Accounting. Test 1

Financial information needed to manage a company is provided by a(n) ______ system. accounting corporate tax equity financing

Accounting

Expenses appear on the ______. Income Statement Statement of Shareholders' Equity Statement of Cash Flows Balance Sheet More than one of these statements

Income Statement

______ purchase goods that are primarily in completed form. A. Manufacturing companies B. Merchandising companies C. Service firms

Merchandising Companies

The cost of a long-term asset, such as Equipment, is expensed ______. never because it is an asset in the period it is purchased over its useful life in the period it is sold

Over its useful life

Liabilities are ______. amounts that the company owes to shareholders amounts that the company owes to creditors economic resources expected to benefit the company in the future expenses incurred to help generate revenues

amounts that the company owes to creditors

The balance sheet reports the ______. revenues minus expenses for the accounting period changes that occurred in shareholders' equity during the accounting period cash collected and cash paid during the period economic resources, obligations, and net worth at a point in time

economic resources, obligations, and net worth at a point in time

The adjusting entry for the amount of interest owed on Notes Payable causes a(n) ________. decrease in assets and decrease in shareholder's equity increase in assets and shareholders' equity increase in one asset and decrease in another asset decrease in assets and liabilities increase in liabilities and decrease in shareholders' equity

increase in liabilities and decrease in shareholders' equity

Dividends are ______. (Select all that apply.) company profits that are paid to shareholders required amounts owed to shareholders amounts owed to creditors not an expense incurred to earn revenue reported on the Income Statement

company profits that are paid to shareholders not an expense incurred to earn revenue

A transaction may be recorded with an increase in a liability and a(n) ______. decrease in an asset decrease in a shareholders' equity account increase in a shareholders' equity account

decrease in a shareholders' equity account

A financial statement heading states that it was prepared: "For the Year Ended December 31". What types of financial statements could this be? Select all that apply. Income Statement Statement of Shareholders' Equity Statement of Cash Flows Balance Sheet

Income Statement Statement of Shareholder's Equity Statement of Cash Flows

Cycle Path, Inc., sold 100 bikes to its customers at $400 each. The bikes cost $250. The entry to record this sale includes a ______. (Select all that apply.) (25,000) Inventory 25,000 Inventory 40,000 Cash 40,000 Sales Revenue 15,000 Gross Profit (25,000) Cost of Goods Sold 25,000 Cost of Goods Sold

(25,000) Inventory 40,000 Cash 40,000 Sales Revenue (25,000) Cost of Goods Sold

Which of the following are possible effects on the accounting equation when recording a transaction that increases a liability by $100? (Select all that apply.)

A shareholders' equity account decreases by $100. An asset increases by $100.

A company owns an economic resource that will provide it with future benefits. This economic resource is ______. an expense an asset a liability retained earnings revenue net income

An Asset

Which of the following are possible effects on the accounting equation when recording a transaction that increases an asset by $100? (Select all that apply.)

An asset decreases by $100. A liability account increases by $100. A shareholders' equity account increases by $100.

Match the financial statement that reports each of the following. Assets Net Income Investing Activities A. Balance Sheet B. Statement of Cash Flows C. Income Statement

Assets: Balance Sheet Net Income: Income Statement Investing Activities: Statement of Cash Flows

Landon Mars, the company bookkeeper, recorded the $10,000 purchase of land as Rent Expense by decreasing Cash and decreasing Shareholders' Equity. What is the effect of this error on the accounting equation? Assets Liabilities Shareholders' Equity A. Too high B. Too low C. Correct

Assets: Too low Liabilities: Too High Shareholders Equity: Correct

Which of the following is the accounting equation? Revenue-Expenses=Net Income Assets+Liabilities=Shareholders' Equity Assets=Liabilities+Shareholders' Equity Assets=Liabilities+Net Income Revenue+Expenses=Net Income Assets-Liabilities=Net Income

Assets= Liabilities+Shareholders Equity

An owner contributes $10,000 cash to her company in exchange for stock. This will increase the company's ______. (Select all that apply.) Total Liabilities Cash Total Shareholders' Equity Common Stock Net Income Retained Earnings Total Assets

Cash Total Shareholders' Equity Common Stock Total Assets

Which of these would be reported as cash flows from investing activities? (Select all that apply.) Cash paid to buy equipment Cash paid for employee wages Cash paid to build a new corporate headquarters Cash paid for advertising Cash paid for rent Cash received from owners in exchange for stock

