ACC101 Chap1 – Flashcards
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E. All of these.
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95. Accounting is an information and measurement system that: A. Identifies business activities. B. Records business activities. C. Communicates business activities. D. Helps people make better decisions. E. All of these.
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C. Has closely linked accounting with consulting, planning, and other financial services.
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96. Technology A. Has replaced accounting. B. Has not changed the work that accountants do. C. Has closely linked accounting with consulting, planning, and other financial services. D. In accounting has replaced the need for decision makers. E. In accounting is only available to large corporations.
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B. To provide financial statements to help external users analyze an organization's activities.
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97. The primary objective of financial accounting is: A. To serve the decision-making needs of internal users. B. To provide financial statements to help external users analyze an organization's activities. C. To monitor and control company activities. D. To provide information on both the costs and benefits of looking after products and services. E. To know what, when, and how much to produce.
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B. Managers.
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98. Internal users of accounting information include: A. Shareholders. B. Managers. C. Lenders. D. Suppliers. E. Customers.
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B. Managerial accounting.
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99. The area of accounting aimed at serving the decision making needs of internal users is: A. Financial accounting. B. Managerial accounting. C. External auditing. D. SEC reporting. E. Bookkeeping.
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E. All of these.
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100. The operating functions of a business include: A. Research and development. B. Purchasing. C. Marketing. D. Distribution. E. All of these.
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E. All of these.
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101. External users of accounting information include: A. Shareholders. B. Customers. C. Creditors. D. Government regulators. E. All of these.
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E. All of these.
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102. Career opportunities in accounting include: A. Auditing. B. Management consulting. C. Tax accounting. D. Cost accounting. E. All of these.
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E. All of these.
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103. Career opportunities in accounting include: A. Budgeting. B. Auditing. C. Cost accounting. D. Internal Auditing. E. All of these.
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E. All of these.
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104. Accounting certifications include the: A. Certified Public Accountant. B. Certified Management Accountant. C. Certified Internal Auditor. D. Personal Financial Specialist E. All of these.
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E. All of these.
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105. A Certified Public Accountant A. Must meet education and experience requirements B. Must pass an examination C. Must exhibit ethical character D. May also be a Certified Management Accountant. E. All of these.
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A. That auditors' pay not depend on the figures in the client's reports.
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106. Ethical behavior requires: A. That auditors' pay not depend on the figures in the client's reports. B. Auditors to invest in businesses they audit. C. Analysts to report information favorable to their companies. D. Managers to use accounting information to benefit themselves. E. All of these.
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A. Is a concern for the impact of our actions on society.
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107. Social responsibility: A. Is a concern for the impact of our actions on society. B. Is a code that helps in dealing with confidential information. C. Is required by the SEC. D. Requires that all businesses conduct social audits. E. All of these.
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E. All of these.
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108. Ethics: A. Are beliefs that separate right from wrong. B. And law often coincide. C. Help to prevent conflicts of interest. D. Are critical in accounting. E. All of these.
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E. Objectivity principle.
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109. The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion is the: A. Business entity principle. B. Monetary unit principle. C. Going-concern principle. D. Cost principle. E. Objectivity principle.
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D. A and C only.
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110. Businesses can take the following form(s): A. Sole proprietorship. B. Common stock. C. Partnership. D. A and C only. E. All of these.
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A. Is a business legally separate from its owners.
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111. A corporation: A. Is a business legally separate from its owners. B. Is controlled by the FASB. C. Has shareholders who have unlimited liability for the acts of the corporation. D. Is the same as a limited liability partnership. E. All of these.
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E. All of these.
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112. The rules adopted by the accounting profession as guides in preparing financial statements are: A. Comprised of both general and specific principles. B. Known as generally accepted accounting principles. C. Abbreviated as GAAP. D. Intended to make information in financial statements relevant, reliable, and comparable. E. All of these.
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E. IASB.
