ACC 201 Exam 1
Earnings Per Share Equation
(Net Income - Preferred Stock Dividends) / Average Common Stock Shares Outstanding
Accounts receivable (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Asset (b) Debit
Cash (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Asset (b) Debit
Supplies (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Asset (b) Debit
Accounts payable (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Liability (b) Credit
Accrued Liability (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Liability (b) Credit
Notes payable (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Liability (b) Credit
Wages payable (a) How is this classified? (b) Is it a normal debit or credit?
(a) Current Liability (b) Credit
Cost of goods sold (a) How is this classified? (b) Is it a normal debit or credit?
(a) Expense (b) Debit
Gas & oil expense (a) How is this classified? (b) Is it a normal debit or credit?
(a) Expense (b) Debit
Professional fees expense (a) How is this classified? (b) Is it a normal debit or credit?
(a) Expense (b) Debit
Supplies expense (a) How is this classified? (b) Is it a normal debit or credit?
(a) Expense (b) Debit
Utilities expense (a) How is this classified? (b) Is it a normal debit or credit?
(a) Expense (b) Debit
Wage expense (a) How is this classified? (b) Is it a normal debit or credit?
(a) Expense (b) Debit
Long-term debt (a) How is this classified? (b) Is it a normal debit or credit?
(a) Long-term Liability (b) Credit
Equipment (a) How is this classified? (b) Is it a normal debit or credit?
(a) Property, Plant, and Equipment (b) Debit
Plant (a) How is this classified? (b) Is it a normal debit or credit?
(a) Property, Plant, and Equipment (b) Debit
Sales (a) How is this classified? (b) Is it a normal debit or credit?
(a) Revenue (b) Credit
Service revenue (a) How is this classified? (b) Is it a normal debit or credit?
(a) Revenue (b) Credit
Common stock (a) How is this classified? (b) Is it a normal debit or credit?
(a) Stockholders' Equity (b) Credit
Retained Earnings, beginning (a) How is this classified? (b) Is it a normal debit or credit?
(a) Stockholders' Equity (b) Credit
Dividends (a) How is this classified? (b) Is it a normal debit or credit?
(a) Stockholders' Equity (b) Debit
At the end of September (1st month of operations) Sunshine Company had the following items in their trial balance: Cash = $1,320; Accounts payable = $1,260; Supplies expense = $240; Dividends = $480; Equipment = $1,800; Common stock = $2,400; Revenues earned = $3,000; Advertising expense = $360; Salary expense = $1,200; Accounts receivable = $540; Supplies = $420; Utilities expense = $300 What amount would be shown as total current assets on Sunshine's September 30th balance sheet? A. $2,280 B. $2,820 C. $4,080 D. $6,480
A. $2,280
Mica, Inc. had a balance in its' Cash account on December 1 of $250. During the first week in December Mica engaged in the following transactions: 1. Purchased 10 Christmas trees for $80 on credit 2. Sold 5 Christmas trees for $60 cash 3. Purchased 5 sets of lights for $10 cash 4. Sold three lighted Christmas trees for $50 on credit 5. Paid a part-time employee's wages, $10 cash 6. Paid the electric bill of $35 by check Mica's Cash account balance after the six above transactions (on December 7) would be: A. $255 B. $245 C. $290 D. $280
A. $255
At the end of September (1st month of operations) Sunshine Company had the following items in their trial balance: Cash = $1,320; Accounts payable = $1,260; Supplies expense = $240; Dividends = $480; Equipment = $1,800; Common stock = $2,400; Revenues earned = $3,000; Advertising expense = $360; Salary expense = $1,200; Accounts receivable = $540; Supplies = $420; Utilities expense = $300 What would be shown as retained earnings on Sunshine's balance sheet at September 30th? A. $420 B. $900 C. $2,520 D. $1,380
A. $420
At the end of June (1st month of operations) MSU Company had the following items shown in their trial balance: Cash = $2,200; Accounts payable = $2,100; Supplies expense = $400; Dividends = $800; Equipment = $3,000; Common Stock = $4,000; Revenues earned = $5,000; Advertising expense = $600; Salary expense = $2,000; Accounts receivable = $900; Supplies = $700; Utilities expense = $500 What would be shown as retained earnings on MSU's balance sheet at June 30th? A. $700 B. $1,500 C. $4,200 D. $2,300
A. $700
