' equity

B. Net income (or net loss)

Vital information that CANNOT be captured solely by dollar amounts is reported in a firm's A. Balance sheet B. Notes to financial statements C. Income statement D. Statement of retained earnings

B. Notes to financial statements

Which of the following classifications does NOT appear on the Statement of Cash Flows? A. Investing B. Operating C. Borrowing D. Financing

C. Borrowing

Which of the following are the two economic factors that enable us to trust an independent auditor despite the fact that the auditor was hired by the company being audited? A. Reputation of auditor and government policy B. Risk of lawsuits and integrity of auditor C. Reputation of auditor and risk of lawsuits D. Integrity of auditor and government policy

C. Reputation of auditor and risk of lawsuits

Another name for the income statement is A. Statement of cash flows B. Statement of financial position C. Statement of earnings D. Retained earnings statement

C. Statement of earnings

. The beginning balance of retained earnings will be greater than the ending balance if A. The company has a net income greater than dividends paid B. The company issues additional shares of stock during the period C. The company has a net income less than dividends paid D. The revenues earned for the period are greater than the expenses incurred and dividends paid

C. The company has a net income less than dividends paid

Which of the following is an example of a significant accounting policy that would be explained in the notes to the financial statements? A. The description of all the individual items that comprise notes payable B. The disclosure of quarterly financial information C. The method used to estimate depreciation on a piece of equipment D. The disclosure of the uncertain, potential outcome of a lawsuit

C. The method used to estimate depreciation on a piece of equipment

In completing an audit of a company's financial statements, auditors A. Guarantee that the financial statements are accurate B. Examine every transaction underlying the financial statements C. Assume responsibility for the accuracy of the financial statements D. Provide some assurance that the financial statements are not misleading

D. Provide some assurance that the financial statements are not misleading

Which of the following is NOT one of the four general types of financial statement notes? A. Summary of significant accounting policies B. Additional information about the summary totals found in the financial statements C. Disclosure of important information that is not recognized in the financial statements D. Supplementary information required by the Internal Revenue Service

D. Supplementary information required by the Internal Revenue Service

On April 1, Bonita Corporation's retained earnings account had a balance of $785,000. During April, Bonita had revenues of $135,000 and expenses of $93,000. On April 30, retained earnings had a balance of $811,500. What amount of dividends were paid during April? A. $42,500 B. $30,750 C. $15,500 D. $13,250

C. $15,500

Rolf Corporation reported the following data for the period end: Earnings per share, $6.00; Retained Earnings, $54,000; Revenues, $150,000; Capital Stock, $30,000; Expenses, $129,000; Dividends, $24,000. With this information, determine retained earnings for the prior period. A. $54,000 B. $51,000 C. $57,000 D. $180,000

C. $57,000

Which of the following types of accounts are NOT found on the balance sheet? a. Revenues b. Assets c. Liabilities d. Owners' equity

a. Revenues

Which of the following classifications refers to those activities that are part of the day-to-day business of a company? A. Investing B. Operating C. Borrowing D. Financing

B. Operating

Which of the following decreases owners' equity? A. Additional investments in the company are made by the owners B. Operations generate a loss C. Operations generate a profit that is retained in the company D. None of these decreases owners' equity

B. Operations generate a loss

A business owned by two or more individuals or entities is called a(n) A. Nonprofit organization B. Partnership C. Institution D. Sole proprietorship

B. Partnership

. Which of the following activities would NOT be classified as an investing activity? A. Purchase of land B. Purchase of inventory C. Sale of Land D. Sale of equipment

B. Purchase of inventory

Retained earnings are A. The earnings of a company that have been distributed to the owners. B. The earnings of a company that have been retained in the company. C. The amount of cash that a company has .D. The amount of cash required for company investments.

B. The earnings of a company that have been retained in the company.

During the month, Meridian Company had the following cash transactions: Cash collected from customers $ 12,500 Cash received from a loan 8,000 Cash paid for wages payable (5,750) Cash paid for the purchase of a building (15,000) Cash received for the issuance of new shares of stock 2,600 Cash received from sale of land 6,400 Cash paid for rent (2,500) Cash paid for dividends (1,500) Refer to Exhibit 2-3. Given the above information, compute cash flow from investing activities. A. $4,250 B. ($4,250) C. ($8,600) D. $8,600

C. ($8,600)

An enterprise's obligations to pay cash or other economic resources to others are called a. Liabilities b. Expenses c. Losses d. Assets

d. Assets

Which of the following types of accounts show how resources came into a firm? a. Liabilities b. Owners' equity c. Assets d. Both liabilities and owners' equity

d. Both liabilities and owners' equity

Which of the following is the correct way to date an income statement? A. For the Year Ended December 31, 2012 B. At December 31, 2012 C. As of December 31, 2012 D. December 31, 2012

A. For the Year Ended December 31, 2012

The idea that certain figures on an operating statement help to explain changes in figures on comparative balance sheets is referred to as A. Liquidity B. Double entry C. Articulation D. Classification