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113. The committee that attempts to create more harmony among the accounting practices of different countries by identifying preferred practices and encouraging their worldwide acceptance is the: A. AICPA. B. FASB. C. CAP. D. SEC. E. IASB.
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B. FASB.
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114. The private group that currently has the authority to establish generally accepted accounting principles is the: A. APB. B. FASB. C. AAA. D. AICPA. E. SEC.
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B. Business entity assumption.
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115. The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the: A. Objectivity principle. B. Business entity assumption. C. Going-concern assumption. D. Revenue recognition principle. E. Cost principle.
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A. Going-concern principle.
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116. The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the: A. Going-concern principle. B. Business entity principle. C. Objectivity principle. D. Cost Principle. E. Monetary unit principle.
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E. All of these.
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117. Rules adopted by the accounting profession as guides in measuring, recording, and reporting the financial condition and activities of a business: A. Are comprised of both general and specific principles. B. Are known as generally accepted accounting principles. C. Are abbreviated as GAAP. D. Arise from both long-used practices and from rulings of authoritative groups. E. All of these.
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B. $137,000.
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118. If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at: A. $95,000. B. $137,000. C. $138,500. D. $140,000. E. $150,000.
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C. Business entity principle.
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119. To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the: A. Objectivity principle. B. Realization principle. C. Business entity principle. D. Going-concern principle. E. Revenue recognition principle.
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B. Cost principle.
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120. The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the: A. Accounting equation. B. Cost principle. C. Going-concern principle. D. Realization principle. E. Business entity principle.
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E. All of these.
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121. Generally accepted accounting principles: A. Are based on long used accounting practices. B. Are basic assumptions, concepts, and guidelines in preparing financial statements. C. Are detailed rules used in reporting on business transactions and events. D. Arise from the rulings of authoritative bodies. E. All of these.
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A. Means that information is supported by independent, unbiased evidence.
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122. The objectivity principle: A. Means that information is supported by independent, unbiased evidence. B. Means that information can be based on what the preparer thinks is true. C. Means that financial statements should contain information that is optimistic. D. Means that a business may not reorganize revenue until cash is received. E. All of these.
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C. Revenue recognition principle.
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123. The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the: A. Going-concern principle. B. Cost principle. C. Revenue recognition principle. D. Objectivity principle. E. Business entity principle
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A. Revenue recognition principle.
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124. The question of when revenue should be recognized on the income statement (according to GAAP) is addressed by the: A. Revenue recognition principle. B. Going-concern principle. C. Objectivity principle. D. Business entity principle. E. Cost principle.
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A. Hopes to create harmony among accounting practices of different countries
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125. The International Accounting Standards Board (IASB) A. Hopes to create harmony among accounting practices of different countries B. Is the government group that establishes reporting requirements for companies that issue stock to the public. C. Has the authority to impose its standards on companies. D. Is the only source of generally accepted accounting principles (GAAP). E. Only applies to companies that are members of the European Union.
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C. Cost principle
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126. The Maximum Experience Company acquired a building for $500,000. Maximum Experience had the building appraised, and found that the building was easily worth $575,000. The seller had paid $300,000 for the building 6 years ago. Which accounting principle would require Maximum Experience use to record the building on its records at $500,000? A. Monetary unit principle B. Going-concern principle C. Cost principle D. Business entity principle E. Revenue recognition principle
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E. Revenue recognition principle
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127. On December 15, 2007, Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in 2008. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2008 and not 2007? A. Monetary unit principle B. Going-concern principle C. Cost principle D. Business entity principle E. Revenue recognition principle
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D. Business entity principle
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128. Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services? A. Monetary unit principle B. Going-concern principle C. Cost principle D. Business entity principle E. None of these. Since Marian is a sole proprietor, she is not required to separate her personal financial information from the financial information of Mosely Accounting Services.
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A. Includes a general partner with unlimited liability.
