question

The assets of a company total $700,000; the liabilities, $200,000. What are the total claims of the owners?

answer

$500,000

question

If net income for the period was $134,250, dividends distributed were $76,530 and Ending Retained Earnings was $862,520, what was the Beginning Retained Earnings for the period?

answer

$804,800

question

Decreases in retained earnings that represent costs of assets or services that are used to earn revenues are called:

answer

Expenses

question

Assets = Liabilities + Equity is known as the:

answer

Accounting equation

question

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 equity?

answer

$71,000

question

Which of the following statements is not true about assets?

answer

They appear on the statement of retained earnings

question

Increases in retained earnings from a company's earnings activities are:

answer

Revenues

question

The financing functions of a business include:

answer

Selling common stock

question

The excess of expenses over revenues for a period is:

answer

Net loss

question

The major activities of a business include:

answer

Operating, Investing, Financing

question

Net Income:

answer

Is the excess of revenues over expenses

question

A limited partnership:

answer

Includes a general partner with unlimited liability

question

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:

answer

Business entity principle

question

The accounting guideline prescribing that financial statement information be supported by independent, unbiased evidence other than someone's belief or opinion is the:

answer

Objectivity principle

question

Which of the following accounting principles would prescribe that all goods and services purchased is recorded at cost?

answer

Cost principle

question

If Beginning Retained Earnings was $184,300, the company distributed $46,000 in dividends and Ending Retained Earnings was $345,000, what was the net income for the period?

answer

$206,700

question

Assets created by selling goods and services on credit are:

answer

Accounts receivable

question

Congress passed the Sarbanes-Oxley Act to

answer

Help curb financial abuses at companies that issue their stock to the public

question

Another name for equity is:

answer

Net assets

question

An example of an investing activity is:

answer

Purchasing land

question

The statement of retained earnings:

answer

Reports how retained earnings changes over a period of time

question

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n):

answer

Financing activity

question

Revenues are:

answer

Increases in retained earnings from a company's earning activities

question

Of the following accounts, the one that normally has a credit balance is:

answer

Sales Salaries Payable

question

Which of the following statements is correct?

answer

The left side of a T-account is the debit side

question

The process of transferring general journal information to the ledger is:

answer

Posting

question

According to IFRSs, comparative information on financial statements is:

answer

Required for the preceding period only

question

The general ledger of a business

answer

Is a collection of all accounts used in a company's information system

question

What is another name for the general journal?

answer

The book of original entry

question

Source documents:

answer

Are the sources of accounting information

question

A ledger is:

answer

A record containing increases and decreases in a specific asset, liability, equity, revenue or expense item

question

The record in which transactions are first recorded is the:

answer

Journal

question

Which of the following is a true statement regarding debits and credits?

answer

Assets and expenses are both increased with a debit

question

Wisconsin Rentals purchased office supplies on credit. The general journal entry made by Wisconsin Rentals will include a:

answer

Credit to Accounts Payable

question

An account used to record the owner's investments in the business is called:

answer

Common Stock

question

Which of the following statements about the Cash account is true?

answer

The cash account includes the value of any medium of exchange that a bank accepts for deposit

question

A list of all accounts used by a company and the identification number assigned to each account is called a:

answer

Chart of accounts

question

A column in journals and ledger accounts used to cross reference journal and ledger entries is the:

answer

Posting reference column

question

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

answer

Recorded as a credit to an unearned revenue account

question

Prepaid expenses are:

answer

Assets that represent prepayments of future expenses

question

An account balance is:

answer

The difference between the total debits and total credits for an account including the beginning balance

question

Which of the following statements is incorrect?

answer

Risk is higher if a company has higher assets

question

A credit is used to record:

answer

An increase in an unearned revenue account

question

The account used to record the transfers of assets from a business to its stockholders is:

answer

The retained earnings account

question

Which of the following accounts would not be on the post closing trial balance?