Which of the following transactions would have caused the assets and liabilities to increase by $15,000? A. Office furniture purchased for $20,000, $5,000 cash paid and a $15,000 note payable given for the balance B. The company issued an addition 1,500 shares of $10 per value stock at par for cash C. Office furniture purchased for $15,000, $5,000 cash paid and a $10,000 note payable given for the balance D. A $15,000 note payable was issued by the company to replace a past-due account payable
A. Office furniture purchased for $20,000, $5,000 cash paid and a $15,000 note payable given for the balance
A machine costing $400 is purchased by paying $50 cash and signing a note payable for the remainder. The journal entry should include a A. credit to Notes Payable B. debit to Cash C. credit to Notes payable D. credit to Machine
A. credit to Notes Payable
Collection of a $1,200 Accounts Receivable A. increases an asset $1,200; decreases an asset $1,200 B. increases an asset $1,200; decreases a liability $1,200 C. decreases a liability $1,200; increases stockholders' equity $1,200 D. decreases an asset $1,200; decreases a liability $1,200
A. increases an asset $1,200; decreases an asset $1,200
Long-term assets held for use in the production or sale of other assets or services are called: A. Plant and equipment B. Current assets C. Intangible assets D. Accrued expenses
A. plant and equipment
Basic Accounting Equation
Assets = Liabilities + Stockholders' Equity
At the end of June (1st month of operations) MSU Company had the following items shown in their trial balance: Cash = $2,200; Accounts payable = $2,100; Supplies expense = $400; Dividends = $800; Equipment = $3,000; Common Stock = $4,000; Revenues earned = $5,000; Advertising expense = $600; Salary expense = $2,000; Accounts receivable = $900; Supplies = $700; Utilities expense = $50 What amount will be shown as net income for the month of June on MSU's income statement? A. $700 B. $1,500 C. $4,200 D. $2,300
B. $1,500
At the end of September (1st month of operations) Sunshine Company had the following items in their trial balance: Cash = $1,320; Accounts payable = $1,260; Supplies expense = $240; Dividends = $480; Equipment = $1,800; Common stock = $2,400; Revenues earned = $3,000; Advertising expense = $360; Salary expense = $1,200; Accounts receivable = $540; Supplies = $420; Utilities expense = $300 What would be shown as total Stockholders' Equity on the September 30 Balance Sheet for Sunshine? A. $2,280 B. $2,820 C. $4,080 D. $1,260
B. $2,820
A company began the year with retained earnings of $210. During the eyar, the company recorded revenues of $300, expenses of $228 and paid dividends of $24. What was the company's retained earnings at the end of the year? A. $306 B. $258 C. $114 D. $162
B. $258
At the end of June (1st month of operations) MSU Company had the following items shown in their trial balance: Cash = $2,200; Accounts payable = $2,100; Supplies expense = $400; Dividends = $800; Equipment = $3,000; Common Stock = $4,000; Revenues earned = $5,000; Advertising expense = $600; Salary expense = $2,000; Accounts receivable = $900; Supplies = $700; Utilities expense = $500 What would be shown as total Stockholders' Equity on the June 30 Balance Sheet for MSU? A. $3,800 B. $4,700 C. $6,800 D. $2,100
B. $4,700
A company showed the following balances in accounts at the end of the first year: Cash = $10; Prepaid insurance = $1; Accounts receivable = $5; Common stock = $2; Dividends = $1; Revenues = $30; Accounts payable = $4; Notes payable = $6; Expenses = $25 What did the company show as total credits on its trial balance for the end of the first year? A. $43 B. $42 C. $41 D. $44
B. $42
At the end of September (1st month of operations) Sunshine Company had the following items in their trial balance: Cash = $1,320; Accounts payable = $1,260; Supplies expense = $240; Dividends = $480; Equipment = $1,800; Common stock = $2,400; Revenues earned = $3,000; Advertising expense = $360; Salary expense = $1,200; Accounts receivable = $540; Supplies = $420; Utilities expense = $300 What amount will be shown as net income for the month of September on Sunshine's income statement? A. $420 B. $900 C. $2,520 D. $1,380
B. $900
Which of the following statements is false? A. Ethics is the application of a code of conduct to everyday life. B. All business activities which are legal are in fact thereby ethical business activities. C. Professional ethics involves the application of a code of conduct to the practice of a profession. D. Every person who becomes an accountant is responsible for upholding the high standards of the profession.