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129. A limited partnership: A. Includes a general partner with unlimited liability. B. Is subject to double taxation. C. Has owners called stockholders. D. Is the same as a corporation. E. May only have two partners.
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B. Has unlimited liability.
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130. A partnership: A. Is also called a sole proprietorship. B. Has unlimited liability. C. Has to have a written agreement in order to be legal. D. Is a legal organization separate from its owners. E. Has owners called shareholders.
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A. The cash equivalent value of what was given up or received.
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131. According to generally accepted accounting principles, a company's balance sheet should show the company's assets at: A. The cash equivalent value of what was given up or received. B. The current market value of the asset received in all cases. C. The cash paid only, even if something other than cash was given in the exchange. D. The best estimate of a certified internal auditor. E. The objective value to external users.
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E. Both A and B.
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132. If a business is not being sold or closed, the amounts reported in the accounts for assets used in operations are based on costs. This practice is best justified by the: A. Cost principle. B. Going-concern principle. C. Objectivity principle. D. Business entity principle. E. Both A and B.
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C. Cost principle.
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133. Which of the following accounting principles would require that all goods and services purchased be recorded at cost? A. Going-concern principle. B. Continuing-concern principle. C. Cost principle. D. Business entity principle. E. Consideration principle.
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D. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price.
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134. Revenue is properly recognized: A. When the customer's order is received. B. Only if the transaction creates an account receivable. C. At the end of the accounting period. D. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. E. When cash from a sale is received.
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B. $85,000 decrease
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135. If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land account transaction amount to handle the sale of the land in the seller's books is: A. $85,000 increase B. $85,000 decrease C. $137,000 increase D. $137,000 decrease E. None of these
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A. Assets increase $52,000; owner's equity increases $52,000
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136. If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. What is the effect of the sale on the accounting equation for the seller? A. Assets increase $52,000; owner's equity increases $52,000 B. Assets increase $85,000; owner's equity increases $85,000 C. Assets increase $137,000; owner's equity increases $137,000 D. Assets increase $140,000; owner's equity increases $140,000 E. None of these $137,000 - $85,000 = $52,000
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C. Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000
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137. If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. At the time of the sale, assume that the seller still owed $30,000 to TrustOne Bank on the land that was purchased for $85,000. Immediately after the sale, the seller paid off the loan to TrustOne Bank. What is the effect of the sale and the payoff of the loan on the accounting equation? A. Assets increase $52,000; owner's equity increases $22,000; liabilities decrease $30,000 B. Assets increase $52,000; owner's equity increases $30,000; liabilities decrease $30,000 C. Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000 D. Assets decrease $30,000; owner's equity decreases $30,000; liabilities decrease $30,000 E. Assets decrease $55,000; owner's equity decreases $55,000; liabilities decrease $30,000 $137,000 - $85,000 - 30,000 = 22,000
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B. Obtaining a long-term loan.
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138. An example of a financing activity is: A. Buying office supplies. B. Obtaining a long-term loan. C. Buying office equipment. D. Selling inventory. E. Buying land.
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A. Paying wages.
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139. An example of an operating activity is: A. Paying wages. B. Purchasing office equipment. C. Borrowing money from a bank. D. Selling stock. E. Paying off a loan.
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C. Involve defining the ideas, goals, and actions of an organization.
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140. Planning activities: A. Are the means organizations use to pay for resources. B. Involve the acquiring and disposing of resources that an organization uses to acquire and sell its products or services. C. Involve defining the ideas, goals, and actions of an organization. D. Are the carrying out of an organization's plans. E. Involve using resources to research, develop, purchase, produce, and market products and services.
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B. Involve using resources to research, develop, purchase, produce, distribute and market products and services.
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141. Operating activities: A. Are the means organizations use to pay for resources like land, buildings and equipment. B. Involve using resources to research, develop, purchase, produce, distribute and market products and services. C. Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services. D. Are also called asset management. E. Are also called strategic management.
