ACCT Exam 1
Jo-Bob Company began the year by issuing $80,000 of common stock for cash. The company recorded revenues of $740,000, expenses of $640,000, and paid dividends of $40,000. What was Jo-Bob's net income for the year?
$100,000
AR
ASSET
CASH
ASSET
EQUIPMENT
ASSET
SUPPLIES
ASSET
Which one of the following is not a justification for adjusting entries?
Adjusting entries are necessary to bring the general ledger accounts in line with the budget.
Applies the same accounting principles over time.
Consistency
What organization issues U.S. accounting standards?
Financial Accounting Standards Board
Which of the following activities involves obtaining the necessary funds to support the business?
Financing
Confirms or corrects prior decisions.
Going concern
AP
LIABILITY
NOTES PAYABLE
LIABILITY
Providing information that would make a difference in a business decision.
Relevance
Provide information that accurately depicts what really happened
Reliability
COMMON STOCK
SE
RETAINED EARNINGS
SE
Providing information that can be reproduced by independent observers.
Verifiable
If total liabilities increased by $3,400, then
assets must have increased by $3,400, or stockholders' equity must have decreased by $3,400.
Buying and selling products are examples of
operating activities.
Equipment is classified on the balance sheet as
property, plant, and equipment.
The two fundamental qualities of useful information are
relevance and reliability.
A small neighborhood barber shop that is operated by its owner would likely be organized as a
sole proprietorship.
The historical cost principle requires that when assets are acquired, they are recorded at
the amount paid to acquire them.
The periodicity assumption states that
the economic life of a business can be divided into artificial time periods.
Which of the following is a measure of liquidity?
working capital
The adjusting entry to an unearned revenue account will
decrease liabilities and increase revenues.
On a classified balance sheet, companies usually list current assets
in the order in which they are expected to be converted into cash.
A gift shop signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $50,000 with annual interest of 6%. What is the adjustment to be made on December 31 for the interest expense accrued to that date, if no adjustments have been made previously for the interest?
increase interest expense $500 decrease cash $500
Buying assets needed to operate a business is an example of a(n)
investing activity.
Which financial statement would best indicate whether the company relies on debt or stockholders' equity to finance its assets?
Balance sheet
Which of the following is not a current liability?
Bonds Payable
