Chapter 1 Financial Accounting practice test

Blossom Company issued stock to Ed Blossom in exchange for his investment of $74,400 cash in the business. The company recorded revenues of $555,100, expenses of 430,000, and had paid dividends of $304,000. What was Blossom's net income for the year?

$125,100

Waterway Company began the year with stockholders' equity of $307,000. During the year, Waterway issued additional shares of stock in exchange for cash of $423,00, recorded expenses of $128,000, and paid dividends of $8,200. If Waterway's ending stockholder's equity was $101,000, what was the company's revenue for the year?

$164,200

Crane's Company Repair Shop started the year with total assets of $303,000 and total liabilities of $209,000. During the year, the business recorded $507,000 in computer repair revenues, $306,000 in expenses, and Crane paid dividends of $49,600. The net income reported by Crane's Computer Repair Shop for the year was

$201,000

If total assets equal $344100 and total stockholders' equity equal $140,000, then total liabilities must equal

$204,100

Concord Company compiled the following financial information as of December 31, 2022: Revenues: $336000 Retained earnings (1/1/22) 62000 Equipment: 81,000 Expenses: 251800 Cash: 90200 Dividends: 20200 Supplies: 9000 Accounts payable: 40500 Accounts receivable: 70500 Common Stock: 79100 Concord's stockholders' equity on December 31, 2022 is

$205,100

Blossom's Computer Repair Shop started the year with total assets of $314,000 and total liabilities of $200,000. During the year, the business recorded $523,000 in computer repair revenues, $316,000 in expenses, and Blossom paid dividends of $49,200. Stockholders' equity at the end of the year was

$271,800

Simon Company had the following summarized operations for the month of May: Revenues earned: for cash, $32,000; and on account, $18,000; and Expenses incurred: for cash, $5,000; and on account, $10,000. In addition, the company purchased Equipment for $8,000 on account and Supplies for $5,000 for cash. The net income for the month of May is

$35,000

At October 1, Concord Enterprises reported stockholders' equity of $69,100. During October, no stock was issued and the company earned net income of $18,900. If stockholders' equity at October 31 totals $78,800, what amount of dividends were paid during the month?

$9,200

Waterway Eyes Downtown Diner received a bill of $620 from the Flounder Wine Advertising Agency. The owner, A.A. Bondy, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is

An increase in Accounts Payable and an increase in Retained Earnings

If the transaction causes an asset account to decrease, which of the following related effects may occur?

An increase of equal amount in another asset account.

Liabilities

Are existing debts and obligations

The accounting equation for Oriole Company is as follows: Assets Liabilities Stockholders' equity $118,400 = $59,200 + $59,200 If Oriole purchases office equipment on account for $25,300, the accounting equation will change to

Assets Liabilities Stockholders' equity $143,700 = $84,500 + $59,200

If total liabilities increase by $9,500 then

Assets must have increased by $9,500, or stockholders' equity must have decreased by $9,500

The financial statement that reports assets, liabilities, and stockholders' equity is the

Balance sheet

The financial statement that summarizes the financial position of a company is the

Balance sheet

Concord Company buys a $20300 van on credit. The transaction will affect the

Balance sheet only

The ending retained earnings amount is shown on

Both the balance sheet and retained earnings statement

The ending retained earnings amount is shown on the

Both the balance sheet and retained earnings statement

Crane company purchased land in 2013 for $292,000. In 2022, it purchased a nearly identical parcel of land for $454,000. In its 2022 balance sheet, Crane valued these two parcels of land at a combined value of $931,000. By reporting the land in this manner, Crane Co. has violated the

Historical cost principle

The starting point of the accounting process is

Identifying economic events

Collection of $3,300 Accounts Receivable

Increases an asset $3300; decreases an asset $3300

On January 1, 2022, Vaughn Company reported stockholders' equity of $704,300. During the year, the company paid dividends of $30,500. At December 31, 2022, the amount of stockholders' equity was $825,500. What amount of net income or net loss would the company report for 2022?

Net income of $151,700

Swifty Company purchases $1,350 of equipment from Pina Inc. for cash. The effects on the components of the basic accounting equation of Swifty Company is

No change in total assets

The cost of an asset and it's fair value are

The same on the date of acquisition

A dividend is

a distribution of the company's earnings to its stockholders

Sources of increases to stockholders equity are

additional investments by owners

Garth Dickinson, owner of Garth's Fine Wines, also owns a personal residence that costs $478000. The market value of his residence is $621000. During preparation of the financial statements for Garth's Fine Wines, the accounting concept most relevant to the presentation of Garth's home is convergence. the monetary unit assumption. the economic entity assumption. the fair value principle.

ans: the economic entity assumption.

A balance sheet shows

assets, liabilities, stockholders equity

Which of the following financial statements is prepared as of a specific date?

balance sheet

When assets are distributed to the owners of a corporation, these distributions are termed

dividends

Stockholders' equity is decreased by

expenses

The common characteristic possessed by all assets is

future economic benefit

Accounting consists of three basic activities which are related to economic events of an organization. These include:

identifying, recording, communicating

Revenues would not result from

issuance of common stock

If the retained earnings account increases from the beginning of the year to the end of the year, then

net income is greater than dividends

Stockholders' equity can be described as

ownership claim on total assets

The three types of business entities are

proprietorships, partnerships, and corporations

Retained earnings at the end of the period is equal to

retained earnings at the beginning of the period plus net income minus dividends

Stockholders' equity is decreased by all of the following except

sales of stock

If services are rendered on account, then

stockholders' equity will increase