C. Articulation

The following data were taken from the records of Mendez Corporation for the year ended December 31, 2013: 01/01/13 12/31/13 Assets $3,750 ? Liabilities 2,860 $3,455 Owners' Equity ? 3,455 Dividends Paid 0 1,230 Given the above information and assuming that no additional stock was added for the year, net income for the year ended December 31, 2013, is A. $1,675 B. $2,120 C. $2,905 D. $3,795

D. $3,795

Eddy Corporation reported the following data for the period: Earnings per share, $3.00; Retained Earnings, $27,000; Revenues, $75,000; Capital Stock, $15,000; Expenses, $64,500. With this information, determine how many shares of stock are outstanding. A. 9,000 B. 5,000 C. 4,000 D. 3,500

D. 3,500

Which of the following is an essential characteristic of the traditional accounting model? A. Going concern assumption B. Cost principle C. Entity concept D. All of these are essential characteristics

D. All of these are essential characteristics

A transaction that causes an increase in an asset may also cause A. A decrease in owners' equity B. An increase in another asset C. A decrease in a liability D. An increase in a liability

D. An increase in a liability

Resource increases from the sale of goods or services are called A. Net income B. Assets C. Gains D. Revenues

D. Revenues

During the month, Meridian Company had the following cash transactions: Cash collected from customers $ 12,500 Cash received from a loan 8,000 Cash paid for wages payable (5,750) Cash paid for the purchase of a building (15,000) Cash received for the issuance of new shares of stock 2,600 Cash received from sale of land 6,400 Cash paid for rent (2,500) Cash paid for dividends (1,500) Refer to Exhibit 2-3. Given the above information, compute cash flow from operating activities. A. $4,250 B. $20,750 C. $15,750 D. $9,250

A. $4,250

Revenues cause A. An increase in net assets B. A decrease in net assets C. No change in net assets D. An increase in liabilities

A. An increase in net assets

The basic accounting equation is A. Assets = Liabilities + Owners' Equity B. Assets + Liabilities = Owners' Equity C. Assets + Owners' Equity = Liabilities D. Liabilities - Owners' Equity = Assets

A. Assets = Liabilities + Owners' Equity

Which of the following includes a company's financial position for both the current year and the preceding year? A. Comparative balance sheet B. Income statement C. Classified balance sheet D. Liquidity balance sheet

A. Comparative balance sheet

Which of the following would be considered a long-term liability? A. Mortgage payable B. Notes payable C. Accounts payable D. Land

A. Mortgage payable

Which of these is an economic asset that is NOT found on the balance sheet? A. Name recognition B. Land C. Inventory D. Goodwill

A. Name recognition

Earnings per share is equal to A. Net income divided by total number of shares of stock outstanding B. Total revenues divided by total number of shares of stock outstanding C. Total revenues divided by the number of shares of stock sold during the year D. Net income divided by the number of shares of stock sold during the year

A. Net income divided by total number of shares of stock outstanding

During 2013, Genoa Corporation had revenues of $198,000 and expenses of $156,000. Dividends of $28,000 were paid during the year and additional stock was issued for $21,400. If total assets and total liabilities on January 1, 2013, were $130,000 and $56,000, respectively, how much is owners' equity on December 31, 2013? A. $137,400 B. $109,400 C. $81,400 D. $65,400

B. $109,400

During the year, Rigby Corporation earned revenues of $114,000 and incurred $98,000 for various operating expenses. There are 1,280 shares of stock outstanding. Earnings per share is A. $12.80 B. $12.50 C. $8.80 D. $8.50

B. $12.50

The following information was taken from the records of McDyce Corporation for the year ended December 31, 2013: Dividends paid $ 6,400 Service revenue 45,250 Accounts payable 69,875 Capital stock 189,375 Total expenses 33,500 Retained earnings (1/1/13) 21,700 The retained earnings balance at December 31, 2013 was A. $216,425 B. $27,050 C. $146,550 D. $33,450

B. $27,050 Hint: Retained earnings + service revenue - Total expenses - Dividends paid.

The following information was taken from the records of Tellers Corporation for the year ended December 31, 2013: Advertising expense $20,625 Income tax expense 13,095 Accounts payable 13,450 Dividends paid 14,125 Retained earnings (12/31/13) 57,860 Consulting fees revenue 93,550 Rent expense 11,728 Supplies expense 16,917 Given the above information, retained earnings on December 31, 2012 was A. $45,110 B. $40,800 C. $31,185 D. $57,860

B. $40,800

The transactions carried out by Blue Waters Corporation during the year caused an increase in total assets of $25,650 and a decrease in total liabilities of $12,250. If no additional stock was issued during the year and dividends of $7,850 were paid, what was the net income for the year? A. $53,600 B. $45,750 C. $29,100 D. $13,400

B. $45,750

Markanich Company purchased land for $90,000 in 2010. In 2013, the land is valued at $115,000. The land would appear on the company's books in 2013 at A. $25,000 B. $90,000 C. $75,000 D. $115,000

B. $90,000

Expenses generally cause A. An increase in net assets B. A decrease in net assets C. No change in net assets D. An increase in liabilities

