A100 Full Tophat
How much did Ridgewood pay for insurance during 2026? A. $13,500 B. $14,500 C. $14,000 D. $13,000
A. $13,500
Which of the following accurately describes retained earnings? A. All the net incomes of the company minus any net losses or dividends paid. B. A fund of cash that has been set aside until the company pays dividends to stockholders. C. This account plus the company's total liabilities must equal the company's total assets. D. The cash remaining from the company's net income for the year minus any dividends the company paid during the year.
A. All the net incomes of the company minus any net losses or dividends paid.
Which of the following is correctly stated on the financial statements? A. Amounts paid for inventory are an operating cash outflow. B. The amount paid for interest is a financing cash outflow. C. The amount of the loss on the sale of land is an investing cash inflow. D. Collection of an accounts receivable is an investing cash inflow. E. Payable of an accouns payable is a financing cash outflow.
A. Amounts paid for inventory are an operating cash outflow.
Which of the following is correctly stated on the financial statements? A. Amounts paid for inventory are an operating cash outflow. B. The amount paid for interest is a financing cash outflow. C. The amount of the loss on the sale of land is an investing cash inflow. D. Collection of an accounts receivable is an investing cash inflow. E. Payable of an accounts payable is a financing cash outflow.
A. Amounts paid for inventory are an operating cash outflow.
Your bookkeeper forgot to make the adjustment for depreciation expense at the end of the period. What impact does that error have on your financial statements? A. Assets are overstated, and expenses are understated. B. Liabilities are overstated, and expenses are understated. C. Both assets and net income are understated. D. Both assets and expenses are overstated.
A. Assets are overstated, and expenses are understated.
Which one of the following is NOT one of the Big Four accounting firms? A. BMO B. PwC C. KPMG D. Deloitte E. EY
A. BMO
At the end of this year, Bartlett Inc. owes its employees $2,200. Bartlett will pay them on Jan. 2nd of the next year. Which of the following is true? A. Bartlett will show the $2,200 as an expense of this year, even though the payment has not yet been made. B. Bartlett will show the $2,200 as a liability at the end of this year, but not an expense for this year. The $2,200 will be an expense when the payment is made next year. C. Bartlett will make no entry for the $2,200 this year. D. Bartlett must pay the $2,200 before the end of this year.
A. Bartlett will show the $2,200 as an expense of this year, even though the payment has not yet been made.
If the balance in unearned revenue increased by $3,000 from the beginning of the year to the end of the year, and the balance in accounts receivable stayed the same from the beginning to the end of the year, which of the following must be true? A. Cash received during the year was $3,000 more than revenue reported. B. Revenue in the current year was $3,000 less than in prior years. C. The receipt of the $3,000 will be recorded on the Statement of Cash Flows in the period it is earned. D. On the Income Statement, revenue in the current year was increased by $3,000 as a result of unearned revenue.
A. Cash received during the year was $3,000 more than revenue reported.
Unearned revenue is A. Cash that has been received from customers but not yet earned. B. Revenue that has not yet been received. C. Revenue that has been earned but not yet received. D. A concept used only in cash-basis accounting. E. Cash that has not been either earned or received.
A. Cash that has been received from customers but not yet earned.
Which of the following is true? A. Depreciation expense on the Income Statement is never for more than one year. B. Depreciation expense always equals accumulated depreciation. C. Accumulated depreciation is a liability account on the company's Balance Sheet. D. Depreciation expense is the amount of cash paid for depreciation during the year.
A. Depreciation expense on the Income Statement is never for more than one year.
Which of the following is true of the income statement? A. It covers a period of time. B. The ending balances always roll over to become the beginning balances of the next period. C. It is broken down into three categories: assets, liabilities, and stockholders equity D. None of the above are true.
A. It covers a period of time.
When a company make an end-of-the-period adjustment for depreciation, A. It decreases retained earnings. B. There is no impact on total assets. C. The Balance Sheet stays in balance because total assets and total liabilities are decreased by the same amount. D. The cash paid for depreciation reduces total assets.
A. It decreases retained earnings.
Which of the following is true of the Statement of Cash Flows? A. It is only analyzing the cash account. B. It must be prepared using accrual accounting. C. The entries on this statement are always the same as the entries on the Income Statement. D. The ending balance on this statement must equal total assets for the statement to be in balance.