answer

Dividends

question

A trial balance prepared after adjustments have been recorded is called a(n):

answer

Unadjusted trial balance

question

A classified balance sheet:

answer

Organizes assets and liabilities into important subgroups

question

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

answer

Debit Unearned Legal Fees and credit Legal Fees Earned

question

The Income Summary account is used

answer

To close the revenue and expense accounts

question

Financial statements are typically prepared in the following order:

answer

Income statement, statement of retained earnings, balance sheet

question

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

answer

A debit to Cash and a credit to Salaries Payable

question

Which of the following is the usual final step in the accounting cycle?

answer

Preparing a post-closing trial balance

question

Profit margin is defined as:

answer

Net income divided by net sales

question

Which of the following accounts would be closed at the end of the accounting period?

answer

Fees Earned

question

The length of time covered by a set of periodic financial statements is referred to as the:

answer

Accounting period

question

The difference between the cost of an asset and the accumulated depreciation for that asset is called

answer

Depreciation Value

question

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

answer

$2,700

question

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

answer

Accumulated Depreciation-Office Equipment

question

A trial balance prepared after the closing entries have been journalized and posted is the:

answer

Adjusted trial balance

question

The recurring steps performed each accounting period, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, are referred to as the:

answer

Accounting cycle

question

Which of the following identifies the proper order of the accounting cycle?

answer

Journalize, Post, Adjusted Trial Balance

question

Merchandise inventory:

answer

Is a current asset

question

The quick assets are defined as:

answer

Cash, short-term investments and current receivables

question

An account used in the periodic inventory system that is not used in the perpetual inventory system is

answer

Purchases

question

A company had: net sales of $82,000; cost of goods sold of $70,000; and other expenses of $2,000. Its gross margin ratio equals:

answer

14.63%

question

The credit terms 2/10, n/30 are interpreted as:

answer

2% cash discount if the amount is paid within 10 days, with the balance due in 30 days

question

A merchandising company:

answer

Earns net income by buying and selling merchandise

question

A company had cash sales of $49,527, credit sales of $38,540, sales returns and allowances of $7,100 and sales discounts of $4,375. The company's net sales for this period equal:

answer

$76,592

question

Multiple-step income statements:

answer

Contain more detail than a simple listing of revenues and expenses

question

A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the gross profit/margin for the period?

answer

$855,000

question

During March, a company had cash receipts of $2,300 and cash disbursements of $6,600. The March 31 cash balance was $2,780. What was the March 1 beginning cash balance?

answer

$7,080

question

A company has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

answer

26.0%

question

A company's current assets were $17,980, its quick assets were $11,420 and its current liabilities were $12,190. Its quick ratio equals:

answer

0.94

question

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:

answer

$3,925.00

question

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

answer

Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect

question

The income statement reports all of the following except:

answer

Assets owned by a business

question

Western Company has an annual reporting period that runs from July 1st through June 30th. Based on this information which of the following is a true statement?

answer

Western has adopted a fiscal year

question

Internal users of accounting information always include:

answer

Managers

question

If liabilities are $51,500 and assets are $173,425, then equity equals:

answer

$121,925

question

The acid-test ratio differs from the current ratio in that:

answer

Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio

question

The debt ratio is used:

answer

To reflect the risk associated with a company's debts

question

Which of the following statements is true?

answer

Retained earnings must be closed each accounting period

question

A trade discount is:

answer

A reduction in price below the list price

question

A corporation:

answer

Is a legal entity separate and distinct from its owners

question

The amounts reported in the accounts for assets used in operations are based on their costs. This practice is best justified by the:

answer

Cost principle

question

The accrual basis of accounting:

answer

Is generally accepted for external reporting since it is more useful for most business decisions

question

If a company records prepayment of expenses in an asset account, the adjusting entry would:

answer

Cause an adjustment to prior expense to be overstated and assets to be understated

question

If equity is $300,000 and liabilities are $192,000, then assets equal:

answer

$492,000

question

The principle prescribing that financial statements 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:

answer

Going-concern principle

question

U.S. government bonds are:

answer

Low-risk and low-return investments

question

Which of the following is the correct sequence for the heading for ABC Company's 2010 Balance Sheet?

answer

ABC Company, Balance Sheet, 12/31/10

question

Which of the following assets is not depreciated?

