Accounting Exam 1
McKinney Corporation had beginning retained earnings of 2,292,000 and ending retained earnings of 2,499,000. During the year they issued common stock totaling 141,000. what was their net income for the year.
207,000
Which of the following would not be classified as a long-term liability
Current maturities of long-term debt
Beginning Retained Earnings+Net Income-Dividends= _______
Ending Retained Earnings
Which of the following activities involves collecting the necessary funds to support the business
Financing
Medina company purchased office supplies costing 5,000 and debited office supplies (an asset account reflecting supplies on hand) for the full amount. Supplies on hand at the end of the accounting period were 1,300. The appropriate adjusting journal entry to be made would be
Debit office supplies expense 3,700; credit office supplies 3,700
Which of the following is NOT a satisfactory statement of the accounting equation
assets=stockholders equity-liabilities
When a company receives a utility bill but will not pay it right away it should
debit utilities expense and credit. Accounts payable
When a company has performed a service but not yet received payment, it
debits accounts receivable and credit revenue from services (service revenue)
DEA
debits are expenses, assets, and dividends
measures the percentage of total assets that creditors provide
debts to assets ratio
Chuck Norris MD reports a net loss of $22,000. This will ______
decrease retained earnings
Dividends paid
decrease retained earnings
The payment of a liability
decreases assets and liabilities
Distribution of cash or other assets from a corporation to its stockholders
dividends
A measure of profitability is the
earnings per share
A measure of the net income earned on each share of common stock
earnings per share
A current asset is
expected to be converted to cash or used in the business within a relatively short period of time.
Long-term investments appear in the property, plant, and equipment section of the balance sheet.
false
Issuing share of stock in exchange for cash is an example of a
financing activity
Which of the following represents the correct order of the three business activities for a new company
financing, investing, operating.
If the retained earnings account decreases from the beginning of the year to the end of the year, then _________
net. income is less than dividends
Receiving payment of a portion of Accounts Receivable will __________
not affect total assets
Buying and selling products are examples of
operating activities
Measures of the income or operating success of an enterprise for a given period of time
profitability
The financial statement that summarizes the changes in retained earnings for a specific period of time is the
retained earnings statement
adjusted trial balance
to ensure that the period ending financial statements will be accurate and in balance. And is used to prepare closing entries.
What is the role of the FASB
to establish accounting standards in the US
Sarbanes-Oxley Act
to reduce unethical corporate behavior and decrease the likelihood of future corporate scandals. As a result of SOX, top management must now certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased both the independence of the outside auditors who review the accuracy of corporate financial statements and the oversight role of boards of directors.
The debt to total assets ratio is computed by dividing
total liabilities divided by total assets
debts to assets ratio
total liabilities divided by total assets
An accounting record that includes a list of accounts and their balances at a given time is called a
trial balance
A debit to an asset account indicates a
increase in the asset
The purchase of an asset on credit ______________
increases assets and liabilities
A revenue generally ___________
increases assets and stockholders equity
A revenue account
is increased by credits
A business organized as a corporation
is owned by its stockholders
The right side of an account
is the credit side
To be relevant what characteristic must accounting information exhibit
it must be capable of making a difference in decision
An advantage of the corporate form of business is that _________
its ownership is easily transferable via the sale of shares of stock.
Payments received in advance of services provided are
liability
the ability of a borrower to pay obligations when the become due
liquidity
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 $800. The cash account has a ____ ____ balance
$400 debit balance
steps in accounting cycle
1. Analyze business transactions 2. debits and credits 3. Journal Entries 4. Ledger and Posting 5. Trial balance
Which accounts normally have debit balances?
Assets, expenses, and dividends
Which of the following items has no effect on retained earnings?
Land purchase
Which of the following is. a measure of liquidity
Working capital
A balance sheet shows
assets, liabilities, and stockholders equity
Revenues owned by a business are referred to as
assets
Equipment costing $20,000 machine is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a________
credit to Notes Payable
The current ratio is________
current assets divided by current liabilities.
Measures the ability of an enterprise to survive over a long period of time
solvency
The periodicity assumption
the life of a business can be divided into artificial times periods for which useful reports can be prepared
Working capital formula
working capital=current assets-current liabilities
