ACCT207 Practice Exam

At December 31, 2014 Lowery Company had retained earnings of $2,384,000. During 2014 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2014 was $402,000. The retained earnings balance at the beginning of 2014 was

A) $2,752,000. B) $2,016,000. C) $2,114,000. D) $2,654,000.

The TNT Company has five plants nationwide that cost $300 million. The current fair value of the plants is $500 million. The plants will be reported as assets at

A) $200 million. B) $800 million. C) $300 million. D) $500 million.

Based on the following data, what is the amount of current assets? Accounts payable $62,000 Accounts receivable 100,000 Cash 50,000 Intangible assets 100,000 Inventory 138,000 Long-term investments 160,000 Long-term liabilities 200,000 Short-term investments 80,000 Notes payable 56,000 Property, plant, and equipment 1,340,000 Prepaid insurance 2,000

A) $212,000 B) $370,000 C) $232,000 D) $230,000

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

A) net income is less than dividends. B) there was a net income and no dividends. C) additional investments are less than net losses. D) net income is greater than dividends.

The relationship between current assets and current liabilities is important in evaluating a company's

A) profitability. B) liquidity. C) market value. D) solvency.

Retained earnings at the end of the period is equal to

A) retained earnings at the beginning of the period plus net income minus liabilities. B) retained earnings at the beginning of the period plus net income minus dividends. C) net income. D) assets plus liabilities.

Liabilities are generally classified on a balance sheet as

A) small liabilities and large liabilities. B) present liabilities and future liabilities. C) tangible liabilities and intangible liabilities. D) current liabilities and long-term liabilities.

The balance sheet

A) summarizes the changes in retained earnings for a specific period of time. B) reports the changes in assets, liabilities, and stockholders' equity over a period of time. C) reports the assets, liabilities, and stockholders' equity at a specific date. D) presents the revenues and expenses for a specific period of time.

Which of the following is not a liability?

A) unearned service revenue B) accounts payable C) accounts receivable D) intrest payable

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Adjustments for accrued revenues:

A) increase assets and increase revenues. B) increase assets and increase liabilities. C) decrease assets and increase revenues. D) decrease liabilities and increase revenues.

During January 2014, its first month of operation, Osborn Enterprises earned net income of $1,700 and paid dividends to the owners of $500. At January 31, the balance in Retained Earnings will be

A) $0. B) $1,700 credit. C) $1,200 credit. D) $500 debit.

If total liabilities decreased by $75,000 and stockholders' equity increased by $25,000 during a period of time, then total assets must change by what amount and direction during that same period?

A) $100,000 increase B) $50,000 decrease C) $50,000 increase D) $75,000 decrease

Ashley's Accessory Shop started the year with total assets of $140,000 and total liabilities of $80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and dividends of $40,000. Stockholders' equity at the end of the year was

A) $120,000. B) $110,000. C) $130,000. D) $70,000.

20. Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Carne Auto Supplies Balance Sheet December 31, 2014 Cash $ 35,000 Accounts payable $ 65,000 Accounts receivable 50,000 Salaries and wages payable 10,000 Inventory 70,000 Mortgage payable 90,000 Prepaid insurance 40,000 Total liabilities $165,000 Stock investment 90,000 Land 95,000 Buildings $115,000 Common stock $120,000 Less: Accumulated Retained earnings 250,000 depreciation (30,000) 85,000 Total stockholders' equity $370,000 Trademarks 70,000 Total liabilities and Total assets $535,000 stockholders' equity $535,000

A) $270,000 B) $250,000 C) $180,000 D) $210,000

Henson Company began the year with retained earnings of $330,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year?

A) $490,000 B) $410,000 C) $790,000 D) $450,000

Elston Company compiled the following financial information as of December 31, 2014: Service revenue $700,000 Common stock 150,000 Equipment 200,000 Operating expenses 625,000 Cash 175,000 Dividends 50,000 Supplies 25,000 Accounts payable 100,000 Accounts receivable 75,000 Retained earnings, 1/1/14 375,000 Elston's stockholders' equity on December 31, 2014 is

A) $525,000. B) $550,000. C) $400,000. D) $600,000.

Use the following data to determine the total dollar amount of assets to be classified as current assets. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000 depreciation (40,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total liabilities and Total assets $1,060,000 stockholders' equity $1,060,000

A) $570,000 B) $400,000 C) $340,000 D) $290,000

Ashley's Accessory Shop started the year with total assets of $140,000 and total liabilities of $80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and dividends of $40,000. The net income reported by Ashley's Accessory Shop for the year was

A) $80,000. B) $100,000. C) $130,000. D) $110,000.

Benedict Company compiled the following financial information as of December 31, 2014: Service revenue $560,000 Common stock 120,000 Equipment 160,000 Operating expenses 500,000 Cash 140,000 Dividends 40,000 Supplies 20,000 Accounts payable 80,000 Accounts receivable 60,000 Retained earnings, 1/1/14 300,000 Benedict's assets on December 31, 2014 are

A) $940,000. B) $680,000. C) $320,000. D) $380,000.

Which of the following correctly identifies normal balances of accounts?

A) Assets Debit Liabilities Credit Common Stock Credit Revenues Debit Expenses Credit B) Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Credit C) Assets Credit Liabilities Debit Common Stock Debit Revenues Credit Expenses Debit D) Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit

Which financial statement is prepared first?

A) Balance sheet B) Income statement C) Retained earnings statement D) Statement of cash flows

What is the order in which assets are generally listed on a classified balance sheet?

A) Current and long-term B) Current; property, plant and equipment; long-term investments; intangibles C) Current; property, plant and equipment; intangibles; long-term investments D) Current; long-term investments; property, plant and equipment, intangibles

Mary Richardo has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Mary make?

A) Debit Cash and credit Unearned Service Revenue B) Debit Accounts Receivable and credit Unearned Service Revenue C) Debit Accounts Receivable and credit Service Revenue D) Debit Unearned Service Revenue and credit Service Revenue

In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement?

A) I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets. B) You are right. Revenues and expenses are shown on the income statement. Dividends are a cost of generating revenues and that makes them an expense. Why else would a corporation pay dividends? C) Dividends represent a portion of corporate profits that are paid to the shareholders. They belong on the retained earnings statement. D) Dividends are deducted from retained earnings on the balance sheet.

Jill Clown earned a salary of $500 for the last week of October. She will be paid on November 1. The adjusting entry for Jill's employer October 31 is

A) No entry is required. B) Salaries and Wages Expense 500 Salaries and Wages Payable 500 C) Salaries and Wages Expense 500 Cash 500 D) Salaries and Wages Payable 500 Cash 500

Ending retianed earnings for a period is equal to beginning

A) Retained Earnings + Net income + Dividends B) Retained Earnings - Net income - Dividends C) Retained Earnings + Net income - Dividends D) Retained Earnings - Net income + Dividends

Equipment is classified on the balance sheet as

A) a current asset. B) property, plant, and equipment. C) an intangible asset. D) a long-term investment.

Which of the following statements is true?

A) amounts received from issuing stock are revenues B) amounts paid out as dividends are not expenses C) amounts paid out as dividends are reported on the income statement D) amounts received from issued stock are reported on the income statement