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D. All of these.
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142. The major activities of a business include: A. Operating. B. Financing. C. Investing. D. All of these.
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C. Purchase of land.
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143. An example of an investing activity is: A. Paying wages of employees. B. Withdrawals by the owner. C. Purchase of land. D. Selling inventory. E. Contribution from owner.
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D. Is the excess of revenues over expenses.
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144. Net Income: A. Decreases equity. B. Represents the amount of assets owners put into a business. C. Equals assets minus liabilities. D. Is the excess of revenues over expenses. E. Represents owners' claims against assets.
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D. $492,000.
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145. If equity is $300,000 and liabilities are $192,000, then assets equal: A. $108,000. B. $192,000. C. $300,000. D. $492,000. E. $792,000. Assets = $192,000 + $300,000 = $492,000
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A. Assets.
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146. Resources owned or controlled by a company that are expected to yield future benefits are: A. Assets. B. Revenues. C. Liabilities. D. Owner's Equity. E. Expenses.
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B. Revenues.
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147. Gross increases in equity from a company's earnings activities are: A. Assets. B. Revenues. C. Liabilities. D. Owner's Equity. E. Expenses.
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B. The excess of revenues over expenses.
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148. Net income is: A. Assets minus liabilities. B. The excess of revenues over expenses. C. An asset. D. The same as revenue. E. The excess of expenses over equity.
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C. Equity.
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149. The difference between a company's assets and its liabilities, or net assets is: A. Net income. B. Expense. C. Equity. D. Revenue. E. Net loss.
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E. Liabilities.
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150. Creditors' claims on the assets of a company are called: A. Net losses. B. Expenses. C. Revenues. D. Equity. E. Liabilities.
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D. Expenses.
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151. Decreases in equity that represent costs of assets or services used to earn revenues are called: A. Liabilities. B. Equity. C. Withdrawals. D. Expenses. E. Owner's Investment.
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B. Accounting equation.
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152. The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the: A. Income statement equation. B. Accounting equation. C. Business equation. D. Return on equity ratio. E. Net income.
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D. Accounting equation.
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153. Assets = Liabilities + Equity is known as the: A. Income statement equation. B. Cost principle. C. Objectivity principle. D. Accounting equation. E. Transaction principle.
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C. Are the costs of assets or services used to earn revenues.
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154. Expenses: A. Increase equity. B. Are gross increases in equity from a company's earning activity. C. Are the costs of assets or services used to earn revenues. D. Occur when equity exceeds revenue. E. Are creditors claims on assets.
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A. Occurs when revenues exceed expenses.
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155. Net income: A. Occurs when revenues exceed expenses. B. Is the same as revenue. C. Equals resources owned or controlled by a company. D. Occurs when expenses exceed assets. E. Represents assets taken from a company for an owner's personal use.
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D. The gross increase in equity from a company's earning activities.
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156. Revenues are: A. The same as net income. B. The excess of expenses over assets. C. Resources owned or controlled by a company D. The gross increase in equity from a company's earning activities. E. The costs of assets or services used.
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E. All of these
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157. Accounting A. Is an information and measurement system. B. Identifies, records, and communicates information about business activities C. Helps people make better decisions D. Involves interpreting information and designing information systems to provide useful reports that monitor and control a company's activities. E. All of these
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B. $67,000.
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158. If assets are $99,000 and liabilities are $32,000, then equity equals: A. $32,000. B. $67,000. C. $99,000. D. $131,000. E. $198,000. Equity = $99,000 - $32,000 = $67,000
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C. Net assets.
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159. Another name for equity is: A. Net income. B. Expenses. C. Net assets. D. Revenue. E. Net loss.
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C. Net loss.
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160. The excess of expenses over revenues for a period is: A. Net assets. B. Equity. C. Net loss. D. Net income. E. A liability.
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E. All of these.