B. All business activities which are legal are in fact thereby ethical business activities.
A company purchased equipment for $9 cash. As a result of this event. A. Equity decreased by $9 B. Assets remained unchanged C. Assets increased by $9 D. Both A and C are correct
B. Assets remained unchanged
The entry on Rainbow's books to record stockholders' investment of $10,000 in exchange for common stock in Rainbow would be: A. Debit Cash $10,000 and Debit Common Stock $10,000 B. Debit Cash $10,000 and Credit Common Stock $10,000 C. Credit Cash $10,000 and Credit Common Stock $10,000 D. Credit Cash $10,000 and Debit Common Stock $10,000
B. Debit Cash $10,000 and Credit Common Stock $10,000
The entry on Rainbow's books to record the payment of a liability of $300 would include A. a debit to Cash for $300 B. a debit to Accounts Payable for $300 C. a credit to Accounts Payable for $300 D. a credit to Accounts Receivable for $300
B. a debit to Accounts Payable for $300
Retained Earnings Equation
Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
Cash = $65; Prepaid Insurance = $30; Accounts Receivable = $50; Inventory = $70; Land = $165; Building ($170) Less Accumulated Depreciation ($20) = $150; Total Assets = $530 Accounts Payable = $70; Salaries Payable = $10; Mortgage Payable = $80; Total Liabilities = $160 Common Stock = $120; Retained Earnings = $250; Total stockholders' equity = $370 Total Liabilities and Stockholders' Equity = $530 The total amount of Winter End's working capital is A. $60 B. $75 C. $135 D. $295
C. $135
If total liabilities increased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? A. $20,000 decrease B. $15,000 increase C. $20,000 increase D. $15,000 decrease
C. $20,000 increase
Cash = $65; Prepaid Insurance = $30; Accounts Receivable = $50; Inventory = $70; Land = $165; Building ($170) Less Accumulated Depreciation ($20) = $150; Total Assets = $530 Accounts Payable = $70; Salaries Payable = $10; Mortgage Payable = $80; Total Liabilities = $160 Common Stock = $120; Retained Earnings = $250; Total stockholders' equity = $370 Total Liabilities and Stockholders' Equity = $530 The total dollar amount of assets to be classified as current assets by Winters End is A. $145 B. $180 C. $215 D. $290
C. $215
If ABC Inc. on December 31 has Assets of $32,000 and Liabilities of $8,000, total Stockholder's Equity would be: A. $40,000 B. $32,000 C. $24,000 D. $8,000
C. $24,000
If total assets are $200,000; liabilities are $120,000; and common stock is $50,000, retained earnings would be: A. $320,000 B. $370,000 C. $30,000 D. $270,000
C. $30,000
At the end of September (1st month of operations) Sunshine Company had the following items in their trial balance: Cash = $1,320; Accounts payable = $1,260; Supplies expense = $240; Dividends = $480; Equipment = $1,800; Common stock = $2,400; Revenues earned = $3,000; Advertising expense = $360; Salary expense = $1,200; Accounts receivable = $540; Supplies = $420; Utilities expense = $300 What amount would be shown as total assets on Sunshine's September 30th balance sheet? A. $2,280 B. $2,820 C. $4,080 D. $6,480
C. $4,080
For this period ICE Corporation reported net income of $30; net sales $400; and average common stock outstanding of 6 shares. There were no preferred stock dividends. Which of the following would be the period's earnings per common share? A. $0.20 B. $4.66 C. $5.00 D. $66.67
C. $5.00
At the end of June (1st month of operations) MSU Company had the following items shown in their trial balance: Cash = $2,200; Accounts payable = $2,100; Supplies expense = $400; Dividends = $800; Equipment = $3,000; Common Stock = $4,000; Revenues earned = $5,000; Advertising expense = $600; Salary expense = $2,000; Accounts receivable = $900; Supplies = $700; Utilities expense = $500 What amount would be shown as total assets on MSU's June 30th balance sheet? A. $3,800 B. $4,700 C. $6,800 D. $10,800
C. $6,800
In the first month of Spring Company's operations, the total debit entries to the Cash account amounted to $1,000 and the total credit entries to the Cash account amount to $400. Spring Company's Cash account has a A. $400 credit balance B. $1,000 debit balance C. $600 debit balance D. $400 credit balance
C. $600 debit balance
Cash = $65; Prepaid Insurance = $30; Accounts Receivable = $50; Inventory = $70; Land = $165; Building ($170) Less Accumulated Depreciation ($20) = $150; Total Assets = $530 Accounts Payable = $70; Salaries Payable = $10; Mortgage Payable = $80; Total Liabilities = $160 Common Stock = $120; Retained Earnings = $250; Total stockholders' equity = $370 Total Liabilities and Stockholders' Equity = $530 Winters End's current ratio is A. 1.57:1 B. 1.94:1 C. 2.69:1 D. 3.14:1
C. 2.69:1
An information system that provides useful information to people who make rational investment, credit, and similar decisions to help them reach better decisions. A. Bookkeeping B. Budgeting C. Accounting D. Internal Auditing
C. Accounting
Which of the following terms fit this definition: "The area of accounting principally concerned with reporting to external users." A. Double-entry concept B. Managerial accounting C. Financial accounting D. Matching principle
C. Financial accounting