answer

Computers

question

A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equal:

answer

$217,500

question

The gross margin ratio:

answer

Measures a merchandising firm's ability to earn a profit from the sale of inventory

question

Expenses:

answer

Are the costs of assets or services used to earn revenues

question

The acid-test ratio differs from the current ratio in that:

answer

The acid-test ratio excludes short-term investments from the calculation

question

A debit is used to record:

answer

A decrease in the balance of retained earnings

question

Apatha Company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effects of this transaction include:

answer

Assets increase by $75,000 and liabilities increase by $75,000

question

An example of an operating activity is:

answer

Paying wages

question

Which of the following list of events properly reflects the early steps taken in the accounting process?

answer

Analyze each transaction, Record relevant transactions, Post journal information to ledger accounts, Prepare and analyze the trial balance

question

If a company records prepayment of expenses in an asset account, the adjusting entry would:

answer

Cause an adjustment to prior expense to be overstated and assets to be understated

question

The principle 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 non-cash assets received from customers in exchange for goods or services is called the:

answer

Revenue recognition principle

question

On June 30, 2009, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On June 30, 2009 Apricot should record:

answer

A debit to a prepaid expense for $5,000

question

During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance?

answer

$2,900

question

Return on assets is:

answer

Computed by multiplying net income by total assets

question

The description of the relation between a company's assets, liabilities and equity, which is expressed as Assets = Liabilities + Equity are known as the:

answer

Accounting equation

question

Which of the following statements is correct?

answer

Promises of future payment are called accounts payable

question

Which of the following elements are found on the Balance Sheet?

answer

Retained Earnings

question

The objectivity principle:

answer

Means that information is supported by independent, unbiased evidence

question

An exchange of value between two entities is called:

answer

A business transaction

question

If a company forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

answer

Assets, net income and equity overstated

question

An example of a financing activity is:

answer

Obtaining a long-term loan

question

Which of the following statements is true regarding the closing process of a merchandiser?

answer

Sales Discounts and Sales Returns and Allowances are not closed. Cost of Goods Sold should be credited

question

Acme Company had equity of $55,000 at the end of the current year. During the year the company had a $2,000 net loss and investments by owners in exchange for stock of $7,000. Compute equity as of the beginning of the year.

answer

$50,000

question

A general journal is:

answer

A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts

question

Various types of documents and other papers that companies use when they conduct their business:

answer

a. Are called source documents b. Can include sales tickets c. Are the source of information for recording accounting entries d. Can be in electronic form ----------------------> e. All of the above

question

Prepaid expenses, depreciation, accrued expenses, unearned revenues and accrued revenues are all examples of:

answer

Items that require adjusting entries

question

A credit entry:

answer

Decreases asset and expense accounts and increases liability, common stock and revenue accounts

question

A balance sheet that places the assets above the liabilities and equity is called a(n):

answer

Unadjusted balance sheet

question

Social responsibility:

answer

Is a concern for the impact of one's actions on society as a whole

question

Accounts payable appear on which of the following statements?

answer

Balance sheet

question

An Asset is:

answer

something the company owns

question

A trade discount is:

answer

A term used by a purchaser to describe a cash discount given to customers for prompt payment

question

The accounting process begins with

answer

Analysis of business transactions and events

question

A balance sheet lists:

answer

The types and amounts of assets, liabilities and equity of a business as of a specific date

question

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?

answer

Business entity principle

question

Which of the following is the primary purpose of accounting?

answer

To identify, record and communicate business transactions

question

Cost of goods sold:

answer

Is the term used for the cost of buying and preparing merchandise for sale

question

The 12-month period that ends when a company's activities are at their lowest point is called the:

answer

Natural business year

question

Double-entry accounting is an accounting system:

answer

That records the effects of transactions and other events in at least two accounts with equal debits and credits

question

Double-entry accounting is an accounting system:

answer

That records the effects of transactions and other events in at least two accounts with equal debits and credits

question

Double-entry accounting is an accounting system:

answer

That records the effects of transactions and other events in at least two accounts with equal debits and credits

ACCT 1 – Exam 1 MC – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards