ACCT Chapter 1

Which type of business organization provides the least amount of protection for bankers and other creditors of the company?

Corporation

All of the following statements are true except one. Which statement is false? -A proprietorship is a business with several owners. -Bookkeeping is only a part of accounting. -Professional accountants are held to a high standard of ethical conduct. -The organization that formulates generally accepted accounting principles in the United States is the Financial Accounting Standards Board.

A proprietorship is a business with several owners.

Which item(s) are reported on the balance sheet? -Retained earnings -Inventory -Accounts payable

All of them.

The accounting equation can be expressed as

Assets - Liabilities = Owner's Equity (Assets = Liabilities + Owner's Equity)

Parret Company had total assets of $175,000 and total stockholders' equity of $78,000 at the beginning of the year. During the year, assets increased by $42,000 and liabilities increased by $12,000. Stockholders' equity at the end of the year is

Beg. Stockholders' Equity + (Inc. Assets - Inc. Liabilities) =End. Stockholders' Equity $78,000 + ($42,000-$12,000) = $108,000

What is the most accurate statement regarding ethics as applied to decision making in accounting?

Ethics involves making difficult choices under pressure and should be kept in mind in making every decision, including those involving accounting.

Which financial statement covers a period of time? -Income statement -Balance sheet -Statement of cash flows

Income statement Statement of cash flows

How would net income be most likely to affect the accounting equation?

Increase assets and increase stockholder's equity

During February, assets increased by $84,000 and liabilities increased by $26,000. Stockholders' equity must have

Increase in Assets - Increase in Liabilities = increase (decrease) in Stockholders' equity 84,000 - 26,000 = 58,000 increased by $58,000.

The primary objective of financial reporting is to provide information

useful for making investment and credit decisions .

During the year, Romero Company's stockholders' equity increased from $98,000 to $116,000. Romero Company's earned net income of $25,000. Assume no changes in the capital stock accounts. How much in dividends did Romero declare during the year?

Net Income - (Stockholders' Equity end. - Stockholders' Equity beg.) = Dividends $25,000 - ($116,000 - $98,000) =$7,000 $7,000 in diviends

Williams Instruments had retained earnings of $350,000 at December 31, 2013. Net income for 2014 totaled $183,750, and dividends declared for 2014 were $78,750. How much retained earnings should Williams report at December 31, 2014?

Retained earnings Beginning balance + Net income - Dividends = Retained earnings Ending balance 350,000 + $183,750 - $78,750 = $455,000

During the year, Aynsley, Inc., has $280,000 in revenues, $145,000 in expenses, and $6,000 in dividend declarations and payments. Stockholders' equity changed by

Revenues - Expenses - Dividends = $280,000 - $145,000 - $6,000 = $129,000 Stockholder equity increased by $129,000

Aynsley, Inc., in question 7 had

Revenues - Expenses = Net Income $280,000 - $145,000 = $135,000 net income of 135,000

Morton Corporation began the year with cash of $140,000 and land that cost $24,800. During the year Morton earned service revenue of $285,000 and had the following expenses: salaries, $209,000; rent, $86,00; and utilities, $27,000. At year-end, Morton's cash balance was down to $79,000. How much net income (or net loss) did Morton experience for the year?

Salaries + Rent + Utilities = Total Expenses $209,000 +$ 86,000 + $27,000 = $322,000 Revenues - Expenses = Net income (net loss) $285,000 - $322,000 = ($37,000)

All of the following are current assets except -Cash. -Inventory . -Sales Revenue. -Accounts Receivable.

Sales Revenue.

Net income appears on which financial statements?

Statement of retained earnings Income Statement

What is a true statement about International Financial Reporting?

They are converging gradually with U.S. standards.

Mighty Corporation holds cash of $8,000 and owes $31,000 on accounts payable. Mighty has accounts receivable o $47,000, inventory of $28,000, and land that cost $40,000. How much are Mighty's total assets and liabilities?

Total Assets = cash+accounts receivable + inventory +land $123,000 =$8,000 + $47,000 + $28,000 + 40,000 Total Liabilities = $31,000

The nature of an asset is best described as

an economic resource that's expected to benefit future operations

The amount a company expects to collect from costumers appears on the

balance sheet in the current assets section.

The valuation of assets on the balance sheet is generally based on

historical cost

Assets are usually reported at their

historical cost .

The financial statement that reports revenues and expenses is called the

income statement .

Revenues are

increases in retained earnings resulting from selling products or performing services .

Cash paid to purchase a building appears on the statement of cash flows among the

investing activities

Another name for the balance sheet is the

statement of financial position.