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161. Which of the following statements is true about assets? A. They are economic resources owned or controlled by the business. B. They are expected to provide future benefits to the business. C. They appear on the balance sheet. D. Claims on them can be shared between creditors and owners. E. All of these.
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B. Withdrawal.
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162. A payment to an owner is called a(n): A. Liability. B. Withdrawal. C. Expense. D. Contribution. E. Investment.
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A. Withdrawals.
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163. Distributions by a business to its owners are called: A. Withdrawals. B. Expenses. C. Assets. D. Retained earnings. E. Net Income.
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D. Another name for the accounting equation.
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164. The balance sheet equation is: A. Revenues minus expenses equals net income. B. Debits equal credits. C. The bookkeeping phase of accounting. D. Another name for the accounting equation. E. Assets minus liabilities and equity.
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C. $500,000.
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165. The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners? A. $900,000. B. $700,000. C. $500,000. D. $200,000. E. It is impossible to determine unless the amount of this owners' investment is known. $700,000 - $200,000 = $500,000
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D. $31,100
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166. On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year? A. $8,300 B. $13,050 C. $20,500 D. $31,100 E. $40,400 $20,500 + $7,250 + $650 + $12,000 - $9,300 = $31,100
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B. Accounts receivable.
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167. Assets created by selling goods and services on credit are: A. Accounts payable. B. Accounts receivable. C. Liabilities. D. Expenses. E. Equity.
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C. A business transaction.
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168. An exchange of value between two entities is called: A. The accounting equation. B. Recordkeeping or bookkeeping. C. A business transaction. D. An asset. E. Net Income.
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B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect.
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169. Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? A. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase. B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect. C. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect. D. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase. E. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.
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D. +$10,000 accounts receivable, +$10,000 revenue.
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170. How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed? A. +$10,000 accounts receivable, -$10,000 accounts payable. B. +$10,000 accounts receivable, +$10,000 accounts payable. C. +$10,000 accounts receivable, +$10,000 cash. D. +$10,000 accounts receivable, +$10,000 revenue. E. +$10,000 accounts receivable, -$10,000 revenue.
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E. Assets increase by $75,000 and liabilities increase by $75,000.
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171. Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? A. Assets increase by $75,000 and expenses increase by $75,000. B. Assets increase by $75,000 and expenses decrease by $75,000. C. Liabilities increase by $75,000 and expenses decrease by $75,000. D. Assets decrease by $75,000 and expenses decrease by $75,000. E. Assets increase by $75,000 and liabilities increase by $75,000.
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C. Total assets, total liabilities, and equity are unchanged.
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172. Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are: A. Total assets decrease and equity increases. B. Both total assets and total liabilities decrease. C. Total assets, total liabilities, and equity are unchanged. D. Both total assets and equity are unchanged and liabilities increase. E. Total assets increase and equity decreases.
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D. Increased $45,000.
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173. If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have: A. Decreased $105,000. B. Decreased $45,000. C. Increased $30,000. D. Increased $45,000. E. Increased $105,000. Change in Assets = Change in Liabilities + Change in Owner's Equity Change in Assets = $75,000 + (-$30,000) = +$45,000
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A. Increased $22,000.
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174. If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have: A. Increased $22,000. B. Decreased $22,000. C. Increased $89,000. D. Decreased $156,000. E. Increased $156,000. Change in Assets = Change in Liabilities + Change in Equity Change in Owner's equity = + $89,000 - $67,000 = +$22,000
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A. Assets would have increased $55,000.
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175. If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets? A. Assets would have increased $55,000. B. Assets would have decreased $55,000. C. Assets would have increased $19,000. D. Assets would have decreased $19,000. E. None of these. Assets = Liabilities + Equity Assets = $74,000 + (-$19,000) = $55,000
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C. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would not change.