Cash Paid to buy equipment Cash Paid to build a new corporate headquarters

Which of the following would be included in the operating activity section of the Statement of Cash Flows? (Select all that apply.) Purchase of a new office building Cash collected from customers Cash paid to employees Cash paid to suppliers Purchase of land

Cash collected from customers Cash paid to employees Cash paid to suppliers

Which of the following are found on the Statement of Shareholders' Equity? (Select all that apply.) Common Stock Accumulated Depreciation Land Notes Payable Retained Earnings Cash

Common Stock Retained Earnings

Which financial statement reports the amount of resources used during the period? Income Statement Statement of Shareholders' Equity Statement of Cash Flows Balance Sheet

Income Statement

What is the effect on total assets when a company purchases a cash register for a cash payment of $1,200? Decrease Increase No effect

No effect

Which of the following is a characteristic of a sole proprietorship? The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business. None of these choices are correct. It is a legal entity separate from its owner. The owners pay no taxes on the income from the business.

The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business.

The main goal of an accounting system is to ______. provide initial financing for a new start-up capture information about a business so that it can be reported to decision makers prove that assets equal liabilities plus shareholders' equity earn a profit for the company's shareholders

capture information about a business so that it can be reported to decision makers

The statement of shareholders' equity reports the ______. changes that occurred in shareholders' equity during the accounting period cash collected and cash paid during the period revenues minus expenses for the accounting period economic resources, obligations, and net worth

changes that occurred in shareholders' equity during the accounting period

An accounting system provides ______. (Select all that apply.) assurance that a company cannot fail financial information needed to report results to outsiders financial information needed to manage a company information about a company's future plans

financial information needed to report results to outsiders financial information needed to manage a company

Depreciating a long-term asset, such as Equipment, over its useful life records the ______. (Select all that apply.) giving up some of the asset's usefulness, Accumulated Depreciation giving an IOU called Accumulated Depreciation getting of Cash getting service, Accumulated Depreciation use of Cash getting use of or service from an asset, Depreciation Expense

giving up some of the asset's usefulness, Accumulated Depreciation getting use of or service from an asset, Depreciation Expense

The contra-asset account, ______, is used to record depreciation on equipment. Contra Depreciation Depreciation Expense Equipment Accumulated Depreciation Accumulated Expense Accumulated Accretion

Accumulated Depreciation

On October 31, Shoe Fly declares and pays a dividend to its shareholders of $400. The dividend ______ by $400. a. reduces assets b. reduces Retained Earnings on the statement of shareholders' equity c. increases Dividend Expense on the income statement d. both a and b e. both a and c

Both a and b

On December 1, Burrows, Inc., borrowed money from a bank. The bank requires Burrows to pay the interest and the principal at the end of six months. As a result, the year-ended December 31 financial statements will report ______. (Select all that apply.) Interest Expense on the income statement Notes Payable on the income statement Notes Payable on the statement of shareholders' equity Interest Expense on the balance sheet Notes Payable on the balance sheet Interest Revenue on the balance sheet

Interest Expense on the income statement Notes Payable on the balance sheet

Identify what a company gives and gets when it invests in equipment by paying cash and signing a two-year note. (Select all that apply.) It gives a promissory note. It gets shares. It gives cash. It gets equipment. It gives shares. It gets a promissory note. It gets cash. It gives equipment.

It gives a promissory note It gets equipment It gives cash

Which of the following are possible effects on the accounting equation when recording a transaction that affects two accounts? (Select all that apply.) One asset account increases and one shareholders' equity account increases. One asset account increases and one liability account increases. One asset account increases and one asset account decreases. One asset account increases and one shareholders' equity account decreases. One liability account increases and one shareholders' equity account decreases. One asset account decreases and one shareholders' equity account increases.

One asset account increases and one shareholders' equity account increases. One asset account increases and one liability account increases. One asset account increases and one asset account decreases. One liability account increases and one shareholders' equity account decreases.

______ are earned by selling goods or services to customers.

Revenues, Sales, or Sales Revenue

Which financial statement reports how much cash was paid for its inventory? Income Statement Statement of Shareholders' Equity Statement of Cash Flows Balance Sheet

Statement of Cash Flows