Accounting For Managers Chapters 1-4 Multiple Choice
The dual effects concept can best be described as follows:
When one records a transaction in the accounting system, at least two effects on the basic accounting equation will result
Which of the following is not a financing activity on the statement of cash flows?
When the company lends money
Which of the following is not a typical note in an annual report?
a note describing the auditor's opinion of the management's past and future financial planning for the business the following are typical notes: a note providing more detail about specific items shown in the financial statements a note describing the accounting rules applied in the financial statements a note describing financial disclosures about items not appearing in the financial statements
The cash t-account has a beginning balance of $21,000. During the year, $100,000 was debited and $110,000 was credited to the account. What is the ending balance of Cash?
$11,000 debit balance
Total liabilities on a balance sheet at the end of the year are $150,000, retained earnings at the end of the year is $80,000, net income for the year is $60,000, common stock is $40,000, and additional paid in capital is $20,000. What amount of total assets would be reported on the balance sheet at the end of the year?
$290,000
9. Cash payments for salaries are reported in what section of the Statement of Cash Flows? a.Operating. b.Investing. c.Financing. d.None of the above.
A
Assume a company receives a bill for 10,000 for advertising done during the current year. IF this bill is not yet recorded at the end of the yearn what will the adjusting journal entry include? a. Debit to advertising expense of 10,000 b. Credit to advertising expense of 10,000 c. Debit to accrued liabilities of 10,000 d. Need more info
A
Which account is least likely to appear in an adjusting journal entry? a. cash b. interest receivable c. Income tax Expense d. Salaries Payable
A
Which of the following is not one of the four criteria that normally must be met for revenue to be recognized according to the revenue principle for accrual basis accounting? a.Cash has been collected. b.Services have been performed. c.The price is determinable. d.Evidence of an arrangement exists.
A
company A has owned a building for several years. Which of the following statements regarding depreciation is false from an accounting perspective? a. Depreciation Expense for the year will equal Accumulated depreciation b. Depreciation is an estimated expense to be recorded each period during the building's life c. As depreciation is recorded, stockholders' equity is reduced d. AS depreciation is recorde, total assets are reduced
A
Which of the following is not an asset?
Additional Paid-In Capital. The following are assets: investments, prepaid expense, and land
Which of the following is not one of the four basic financial statements?
Audit Report. Balance sheet, income statement, statement of cash flows, statement of stockholders' equity are the four basic financial statements.
The matching principle controls a.Where on the income statement expenses should be presented. b.When costs are recognized as expenses on the income statement. c.The ordering of current assets and current liabilities on the balance sheet. d.How costs are allocated between Cost of Sales (sometimes called Cost of Goods Sold) and general and administrative expenses.
B
When expenses exceed revenues in a given period, a. Retained earnings are not impacted. b.Retained earnings are decreased. c.Retained earnings are increased. d.One cannot determine the impact on retained earnings without additional information
B
Which of the following accounts would not appear in a closing journal entry? a. Interest Revenue b. Accumulated Depreciation c. Retained Earnings d. Salary Expense
B
Asume the balance in Prepaid Insurance is 2,500 but it should be 1,500. The adjusting journal entry should include which of the following? a. Debit to Prepaid Insurance for 1,000 b. Credit to insurance Expense for 1,000 c. Debit to insurance Expense for 1,000 d. Debit to insurance Expense for 1,500
C
On december 31, an adjustment is made to reduce unearned revenue and repot (earned) revenue. How many accounts will be included in this adjusting journal entry? a. none b. one c. two d. three
C
Which of the following is not a specific account in a company's chart of accounts? a.Gains b.Revenue c.Net Income d.Unearned Revenue
C
Which of the following trial balances is used as a source for preparing the income statement? a. Unadjusted trial balance b. Pre-adjusted trial balance c. Adjusted trial balance d. Post-closing trial balance
C
which of the following regarding US GAAP is true?
Changes in GAAP can affect the interests of managers and stockholders.
An Adjusting journal entry to recognize accrued salaries payable would cause which of the following? a. A decrease in assets and stockholder's equity b. A decrease in assets and liabilities c. An increase in expenses, liabilities, and stockholders' equity d. An increase in expenses and liabilities and a decrease in stockholders' equity
D
An adjusted trial balance a. Shows the ending balances in a debit and credit format before posting the adjusting journal entries b. Is prepared after long entries have been posted c. Is a tool used by financial analysts to review the performance of publicly traded companies d. Shows the ending balances resulting from the adjusting journal entires in a debit and credit format
D
When a convent promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is recorded? a. Accrued liability b. Accounts receivable c. Prepaid Expense d. Unearned Revenue
D
Which of the following is true?
FASB created GAAP
The T-account is a tool commonly used for analyzing which of the following?
Increases and decreases to a single account in the accounting system, debits and credits to a single account in the accounting system, changes in specific account balances over a time period.
If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely to understate which of the following on its balance sheet?
Liabilities
Which of the following statements are true regarding the balance sheet?
One cannot determine the true fair market value of a company by reviewing its balance sheet. Certain internally generated assets, such as a trademark, are not reported on a company's balance sheet. A balance sheet shows only the ending balances, in a summarized format, of all balance sheet accounts in the accounting system as of a particular date.
Which of the following regarding retained earnings is false?
Retained earning is an asset on the balance sheet. The following are true: 1. Retained earnings is increased by net income and decreased by net loss. 2. Retained earnings is a component of stockholder's equity on the balance sheet 3. Retained earnings represents earnings not distributed to stockholders in the form of dividends
which of the following is not one of the four items required to be shown in the heading of a financial statement?
The financial statement preparer's name The following are required: Title of the Financial Statement, Unit of measure in the financial statement, and the name of the business entity
Which of the following is true about the statement of operations?
The income statement reports revenues, expenses, and liabilities.
At the end of the recent year, The Gap, Inc., reported total assets of $7,422 million, current assets of $4,309 million, total liabilities of $4,667, current liabilities of $2,128 million, and stockholders' equity of $2,755 million. What is its current ratio and what does this suggest about the company?
The ratio of 2.02 suggests that the Gap has sufficient liquidity.
As stated in the audit report, or Report of Independent Accountants, the primary responsibility for a company's financial statements lies with
company management
which of the following describes how assets are listed on the balance sheet?
from most liquid to least liquid
Which of the following is false regarding the balance sheet?
the balance sheet reports the changes in specific account balances over a period of time. The following are true: 1. The accounts shown on the balance sheet represent the basic accounting equation for a particular business entity 2. The retained earnings balance shown on the balance sheet must agree with the ending retained earnings balance shown on the statement of stockholders' equity. 3. The balance sheet reports the amounts of assets, liabilities, and stockholders' equity of an accounting entity at a point in time
which of the following statements regarding the statement of cash flows is true?
the statement of cash flows separates cash inflows from cash outflows into three major categories: operating, financing, and investing. the ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet for the same fiscal period
this period a company collects $100 cash on an account receivable from a customer for a sale last period. How would the receipt of cash impact the following two financial statements this period?
there would be no impact on the inflow from operations