A. It is only analyzing the cash account.
Which of the following is true of the IASB? A. It is responsible for IFRS. B. It is the new accounting standard established by Sarbanes-Oxley. C. This is a company's internal accounting standards book. D. It is the rule-making body of the SEC. E. It is responsible for the accounting rules used in the U.S.
A. It is responsible for IFRS.
Which of the following is true of unearned revenue? A. It is shown on the statement of cash flows when it is received. B. It increased assets and revenue when received. C. It increases liabilities and revenue when received. D. It increases assets and revenue when earned. E. It increases assets and decreases liabilities when earned.
A. It is shown on the statement of cash flows when it is received.
Which of the following is true? A. Making a sale on account increases assets. B. Collecting an accounts receivable increases total assets. C. Revenue is not recorded until the cash is received. D. Accounts receivable is the amount of revenue that the cash has already been received.
A. Making a sale on account increases assets.
Which of the following statements are true? A. Retained earnings is a Balance Sheet account. B. If no dividends were paid, net income will always equal ending retained earnings. C. The Balance Sheet is in balance when net income equals ending retained earnings. D. The Balance Sheet covers a period of time, while the Income Statement is at one point in time.
A. Retained earnings is a Balance Sheet account.
Which of the following is true regarding accounts receivable? A. Total assets are not changed when cash is collected. B. Accounts receivable is increased when cash is collected. C. Accounts receivable is decreased and revenue is increased when a sale is made. D. Both assets and liabilities are increased when a sale is made on account.
A. Total assets are not changed when cash is collected.
When a company make an end-of-the-period adjustment for depreciation, A. it decreases retained earnings. B. there is no impact on total assets. C. the Balance Sheet stays in balance because total assets and total liabilities are decreased by the same amount. D. the cash paid for depreciation reduces total assets.
A. it decreases retained earnings.
Bentley Company is considering investing in equipment which costs $200,000. Bentley believes the equipment will earn $8,000 net income before taxes per year for 40 years and, at the end of that time, it will be worthless. Bentley is in the 21% tax bracket. What is Bentley's expected after-tax cash flow from this equipment? A. $6,320 B. $11,320 C. $2,370 D. $8,950
B. $11,320
Which of the following statements is true regarding stockholders? A. They are creditors of the company. B. They are owners of the company. C. They expect to receive interest on their investment. D. They expect to receive their investment back at a specified point in time.
B. They are owners of the company.
During the month, Pinto Company earned $12,000 in revenue, but only $10,000 of that had been received by the end of the month. Pinto's only expense was advertising of $3,000, but the company will pay for that next month. How much did Pinto report in net income for the month? A. $10,000 B. $9,000 C. $7,000 D. $12,000
B. $9,000
Which of the following is true of stockholders' equity? A. This is a category on the Income Statement. B. All corporations must have both the common stock account and the retained earnings account. C. The only way it can be increased is by the company issuing more common stock. D. Assets plus liabilities will always equal stockholders' equity.
B. All corporations must have both the common stock account and the retained earnings account.
Which of the following is true? A. Assets + liabilities = stockholders' equity B. Assets - liabilities = stockholders' equity C. Assets = stockholders' equity - liabilities D. Assets = liabilities + retained earnings E. Assets - retained earnings = liabilities
B. Assets - liabilities = stockholders' equity
The bookkeeper at your company mistakenly recorded six months of prepaid insurance as an expense in the first month. What impact does that have on the first month's financial statements? A. Assets are overstated, and expenses are understated. B. Both assets and net income are understated. C. Liabilities are understated, and expenses are overstated. D. Both assets and expenses are understated.
B. Both assets and net income are understated.
Which of the following is correctly classified? A. Borrowing money from the bank is an operating cash flow. B. Buying a building is an investing cash flow. C. Selling stock to stockholders is an investing cash flow. D. Paying for operations of the business is an investing cash flow.
B. Buying a building is an investing cash flow.
Which of the following is true of accounts receivable? A. Accounts receivable is increased when the company receives payment from a customer. B. Collection of an accounts receivable neither increases nor decreases total assets. C. The balance in the account will always equal the total amount of sales made during the period. D. The sale is recorded as revenue only when the accounts receivable is collected.