B. A decrease in net assets

Which of the following distinguishes between current and long-term assets? A. Comparative balance sheet B. Income statement C. Classified balance sheet D. Liquidity balance sheet

C. Classified balance sheet

The idea that transactions are recorded at their exchange prices at the transaction date is referred to as the A. Arm's-length transaction assumption B. Monetary measurement principle C. Cost principle D. Going concern assumption

C. Cost principle

Costs that are incurred during the normal operations of a business to generate revenues are called A. Losses B. Liabilities C. Expenses D. Assets

C. Expenses

The accounting idea that only items quantifiable in terms of U.S. currency are recorded is the A. Monetary measurement concept B. Arm's-length transaction assumption C. Going concern concept D. Double-entry assumption

C. Going concern concept

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or a year, is called a(n) A. Statement of Cash Flows B. Statement of Retained Earnings C. Income Statement D. Balance Sheet

C. Income Statement

Which of the following usually is NOT considered to be an owners' equity account? A. Capital stock B. Retained earnings C. Inventory D. All these are owners' equity accounts

C. Inventory

Which of the following is the reason that the accounting equation is true by definition? A. Liabilities are the source that funds the purchase of assets B. Assets are the source that funds the purchase of liabilities and owner's equity C. Liabilities and owner's equity are the sources that fund the purchase of assets D. None of these are true, the accounting equation is merely a coincidence

C. Liabilities and owner's equity are the sources that fund the purchase of assets

Which of the following is a primary use of cash? A. Borrowing B. Investment by owners C. Operating expenses D. Sale of equipment

C. Operating expenses

Which of the following activities would be classified as a financing activity? A. Selling goods B. Payment of wages C. Repayment of a loan D. Purchase of equipment

C. Repayment of a loan

Which of the following is a revenue generating activity? A. Borrowing money from a bank B. Paying rent C. Selling a product D. Selling capital stock

C. Selling a product

If a company has $528,000 of sales revenue, pays $26,400 in dividends, and has net income of $158,400, how much were the expenses for the year? A. $343,200 B. $422,400 C. $396,000 D. $369,600

D. $369,600

During the month, Meridian Company had the following cash transactions: Cash collected from customers $ 12,500 Cash received from a loan 8,000 Cash paid for wages payable (5,750) Cash paid for the purchase of a building (15,000) Cash received for the issuance of new shares of stock 2,600 Cash received from sale of land 6,400 Cash paid for rent (2,500) Cash paid for dividends (1,500) Refer to Exhibit 2-3. Given the above information, compute cash flow from financing activities. A. $6,900 B. $3,900 C. $12,100 D. $9,100

D. $9,100

An independent audit report is usually issued by A. Management B. A government accountant C. A private detective D. A certified public accountant

D. A certified public accountant

. Which of the following would be classified as a current asset? A. Accounts payable B. Land C. Capital stock D. Accounts receivable

D. Accounts receivable

Suppose you decide to purchase a stereo and an independent store dealer offers to sell you a system that retails for $4,000 for a price of $3,695. After some negotiation, you purchase the system for $3,400. The $3,400 is considered the accounting measurement for the transaction because of the A. Going concern assumption B. Fair value assumption C. Double-entry assumption D. Arm's-length transaction assumption

D. Arm's-length transaction assumption

The idea that an increase or decrease on one side of the accounting equation must be offset exactly by an increase or decrease on the other side of the accounting equation is called A. Additive concept B. Going concern assumption C. Monetary measurement concept D. Double-entry accounting

D. Double-entry accounting

Which of the following classifications refers to those activities whereby cash is obtained or repaid to owners and creditors? A. Investing B. Operating C. Borrowing D. Financing

D. Financing

If a company sells its equipment for more than it is valued on the balance sheet, the difference is called a(n) A. Income B. Revenue C. Profit D. Gain

D. Gain

Which of the following is NOT included in the statement of retained earnings? A. Dividends B. Net income C. Beginning of year retained earnings D. Owner investment

D. Owner investment

Which of the following would be included on an income statement? A. Cash B. Accounts receivable C. Land D. Rent expense

D. Rent expense

A business owned by one person is called a A. Nonprofit organization B. Partnership C. Corporation D. Sole proprietorship

D. Sole proprietorship

Which of the following is an example of a disclosure of information NOT recognized that would be explained in the notes to the financial statements? A. The description of all the individual items that comprise notes payable B. The disclosure of quarterly financial information C. The method used to estimate depreciation on a piece of equipment D. The disclosure of the uncertain, potential outcome of a lawsuit

D. The disclosure of the uncertain, potential outcome of a lawsuit

1. The financial statement that reports resources owned, the obligations to transfer resources to other organizations, and the claims by the entity's owners is known as the A. Income statement B. Statement of retained earnings C. Balance sheet D. Statement of cash flows

c. Balance sheet

Which of the following is generally considered to be a liability? a. Accounts receivable b. Capital stock c. Notes payable d. Retained earnings

c. Notes payable

Another name for the balance sheet is the a. Statement of cash flows b. Statement of earnings c. Statement of financial position d. Retained earnings statement

c. Statement of financial position