Because some totals from one financial statement carry forward to another financial statement, it is necessary to prepare the financial statements in the following order: A. Income Statement, Balance Sheet, Statement of Cash Flows, Statement of Retained Earnings B. Statement of Retained Earnings, Income Statement, Statement of Cash Flow, Balance Sheet C. Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows D. None of these
C. Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows
Which of the following items is not normally shown on a classified balance sheet as a current asset? A. Cash B. Accounts receivable C. Property, Plant & Equipment D. Prepaid insurance
C. Property, Plant & Equipment
The entry on Rainbow's books to record revenue earned of $1,000 would include A. a debit to Revenue for $1,000 B. a credit to Accounts Receivable for $1,000 C. a credit to Revenue for $1,000 D. a credit to Cash for $1,000
C. a credit to Revenue for $1,000
On July 7, Year 2, Summer Enterprises received cash of $700 for services rendered. The entry to record this transaction will include: A. a debit to Service Revenue of $700 B. a credit to Accounts Receivable of $700 C. a debit to Cash of $700 D. a credit to Accounts Payable of $700
C. a debit to Cash of $700
Working Capital Equation
Current Assets - Current Liabilities
Current Ratio Equation
Current Assets / Current Liabilities
At January 1, Year 2, Fall Industries reported Retained Earnings of $260. During Year 2, Fall had a net loss of $60 and paid dividends to the stockholders of $40. At December 31, Year 2, the balance in Retained Earnings is A. $260 debit B. $280 credit C. $200 debit D. $160 credit
D. $160 credit
At the end of September (1st month of operations) Sunshine Company had the following items in their trial balance: Cash = $1,320; Accounts payable = $1,260; Supplies expense = $240; Dividends = $480; Equipment = $1,800; Common stock = $2,400; Revenues earned = $3,000; Advertising expense = $360; Salary expense = $1,200; Accounts receivable = $540; Supplies = $420; Utilities expense = $300 What will be shown as Sunshine's total expenses on the income statement for the month of September? A. $420 B. $900 C. $2,580 D. $2,100
D. $2,100
At the end of June (1st month of operations) MSU Company had the following items shown in their trial balance: Cash = $2,200; Accounts payable = $2,100; Supplies expense = $400; Dividends = $800; Equipment = $3,000; Common Stock = $4,000; Revenues earned = $5,000; Advertising expense = $600; Salary expense = $2,000; Accounts receivable = $900; Supplies = $700; Utilities expense = $500 What will be shown as MSU's total expenses on the income statement for the month of June A. $700 B. $1,500 C. $4,300 D. $3,500
D. $3,500
Cash = $65; Prepaid Insurance = $30; Accounts Receivable = $50; Inventory = $70; Land = $165; Building ($170) Less Accumulated Depreciation ($20) = $150; Total Assets = $530 Accounts Payable = $70; Salaries Payable = $10; Mortgage Payable = $80; Total Liabilities = $160 Common Stock = $120; Retained Earnings = $250; Total stockholders' equity = $370 Total Liabilities and Stockholders' Equity = $530 The total dollar amount of assets to be classified as property, plant, and equipment is: A. $165 B. $170 C. $335 D. $315
D. $315
The accounting equation can be expressed as follows: A. Assets = Liabilities + Capital B. Assets = Liabilities + Owner's Equity C. Assets = Liabilities + Stockholder's Equity D. All of the above
D. All of the above
Which of the following statements is true about revenue? A. Revenue is the amount charged to customers for goods or services sold to them B. Revenue accounts are increased by crediting them C. Revenue is recorded when a sale is made on credit D. All of the above are true
D. All of the above are true
A company provided consulting services and billed the client $500. As a result of this event: A. Assets remained unchanged B. Assets increased by $500 C. Equity increased by $500 D. Both B and C are correct
D. Both B and C are correct
The entry on Rainbow's books to record the purchase of $500 of supplies on account would be: A. Credit Supplies $500 and Credit Accounts payable $500 B. Credit Supplies $500 and Debit Accounts payable $500 C. Debit Supplies $500 and Debit Accounts payable $500 D. Debit Supplies $500 and Credit Accounts payable $500
D. Debit Supplies $500 and Credit Accounts payable $500
Earnings per share is calculated by: A. Dividing net income into the stock price at the end of the year B. Dividing net income by the stock price at the end of the year C. Dividing net income (less Preferred Stock Dividends) into the average number of common shares outstanding during the year D. Dividing net income (less Preferred Stock Dividends) by the average number of common shares outstanding during the year
D. Dividing net income (less Preferred Stock Dividends) by the average number of common shares outstanding during the year
Income Statement
Revenues - Expenses = Net Income
Statement of Stockholders' equity
a financial statement that presents the items that caused stockholders' equity to change during the period, including those items that caused retained earnings to change
Corporation