B. Collection of an accounts receivable neither increases nor decreases total assets.
Morgan Company paid $400 for advertising brochures when it went into business on January 1. By January 31st, Morgan had given away one-fourth of these flyers. Which entry should Morgan make at January 31 to correctly state its accounts? A. Decrease cash by $100, and increase supplies expense by $100 B. Decrease the asset account supplies by $100, and increase supplies expense by $100. C. Increase both the asset account supplies and the expense account supplies expense by $100. D. Make no entry to the asset accounts, and increase supplies expense by $100.
B. Decrease the asset account supplies by $100, and increase supplies expense by $100.
Which of the following is true? A. Revenue becomes revenue when the cash is received. B. Expenses become an expense when they are incurred, whether or not they have been paid. C. Ending retained earnings always equals ending net income. D. Retained earnings is an account on the Income Statement.
B. Expenses become an expense when they are incurred, whether or not they have been paid.
Which of the following is true of retained earnings? A. It is a summary of all the cash the company has received for all the years it has been in business minus any dividends paid. B. It is a Balance Sheet account. C. The ending balance in retained earnings should always agree with the ending balance in cash. D. When the Balance Sheet is in balance, assets will equal liabilities plus retained earnings.
B. It is a Balance Sheet account.
Which of the following is true of retained earnings? A. It is an account on the Income Statement. B. It is an account on the Balance Sheet. C. It is the amount of cash received by the company over all the years it has been in business minus all of the expenses it made. D. The ending balance on the Statement of Retained Earnings will always equal net income at the bottom of the Income Statement.
B. It is an account on the Balance Sheet.
Which of the following types of businesses are considered "flow-through entities"? A. Regular corporation, limited-liability company, proprietorship, partnership B. Partnership, proprietorship, S corporation, limited-liability company C. Limited-liability company, S corporation, regular corporation, partnership D. Proprietorship, partnership, regular corporation, S corporation
B. Partnership, proprietorship, S corporation, limited-liability company
Which of the following is true of dividends? A. Paying dividends reduces net income. B. Paying dividends reduces total assets. C. Dividends are payments made to both stockholders and bondholders. D. The payment of dividends is shown as an investing cash outflow on the Statement of Cash Flows. E. None of the above are true.
B. Paying dividends reduces total assets.
Chandler's Inc. paid $1,200 for four months of insurance on January 1. Which of the following would correctly state Chandler's accounts at January 31? A. Prepaid insurance is $1,200, and insurance expense is $300. B. Prepaid insurance is $900, and insurance expense is $300. C. Prepaid insurance is $300, and insurance expense is $300. D. Prepaid insurance is $0, and insurance expense is $1,200.
B. Prepaid insurance is $900, and insurance expense is $300.
Which of the following ratios is required by the SEC to be shown on the face of the income statement? A. Earnings per share B. Return on equity C. Debt to equity D. Current ratio
B. Return on equity
Which of the following is true? A. Total expenses always equals the amount of cash paid for them during the period. B. Revenue can include some amounts that have not yet been received by the company C. Ending balances on the Balance Sheet are zeroed out before starting the new period. D. Expenses are recorded as an expense only after they have been paid.
B. Revenue can include some amounts that have not yet been received by the company
Which of the following best describes interest payable? A. The amount of interest expense incurred during the period. B. The total amount of interest owed at the end of the period. C. The total amount of interest that has been paid on the loan by the end of the period. D. The total amount of interest that will be owed at the loan's maturity.
B. The total amount of interest owed at the end of the period.
During January, Bradbury Co. made $46,000 in total sales. All of the sales were for cash, except one sale to Lima for $1,500, which was on account. When Lima pays Bradbury in February, which of the following will be true? A. Both Bradbury's total revenue and cash will increase by $1,500 in February. B. There will be no change to either Bradbury's total assets or net income for February. C. Bradbury's total assets will increase by $1,500 when the cash is received, but no other accounts will be changed. D. Bradbury's net income will increase by $1,500, but no other accounts will be impacted.
B. There will be no change to either Bradbury's total assets or net income for February.
The accounting equation is out of balance when A. Ending cash does not equal ending net income. B. Total assets do not equal the total of liabilities plus stockholders' equity. C. Ending retained earnings does not equal net income. D. The ending balance on the Statement of Cash Flows does not equal the ending balance of total assets on the Balance Sheet.
B. Total assets do not equal the total of liabilities plus stockholders' equity.
Accrual accounting A. is the same as the cash basis of accounting. B. requires an expense be recorded as an expense when it is incurred, whether or not it has been paid. C. is not allowed under either GAAP nor IFRS. D. requires recording an expense as an expense when it is paid, whether or not is has been incurred.
B. requires an expense be recorded as an expense when it is incurred, whether or not it has been paid.
The term "1 minus the tax rate" refers to A. the amount of tax required to be paid. B. the net income remaining after tax is paid. C. the net income before taking tax into account. D. an estimate of taxable income.
B. the net income remaining after tax is paid.
On its income statement Woodlawn, Inc. has net income of $32,000. Included in the calculation of net income are expenses of $2,000 for penalties, $7,500 for federal income taxes, and an exclusion of $3,000. How much is Woodlawn's taxable income for the year? A. $46,500 B. $21,500 C. $38,500 D. $45,500
C. $38,500
Bleeker Co. had the following information for the year: Sales: $72,000 Rent Expense: ($10,000) Gain on land sale: $5,000 Salary expense: ($20,000) Cost of goods sold: ($22,000) What is Bleeker's gross profit? A. $30,000 B. $15,000 C. $50,000 D. $37,000
C. $50,000
Which of the following accounts would appear on the Balance Sheet? A. Land, depreciation expense, common stock, cash B. Retained earnings, interest payable, cost of goods sold, accounts payable C. Accounts receivable, retained earnings, utilities payable, accumulated depreciation D. Equipment, gross profit, interest expense, sales E. Inventory, note payable, unearned revenue, sales
C. Accounts receivable, retained earnings, utilities payable, accumulated depreciation
Which of the following is true? A. The ending balances in the stockholders' equity accounts will always become the beginning balances at the start of the next period. B. Ending retained earnings will always equal ending stockholders' equity if the books are in balance. C. Assets minus liabilities must equal stockholders' equity. D. Stockholders equity is the total cash the company earned as well as received from stockholders.
C. Assets minus liabilities must equal stockholders' equity.
Which of the following increases total assets? A. Selling land for your original purchase price B. Buying equipment for cash C. Buying inventory on account D. Collecting an account receivable
C. Buying inventory on account
Which of the following is true about stockholders' equity? A. This section of the Balance Sheet will always equal total assets. B. This section of the Balance Sheet can only be increased if the company sells more stock to its stockholders. C. Corporations always must have at least two accounts in this section of the Balance Sheet: common stock and retained earnings. D. Retained earnings in stockholders equity is the one account on the Balance Sheet that the ending balance at the end of the period is zeroed out and does not carry over to the following period.
C. Corporations always must have at least two accounts in this section of the Balance Sheet: common stock and retained earnings.
Which of the following accounts would NOT be located on the Balance Sheet? A. Retained earnings B. Accumulated depreciation C. Cost of goods sold D. Interest payable
C. Cost of goods sold
Which of the following statements is true? A. Taxable income is the amount of tax due. B. Exclusions are an expense that is not an allowable deduction. C. Credits are deducted after taxable income has been multiplied by the tax rate. D. Deductions on a tax return are exactly the same as expenses on an income statement.
