Chapter 1 Quiz Questions
A company began the year with retained earnings of $465,000. During the year, the company did the following: Issued common stock, $630,000 Incurred expenses, $1,800,000 Declared and paid dividends, $120,000 The company's ending retained earnings is $495,000. What was the company's revenue for the year? -$1,830,000 -$2,460,000 -$2,580,000 -$1,950,000 -$1,185,000
$1,950,000 re arrange statement of stockholders' equity formula revenue= ending retained earnings- beginning + expenses+ dividends = 495,000-465,000+ 1,800,000+ 120,000 = 1,950,000
The financial records for a corporation included the following information: Accounts receivable, $60,000 Accounts payable, $5,000 Cash, $30,000 Common stock, $5,000 Dividends, $20,000 Insurance expense, $10,000 Salaries and wages expense, $40,000 Sales revenue, $150,000 Retained earnings is not given. Based on this information, how much is its net income? -$70,000 -$120,000 -$100,000 -$80,000 -$50,000
$100,000
The financial records for a corporation included the following information: Accounts receivable, $60,000 Accounts payable, $5,000 Cash, $30,000 Common stock, $5,000 Dividends, $20,000 Insurance expense, $10,000 Salaries and wages expense, $40,000 Sales revenue, $150,000 Retained earnings is not given. Based on this information, how much is its net income? -$70,000 -$120,000 -$80,000 -$100,000 -$50,000
$100,000 Net income= rev -exp = 150,000-40,000, 10,000= $100,000
A corporation began the year with total assets of $125,000 and stockholders' equity of $40,000. During the year, the company reported the following: - Net Income $90,000 - Dividends $20,000 Total assets at the end of the year were $215,000. How much were total liabilites at the end of the year?
$105,000 get ending balance of stockholders' equity x = 40,000+ 90,000 -20,000= $110,000 Liabilites = 215,000 - 110,000 = $105,000
A company recorded the following cash transactions for the year: Paid $60,000 for salaries. Paid $135,000 to purchase office equipment.Paid $10,000 in dividends.Collected $245,000 from customers.What is the company's net cash from operating activities for the year? -$185,000 -$50,000 -$100,000 -$110,000 -$245,000
$185,000 245,000-60,000= 185,000 buying equipment is an investment activity paying a dividend is a financing activity
A company began the year with retained earnings of $620,000. During the year, the company did the following: Issued common stock, $840,000 Declared and paid dividends, $160,000 Incurred expenses, $2,400,000 The company's ending retained earnings is $660,000. What was the company's revenue for the year? -$1,580,000 -$2,600,000 -$2,440,000 -$3,440,000 -$3,280,000
$2,600,000
A company began the year with total assets of $230,000 and total liabilities of $160,000. During the year, the company did the following: - Recognized revenues $400,000 - Incurred expenses $220,000 - Declared and paid dividends $40,000 - Issued common stock $10,000 What is the stockholders' equity at the end of the year?
$220,000 Assets= Liabilites+ Stockholders' Equity 230,000 -160,000= 70,000 in equity equity increaed to $220,000 70,000+ 400,000-220,000- 40,000 +10,000= $220,000
If total liabilities increased by $46,000 during a period of time and stockholders equity decreased by $18,000 during the same period, then the amount and direction (increase or decrease) of the period s change in total assets is a(n) -$28,000 increase. -$64,000 increase. -$46,000 increase. -$28,000 decrease. -$64,000 decrease.
$28,000 increase
If total liabilites increased by $46,000 during a period of time and stockholders equity decreased by $18,000 during the same period, then the amount and direction (increase or decrease) of the period change in total assets is
$28,000 increase Asseets= Liabilites+ Equity 46-18= 28,000 increase
A corporation had the following accounts and balances: Accounts payable$ 4,000 Accounts receivable 8,000 Cash 9,000 Common stock 16,000 Equipment 45,000 Retained earnings Not given Supplies 2,000 Unearned service revenue 4,000 What is the balance of the company's retained earnings account? -$40,000 -$34,000 -$26,000 -$38,000 -$42,000
$40,000 Assets= accounts receivable +cash + equipment +supplies= 8,000+ 9,000+ 45,000+ 2,000= 64,000 Liabilites= accounts payable + unearned revenue = 4,000+ 4,000 = 8,000 Assets= liablilites + stockholders' equity stockholders' equity= 64,000-8,000= 56,000 stockholders' equity = common stock +retained earnings 56,000-16,000= $40,000
A company's retained earnings at the start of the year was $300,000. At the end of the current year, its accounts had the following balances: Accounts payable, $80,000 Accounts receivable, $60,000 Cash, $140,000 Common stock, $120,000 Dividends, $40,000 Equipment, $300,000 Retained earnings, Not given Salaries expense, $500,000 Service revenue, $560,000 Supplies, $20,000 Determine the company's total stockholders' equity at year-end. -$440,000 -$380,000 -$320,000 -$420,000 -$480,000
$440,000 calculate ending retained earning = 300,000 + 560,000- 500,000 -40,000 = 320,000 total stockholders' equity = 320,000 + 120,000= 440,000
The financial records for a corporation included the following information: - accounts receivable $55,000 - accounts payable $20,000 - cash $25,000 - common stock $25,000 - dividends $15,000 - sales revenue $90,000 - salaries and wages expense $30,000 - supplies expense $10,000 Retained earnings is not given. Based on this information, how much is its net income?
$50,000 Net income= rev-exp = 90,000- 30,000 -10,000= $50,000
A corporation had the following accounts and balances: Accounts payable $10,000 Accounts receivable 15,000 Buildings 40,000 Cash 5,000 Common stock 25,000 Equipment 30,000 Retained earnings Not given Unearned service revenue 4,000 What is the balance of the company's retained earnings account? -$71,000 -$101,000 -$41,000 -$59,000 -$51,000
$51,000 Assets= 15,000+ 40,000 +5,000+ 26,000+ 4,000 = 90,000 Liabilites= 10,000+ 4,000= 14,000 equity= assets- liabilites = 90,000- 14,000 = 76,000 retained earnings = stockholders' equity- common stock = 76,000- 25,000 = 51,000
A company recorded the following cash transactions for the year -collected $460,000 from customers -collected $50,000 from issuing a note to a bank -paid $10,000 to purchase office equipment - paid $140,000 for salaries -paid $20,000 in dividends - paid $260,000 for inventory What was the company's net cash provided by operating activities for the year?
$60,000 =$460,000 -$140,000- $260,000= $60,000
In what order should financical statements be prepared?
1. Income statement 2. Retained earnings 3. Balance Sheet get equity from retaied earnings for balance sheet
Which of the following is not an asset? -Accounts payable -Supplies -Land -Inventory -Cash
Accounts Payable
Which of the following is least likely to be considered a user of a business accounting information, and instead plays a role in the independent verification of the accuracy of a business's accounting information? -Managers -Investors -Creditors -Finance directors -Independent auditors
Independent auditors
Publicly traded U.S. companies must provide shareholders with an annual report. Which of the following is not part of the annual report provided to shareholders? -Internal and external users report -Management discussion and analysis -Auditor's report -Notes to the financial statements -Statement of cash flows
Internal and external users report
Which of the following describes that sequence in which financial statements are prepared? -None of these -All of these -The retained earnings statement is prepared before the income statement. -The balance sheet is prepared before the retained earnings statement. -The balance sheet is prepared before the income statement.
None of these
Which of the following best defines assets? -The amount of resources owned by a company minus the claims on those resources. -Resources belonging to a company that have a future benefit to the company. -The cash in the company s bank accounts. -The cash owned by the company. -Owners' investment in the business
Resources belonging to a company that have a future benefit to the company
Retained earnings at the end of the period is equal to which of the following? -Assets plus liabilities -Assets minus liabilities -Net income since the business began operating -Retained earnings at the beginning of the period plus net income minus liabilities -Retained earnings at the beginning of the period plus net income minus dividends
Retained earnings at the beginning of the period plus net income minus dividends
Which of the following statements is true regarding the Sarbanes-Oxley Act (SOX)? -SOX eliminated the requirement that company management certify the accuracy of the company's financial statements. -SOX decreased penalties for financial fraud by management. -Penalties no longer include the possibility of imprisonment. -All of these -None of these -SOX required increased independence of the certified public accountants hired to audit a company's financial statements.
SOX required increased independence of the certified public accountants hired to audit a company's financial statements
Which of the following statements is true regarding the Sarbanes-Oxley Act (SOX)?
SOXX increased the penalites for financial fruad. Penalties may include fines and imprisonment.
Which of the following is true with regards to the forms of business organization? -All of these are true -Partnerships and their owners generally receive less favorable tax treatment than corporations. -A partnership is a business organized as a separate legal entity owned by stockholders. -The number of corporations exceeds the combined number of proprietorships and partnerships in the United States. -Stockholders are generally not personally liable for their corporations' debts.
Stockholders are generally not personally liable for their corporations' debts
Which of the following is comprised of two parts: (1) common stock and (2) retained earnings? -Stockholders' equity -Expenses -Revenues -Assets -Liabilities
Stockholders' equity
Which of the following best describes stockholders' equity? -Stockholders' equity are the claims of owners. -Stockholders' equity are the claims of creditors. -Stockholders' equity is the cash collected from owners. -Stockholders' equity is the difference between revenues and expenses. -Stockholders' equity are the economic resources of the firm.
Stockholders' equity are the claims of owners.
Which of the following best defines accounting?
The information system that identifies, measures, and communicates information to permit informed judgements and decisions by the users of the information
Which of the following is required as a result of the Sarbanes-Oxley Act (SOX) passed into law in 2002? -Companies that go bankrupt must repay shareholders for lost investments. -Top management must certify the financial statements for their company. -Private companies must prepare audited financial statements. -None of these -All shareholders now have an oversight role of the company's financial activities.
Top management must certify the financial statements for their company
A company should report an issuance of common stock on its statement of cash flows as -marketing activity. -an investing activity. -an operating activity. -a financing activity. -a budgeting activity
a financing activity
An annual report includes all of the following except
a listing of all the stockholders
The right to receive money in the future is called a(n) -unearned revenue -revenue -account payable -account receivable -liability.
account receivable
Which of the following would appear on a balance sheet? -Net income -Interest expense -Dividends -Service revenue -Accounts receivable
accounts receivable
The cost of assets consumed or services used is also known as
an expense
The annual report provided to shareholders includes an auditor's report. The auditor's report includes an opinion about the fairness of the financial statements. The party expressing that opinion is -the Internal Revenue Service. -an independent auditor who is a member of the Government Auditing Accountants. -the company's Chief Operating Officer. -the company's internal auditor. -an independent auditor who is a Certified Public Accountant.
an independent auditor who is a certified public accoutant
In terms of the principal types of cash flow activities, paying for goods and services is an example of -a financing activity -an advertising activity -None of these -an operating activity -an investing activity.
an operating activity
If the auditor issuing the auditor's report is satisfied that the financial statements provide a fair representation of the company's financial position and result of operation, the auditor expresses
an unqualified opinion
Resources owned by a business are referred to as -assets -stockholders' equity -liabilities -expenses -revenues.
assets
A balance sheet shows -expenses, dividends, and stockholders' equity -assets, liabilities, and equity -assets, liabilities, and expenses -revenues, liabilities, and stockholders' equity -revenues, expenses, and dividends.
assets, liabilites, and equity
the ending balance of the retained earnings account appears on -the income statement, balance sheet, and statement of stockholders' equity. -both the income statement and the statement of stockholders' equity. -the statement of stockholders' equity only. -the balance sheet only. -both the statement of stockholders' equity and the balance sheet.
both the statement of stockholders' equity and the balance sheet
Which of the following is an example of an investing activity?
buying a delivery truck in exchange for cash
Which of the following is an asset? -Common stock -Cash -Notes payable -Retained earnings -Accounts payable
cash
Stockholders' equity is comprised of two components, including
common stock and retained earnings
Which of the following is an expense?
cost of goods sold
Borrowing money is an example of a(n) -capital activity - investing activity - operating activity - delivering activity - financing activity
financing activity
To show how successfully your business performed during a period of time, you would report its revenues and expenses in the
income statement
To show how successfully your business performed during a period of time, you would report its revenues and expenses in the -sources and uses statement. -balance sheet. -income statement. -statement of stockholders' equity. -statement of cash flows.
income statement
An advantage of the corporate form of business is that.
it has an unlimited life
The segment of a corporation's annual report that describes the corporation's accounting methods is the -auditor's report. -income statement. -balance sheet. -notes to the financial statements. -management discussion and analysis.
notes to the financial statement
Which of the following would appear on a balance sheet?
prepaid rent Assets=Liabilities-Equity
Net income results when -assets exceeds liabilities -equities are greater than dividends -amounts received from issuing stock exceed dividends paid -revenues are greater than expenses -liabilities decrease.
revenues are greater than expenses
Which of the following best describes stockholders' equity?
stockholders' equity are the claims of owners
Which statement about users of accounting information is correct? -Labor unions are considered internal users -Taxing authorities are considered external users -Regulatory authorities are considered internal users -Creditors are considered internal users -Management is considered an external user.
taxing authorities are considered external users
Which of the following is an internal user of accounting data?
the comapny's finance personnel
Which of the following best defines accounting? -The information system that identifies, measures, and communicates the economic events of an organization to interested users. -the processing system and regulatory rules for determining the fair market value of a business organization. -The procedures for collecting information about the production of merchandise and services for sale to customers. -The interconnected network of financial information used to track the cash flows of a business organization. -The system of electronic collection, organization, and communication of valuation information.
the information system that identifies, measures, and communicates the economic eents of an organization to be interested users
Which of the following would not appear on an income statement? -Salaries and wages expense -Cost of goods sold -Service revenue -Unearned revenue -Net income
unearned revenue