a form of business owned by one or more entities who own shares of stock in the business; separate entity from its owners
Proprietorship
a form of business owned by one person
Partnership
a form of business owned by two or more persons or entities
Earnings Per Share (EPS)
a measure of the net income earned on each share of common stock
Accounting Information System
a method of collecting and processing transaction data and communicating financial information to interested parties
Entity
a person, unit, organization or group
Accounting Transaction
a quantifiable event that requires recording in the accounting information system because it affects assets, liabilities or stockholder's equity of a company
Asset
a resource owned by an entity ie cash, accounts receivable, supplies
T account
a simplified picture which shows the activity in an account in a simplified manner
Account
an individual accounting record which shows the increases and decreases in a specific asset, liability, stockholder's equity, revenue, or expense item ie cash, common stock
Liability
an obligation of an entity; amounts owed to creditors ie accounts payable, accrued liabilities, long-term debt
Intangible Assets
assets that do not have physical substance ie copyright, patents
Current Ratio
calculated by dividing the current assets by the current liabilities and is used as a measure to evaluate a company's ability to pay short-term debt
Free Cash Flow
cash provided by operating activities adjusted for capital expenditures and dividends paid
Order of Liquidity
cash, short-term investments, accounts receivable, notes receivable, supplies, merchandise inventory, prepaid expenses then other current assets
Generally Accepted Accounting Principles
include a set of rules and practices, having substantial authoritative support that the accounting profession uses as a general guide in preparing financial statements
Revenue
increase in assets that results from the sale of a product or service in the normal course of business ie sales revenue, service revenue
Magnitude
list the account with the largest dollar amount first
Solvency ratios
measure the ability of the company to survive over a long period of time
Liquidity Ratios
measure the short-term ability of a company to pay its obligations as they are due and meet unexpected cash needs
Debt to Total Assets Ratio
measures the percentage of total financing provided by creditors or Total Liabilities/Total Assets
Long-term Liabilities
obligations of an entity which are not expect to be paid within one year or the operating cycle ie notes payable in 5 years, bonds payable, mortgage payable
Current liabilities
obligations of an entity which the entity reasonably expects to pay within the next year or operating cycle, whichever is longer; can also be liabilities expected to be paid with current assets ie accounts payable, salaries payable
Property, Plant, and Equipment
resources owned by an entity in the business and are not intended for resale; used every day for more than a year ie land, buildings
Current Assets
resources owned by an entity that can be expected to be converted to cash or used up within one year or the operating cycle, whichever is longer ie cash, accounts receivable
Other Assets
resources owned by an entity that do not "fit" in one of the above classifications
Journal
the book in which the accounting transaction is originally entered
Expense
the cost of assets consumed or services used in the process of generating revenues ie operating expense, cost of goods sold, fuel expense
Working capital
the difference between the current assets and current liabilities
Income Statement
the financial statement that reports a company's revenues and expenses with resulting net income or net loss of the company for a specific period of time. This period of time is usually a month, quarter or year
Classified Balance Sheet
the financial statement that reports entities' assets, liabilities and stockholder's equity at a point in time in a number of standard classifications or sections
Balance Sheet
the financial statement that reports entities' assets, liabilities, and stockholder's equity at a point in time; usually this point of time is at the end of a period of time - a month, quarter or year
Statement of Cash Flows
the financial statement that reports financial information about a company's cash receipts and cash payments for a specific period of time
Retained Earnings Statement
the financial statement that summarizes the amounts and causes of changes in retained earnings for a specific period of time.
General Ledger
the group of accounts used by a company in reporting financial information
Accounting
the information system that identifies, records, and communicates the economic events of an organization to users
Debit
the left side of an account
Stockholders' Equity
the owner's claim on total assets ie common stock, capital stock, preferred stock, dividends, retained earnings
Bookkeeping
the part of accounting that records transactions and other events, either manually or with computers
Posting
the procedure used to transfer information shown in the journal to the accounts found in the ledger
Credit
the right side of an account, not a DEBT that you owe or an amount you can SPEND