C. Credits are deducted after taxable income has been multiplied by the tax rate.
Fairfax Company bought a piece of equipment on December 1, 2025 for $12,000. Fairfax expects the equipment to last four years and then be worthless. What is the depreciation expense and net carrying value Fairfax would show on its annual financial statements at December 31, 2026 for this asset? A. Depreciation expense $3,250; net carrying value $8,750 B. Depreciation expense $3,250; net carrying value $12,000 C. Depreciation expense $3,000; net carrying value $8,750 D. Depreciation expense $3,000; net carrying value $3,250
C. Depreciation expense $3,000; net carrying value $8,750
On October 1, 2025, Wolfie Co. bought equipment for $12,000. Wolfie expects the equipment will last for three years and then be worthless. Which of the following is correct for the company's annual financial statements at December 31, 2026? A. Depreciation expense $4,000; accumulated depreciation $7,000 B. Depreciation expense $5,000; accumulated depreciation $5,000 C. Depreciation expense $4,000; accumulated depreciation $5,000 D. Depreciation expense $5,000; accumulated depreciation $4,000
C. Depreciation expense $4,000; accumulated depreciation $5,000
Company A delivered inventory to Company B on January 6th. Company B paid Company A for the inventory on January 20th. Company B sold all of the inventory to Customer on February 3rd. Customer paid Company B for the inventory on February 9th. On which day did Company B record an expense on its Income Statement for this inventory? A. January 6 B. January 20 C. February 3 D. February 9
C. February 3
Evian, Inc. borrowed $60,000 on July 1, 2025. Evian will make no payments until the note matures on July 1, 2029, and at that time Evian will pay $72,000. Which of the following correctly states Evian's annual financial statements at December 31, 2028? A. Interest expense $4,500; interest payable $4,500 B. Interest expense $3,000; interest payable $4,500 C. Interest expense $3,000; interest payable $10,500 D. Interest expense $1,500; interest payable $3,000
C. Interest expense $3,000; interest payable $10,500
Which of the following is true of the form 10-K? A. It is a monthly form required to be filed by all U.S.-based companies. B. It is a form required by IASB of all companies using IFRS. C. It is a required filing to the SEC for all publicly-traded companies. D. It is a work paper which remains inside the company and is optional for all companies. E. It was an optional form required before the SEC came about in 1933.
C. It is a required filing to the SEC for all publicly-traded companies.
Elyptical, Inc. paid three months of rent for $9,000 on April 1st. At April 30th, which of the following would correctly state Elyptical's accounts? A. Prepaid rent $0; rent expense $9,000 B. Prepaid rent $0; rent expense $3,000 C. Prepaid rent $6,000; rent expense $3,000 D. Prepaid rent $3,000; rent expense $6,000
C. Prepaid rent $6,000; rent expense $3,000
In which of the following types of businesses is the business itself responsible for paying tax on the company's taxable income? A. Proprietorship, Partnership, Limited-Liability Company B. Regular Corporation, S Corporation C. Regular Corporation D. Proprietorship, Partnership, S Corporation, Limited Liability Company E. S Corporation and Limited Liability Company
C. Regular Corporation
Accrual accounting A. Is not allowed under GAAP. B. Is the same as cash basis of accounting. C. Requires showing revenue on the Income Statement when it is earned, whether or not the cash has been received. D. Impacts the Income Statement but not the Balance Sheet.
C. Requires showing revenue on the Income Statement when it is earned, whether or not the cash has been received.
Which of the following is true? A. Depreciation expense is the cash paid for depreciation during the period. B. The balance in the account "accumulated depreciation" always equals the depreciation expense for the period. C. Subtracting accumulated depreciation from the equipment account gives the net carrying value of equipment at this point in time. D. The balance in accumulated depreciation is the total cash that has been paid for depreciation over all the years the company has owned that asset.
C. Subtracting accumulated depreciation from the equipment account gives the net carrying value of equipment at this point in time.
Which of the following is true of the Form 10-K? A. It is required to be filed quarterly by publicly-held corporations. B. All companies, public and private, are required to file this form. C. The annual filing of this form is an SEC requirement for only publicly-held corporations. D. The information on this form remains confidential.
C. The annual filing of this form is an SEC requirement for only publicly-held corporations.
Which of the following is true when a company borrows money from the bank? A. The amount borrowed will eventually become an expense on the company's Income Statement. B. The interest that must be paid increases both assets and liabilities. C. The interest associated with the loan will eventually be shown as an expense on the company's Income Statement. D. When the cash is received by the company, both assets and stockholders' equity are increased.
C. The interest associated with the loan will eventually be shown as an expense on the company's Income Statement.
Which of the following is true regarding equity and debt holders? A. Debt holders hope to receive dividends and interest from the company. B. Equity holders receive a stated amount of interest plus a return on their original investment. C. The maximum amount debt holders can receive is the amount originally loaned plus interest. D. Equity holders hope to receive dividends, interest, and an increase in the stock price. E. Debt holders benefit from an increase in the stock price.
C. The maximum amount debt holders can receive is the amount originally loaned plus interest.
Which of the following is true regarding equity and debt holders? A. Equity holders expect to receive both dividends and interest on their investment. B. Equity holders receive their original investment at maturity as well as any interest they are owed. C. The maximum amount debt holders could receive is the amount they loaned plus interest. D. Debt holders stand to benefit if the company does well and the stock price increases.
C. The maximum amount debt holders could receive is the amount they loaned plus interest.
Which of the following is true regarding accounts receivable? A. Both revenue and liabilities are increased when the sale is made. B. Revenue is increased when the cash is collected. C. Total assets do not change when the cash is collected. D. Total assets do not change when the sale is made.
C. Total assets do not change when the cash is collected.
Which of the following is a liability account? A. Retained earnings B. Equipment C. Utilities payable D. Common stock
C. Utilities payable
When a company pays a dividend, it is classified A. as an investing cash outflow. B. as an operating cash inflow. C. as a financing cash outflow. D. The payment of dividends is not a cash transaction.
C. as a financing cash outflow.
Accounting books are "in balance" when A. net income equals ending retained earnings. B. the cash account equals net income. C. assets minus liabilities equal stockholders equity. D. assets plus liabilities equal stockholders equity.
C. assets minus liabilities equal stockholders equity.
Utilities payable at the end of the reporting period are A. the total utilities used during the period. B. the amount paid for utilities during the period. C. the utilities used but not yet paid at the end of the period. D. the amount paid for utilities but not yet used at the end of the period.
C. the utilities used but not yet paid at the end of the period.
2027 2028 Prepaid Insurance: $1100 $1250 Insurance Expense: $15500 $16500 How much did Ridgewood pay for insurance during 2028? A. $16,350 B. $15,350 C. $17,350 D. $16,650
D. $16,650
During 2010 Vermont Corp. paid a total of $65,000 for inventory. In one transaction, Vermont sold inventory that had cost $3,000 for $7,500 on account. How much did total assets increase (decrease) as a result of this one transaction? A. ($3,000) B. $10,500 C. $7,500 D. $4,500
D. $4,500
Marvelous Company had sales of $66,000 during the year. The company's expenses were advertising expense of $8,000, depreciation expense of $5,000, and cost of goods sold of $16,000. In addition, Marvelous sold a plot of land and incurred a $1,000 loss. What was Marvelous' gross profit for the year? A. $37,000 B. $36,000 C. $38,000 D. $50,000
D. $50,000
Meldrum Company purchased land $6,000 in 2019. During 2025, Meldrum sold one-half of that land for $4,500 and bought another plot of land for $4,000. What was the balance in the land account at December 31, 2025? A. $8,500 B. $10,000 C. $5,500 D. $7,000
D. $7,000
Anjou Inc. owes its only employee $600 at the end of its first month in business. Anjou will pay its employee in the next month. Which of the following is true? A. Because no payment was made in month 1, Anjou does not need to record any entries until month 2, when the payment is made. B. Even though the payment has not yet been made, Anjou must reduce its cash account and record a liability for the amount due. C. Anjou records the transaction in the first month as if the payment was made. The entry is to reduce cash and record salary expense on the Income Statement. D. Anjou records the salary expense on the Income Statement and salaries payable on the Balance Sheet
D. Anjou records the salary expense on the Income Statement and salaries payable on the Balance Sheet
Which of the following is true? A. Supplies is a liability account showing the amount of supplies used during the period. B. When supplies are purchased, net income is reduced. C. Supplies are an asset when purchased and become a liability as they are used. D. As the company uses supplies, it decreases assets and increases expenses.
D. As the company uses supplies, it decreases assets and increases expenses.
If you were interested in investing in a company but were worried about the company becoming too risky because of its large amount of debt, which ratio would you be more interested in? A. Current ratio B. Return on equity C. Inventory turnover D. Debt to equity
D. Debt to equity
Which of the following is the most accurate and complete statement? A. Dividends are payments made to creditors of the business. B. Dividends are always required by law to be paid by public corporations. C. Dividends are payments made to both the business's creditors and stockholders. D. Dividends are payments made to the company stockholders.
D. Dividends are payments made to the company stockholders.
If the bookkeeper was attempting to reconcile by going from taxable income to net income, which of the following would be correct? A. One-half of the business meals with clients should be added in. B. All of the tax exclusions should be subtracted out. C. All of the entertainment expenses should be added in. D. Federal income taxes should be subtracted out. E. All of the depreciation expense should be added back.