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176. If a company paid $38,000 of its accounts payable in cash, what was the effect on the assets, liabilities, and equity? A. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000. B. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000. C. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would not change. D. There would be no effect on the accounts because the accounts are affected by the same amount. E. None of these.
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B. $245,000.
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177. If assets are $365,000 and equity is $120,000, then liabilities are: A. $120,000. B. $245,000. C. $365,000. D. $485,000. E. $610,000. Liabilities = $365,000 - $120,000 = $245,000
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E. All of these.
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178. Return on assets is: A. Also called return on investment. B. ROA. C. Computed by dividing net income by average total assets. D. Used in helping evaluate management. E. All of these.
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A. 8.3%.
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179. Reebok had income of $150 million and average invested assets of $1,800 million. Its return on assets is: A. 8.3%. B. 83.3%. C. 12%. D. 120%. E. 16.7%. $150 million/$1,800 million = 8.3%
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C. 17.5%.
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180. Nike had income of $350 million and average invested assets of $2,000 million. Its ROA is: A. 1.8%. B. 35%. C. 17.5%. D. 5.7%. E. 3.5%. $350 million/$2,000 million = 17.5%
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B. 8.5%.
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181. FastForward has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets. A. 7.7%. B. 8.5%. C. 9.5%. D. 11.8%. E. 13.0%. $18,955/[($200,000 +$246,000)/2] = $18,955/$223,000 = 8.5%
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D. 15.6%
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182. Harris Co. has a net income of $43,000, assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000. Compute its return on assets. A. 8.4% B. 17.2% C. 14.3% D. 15.6% E. 1.5% $43,000/(($250,000 + $300,000)/2) = 15.6%
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B. Low-risk and low-return investments.
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183. U. S. government bonds are: A. High-risk and high-return investments. B. Low-risk and low-return investments. C. High-risk and low-return investments. D. Low-risk and high-return investments. E. High risk and no-return investments.
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C. The uncertainty about the expected return to be earned.
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184. Risk is: A. Net income divided by average total assets. B. The reward for investment. C. The uncertainty about the expected return to be earned. D. Unrelated to expected return. E. Derived from the idea of getting something back from an investment.
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E. A, B and C only.
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185. The statement of cash flows reports on cash flows for: A. Operating activities. B. Investing activities. C. Financing activities. D. Planning activities. E. A, B and C only.
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E. All of these.
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186. The basic financial statements include the: A. Balance Sheet. B. Income Statement. C. Statement of Owner's Equity. D. Statement of Cash Flows. E. All of these.
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E. B, C, and D.
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187. The statement of cash flows reports information on: A. Revenue activities. B. Operating activities. C. Financing activities. D. Investing activities. E. B, C, and D.
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B. Reports how equity changes over a period of time.
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188. The statement of owner's equity: A. Reports how equity changes at a point in time. B. Reports how equity changes over a period of time. C. Reports on cash flows for operating, financing, and investing activities over a period of time. D. Reports on cash flows for operating, financing, and investing activities at a point in time. E. Reports on amounts for assets, liabilities, and equity at a point in time.
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D. An Income statement.
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189. The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called: A. A Balance sheet. B. A Statement of owner's equity. C. A Statement of cash flows. D. An Income statement. E. A Statement of financial position.
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C. The types and amounts of assets, liabilities, and equity of a business as of a specific date.
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190. A balance sheet lists: A. The types and amounts of the revenues and expenses of a business. B. Only the information about what happened to equity during a time period. C. The types and amounts of assets, liabilities, and equity of a business as of a specific date. D. The inflows and outflows of cash during the period. E. The assets and liabilities of a company but not the owner's equity.
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A. Balance sheet.
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191. A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n): A. Balance sheet. B. Income statement. C. Statement of cash flows. D. Statement of owner's equity. E. Financial Status Statement.
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B. Statement of cash flows.
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192. The financial statement that describes where a company's cash came from and where it went during the period is the: A. Statement of financial position. B. Statement of cash flows. C. Balance sheet. D. Income statement. E. Statement of changes in owner's equity.
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E. Statement of owner's equity.
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193. The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the: A. Statement of financial position. B. Statement of cash flows. C. Balance sheet. D. Income statement. E. Statement of owner's equity.
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E. Both C and D.
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194. Cash investments by owners are listed on which of the following statements? A. Balance sheet. B. Income statement. C. Statement of owner's equity. D. Statement of cash flows. E. Both C and D.
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A. Balance sheet.
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195. Accounts payable appear on which of the following statements? A. Balance sheet. B. Income statement. C. Statement of owner's equity. D. Statement of cash flows. E. Transaction statement.
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C. Assets owned by a business.
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196. The income statement reports all of the following except: A. Revenues earned by a business. B. Expenses incurred by a business. C. Assets owned by a business. D. Net income or loss earned by a business. E. The time period over which the earnings occurred.
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C. $297,000.
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197. Use the following information as of December 31 to determine equity. Liabilities............... 141,000 Cash........................ 57,000 Equipment............... 206,000 Buildings.................. 175,000 A. $57,000. B. $141,000. C. $297,000. D. $438,000. E. $579,000. Assets = $57,000 + $206,000 + $175,000 = $438,000 Equity = $438,000 - $141,000 = $297,000
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A. $190,000.
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198. Determine the net income of a company for which the following information is available for the month of May. Employee salary expense.........180,000 Interest expense........................ 10,000 Rent expense............................ 20,000 Consulting revenue...................400,000 A. $190,000. B. $210,000. C. $230,000. D. $400,000. E. $610,000. Expenses: $180,000 + $10,000 + $20,000 = $210,000 Net income = $400,000 - $210,000 = $190,000
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B. Investing activity.
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199. A company acquires equipment for $75,000 cash. This represents a(n) A. Operating activity. B. Investing activity. C. Financing activity. D. Revenue activity. E. Expense activity.
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E. Financing activity.
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200. A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n): A. Revenue activity. B. Operating activity. C. Expense activity. D. Investing activity. E. Financing activity.
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A. $40,500 increase.
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201. Flash had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was: A. $40,500 increase. B. $40,500 decrease. C. $134,500 decrease. D. $134,000 increase. E. $9,500 increase. $62,500 - $47,000 + $25,000 = $40,500 increase
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D. $274,000.
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202. Flash has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is: A. $223,000. B. $240,000. C. $268,000. D. $274,000. E. $208,000. $257,000 + $51,000 - $40,000 + $6,000 = $274,000
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E. Both B and D.
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203. Rent expense that is paid with cash appears on which of the following statements? A. Balance sheet. B. Income statement. C. Statement of owner's equity. D. Statement of cash flows. E. Both B and D.
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E. Both A and B.
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204. Fees earned (but not yet received in cash) by a business in exchange for services it provided appear on which of the following statements? A. Balance sheet. B. Income statement. C. Statement of owner's equity. D. Statement of cash flows. E. Both A and B.
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C. $71,000.
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205. A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity? A. $17,000. B. $29,000. C. $71,000. D. $88,000. E. $105,000. Assets = $22,000 + $16,000 + $50,000 = $88,000 Liabilities = $17,000 Owner's Equity = $88,000 - $17,000 = $71,000
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E. $282,000.
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206. A company reported total equity of $145,000 on its December 31, 2008 balance sheet. The following information is available for the year ended December 31, 2009: 2009 Revenues .......................... 210,000 2009 Expenses .......................... 165,000 Liabilities, at December 2009....... 92,000 What are the total assets of the company at December 31, 2009? A. $45,000. B. $92,000. C. $98,000. D. $210,000. E. $282,000. Net income = $210,000 - $165,000 = $45,000 2008 equity = $145,000 + $45,000 = $190,000 2008 assets = $190,000 + $92,000 = $282,000