D. Federal income taxes should be subtracted out.
Which of the following is an asset account? A. Accounts payable B. Retained earnings C. Notes payable D. Land
D. Land
Which of the following types of businesses is defined as being owned by only one person and not incorporated? A. Venture Capitalist B. Partnership C. S Corporation D. Proprietorship
D. Proprietorship
Cash distributions to the owners of the company are taxable when made by which type of company? A. Partnerships, S corporations, and LLCs B. Regular corporations and S corporations C. All businesses except regular corporations D. Regular corporations only E. Proprietorships and partnerships
D. Regular corporations only
Which of the following is true under accrual accounting? A. Expenses become an expense when they are paid. B. Revenue always equals the amount of cash received. C. Cash received minus expenses paid is net income. D. Revenue may be recorded on the income statement even before the cash is received.
D. Revenue may be recorded on the income statement even before the cash is received.
Which of the following is true? A. The Income Statement and the Balance Sheet are the same financial statement. B. Companies are required to use the cash basis of accounting on the Income Statement. C. Accrual accounting requires that revenue be reported only when the cash is received. D. The Income Statement covers a period of time, while the Balance Sheet is a point in time.
D. The Income Statement covers a period of time, while the Balance Sheet is a point in time.
Which of the following is true regarding the Statement of Cash Flows? A. It must be prepared prior to the Income Statement. B. It is the one statement that relies on accrual accounting. C. This statement is based on the principles of double-entry bookkeeping. D. The beginning balance of this statement is the ending balance of cash at the end of the prior period.
D. The beginning balance of this statement is the ending balance of cash at the end of the prior period.
Which of the following is true of the Statement of Retained Earnings? A. This statement must be prepared before the Income Statement can be completed. B. The ending balance on this statement is the total of stockholders' equity. C. The ending balance on this statement is the cash that is available for dividends. D. The ending retained earnings always becomes the beginning retained earnings at the start of the next period.
D. The ending retained earnings always becomes the beginning retained earnings at the start of the next period.
Which of the following lists contains only accounts shown on the Balance Sheet? A. Retained earnings, accumulated depreciation, cost of goods sold, accounts receivable B. Accounts payable, common stock, cash, revenues C. Prepaid rent, inventory, retained earnings, gain on land sale D. Unearned revenue, common stock, equipment, accounts receivable E. Cash, utilities payable, dividends, accumulated depreciation
D. Unearned revenue, common stock, equipment, accounts receivable
When a company borrows money from a bank, A. stockholders' equity is increased by the amount borrowed. B. revenue is increased by the amount borrowed. C. the company's books are out of balance. D. both assets and liabilities are increased.
D. both assets and liabilities are increased.
Dividends are A. payments made to both creditors and stockholders. B. required to be paid to creditors. C. voluntary payments made by the company to creditors. D. payments made to stockholders.
D. payments made to stockholders.
What is the impact on the company's financial statements when it collects an accounts receivable? A. Both total assets and net income increase. B. Total assets increase and total liabilities decrease. C. Total assets increase and retained earnings decreases. D. Total liabilities decrease and net income increases. E. No change in total assets, total liabilities, net income, or retained earnings.
E. No change in total assets, total liabilities, net income, or retained earnings.
Which of the following is true of interest expense? A. When interest that has not yet been paid is accrued at the end of the period, expenses are increased and cash is decreased. B. It is recorded as a liability on the day the loan is taken out. C. Interest expense steadily decreases as the company gets closer to the payment date. D. Interest is recorded as an expense on the income statement when the cash is paid. E. None of the above are true.
E. None of the above are true.
Which of the following transactions increases total assets? A. Collecting an accounts receivable B. Selling land for a loss C. Paying six months rent in advance D. Recording depreciation expense E. Purchasing inventory on account
E. Purchasing inventory on account
Which of the following is true regarding the taxation of a partnership? A. The partnership pays the tax on the partnership's taxable income. B. The partners' personal assets have legal protection from the partnership's creditors. C. The partnership is subject to "double taxation", which means it is taxed at both the partnership and partner levels. D. The partners' pay tax on any cash they receive from the partnership during the year. E. The partnership files an information-only return, and the partners pay the tax on the partnership's taxable income.
E. The partnership files an information-only return, and the partners pay the tax on the partnership's taxable income.
