ACC 255 Chp. 1 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Which is an advantage of corporations relative to partnerships and sole proprietorships? Reduced legal liability for investors Most common form of organization Increased difficulty of raising funds Harder to transfer ownership
answer
Reduced legal liability for investors
question
In which forms of business organization are the owners personally liable for all the debts of the business? Sole proprietorships and corporations Sole proprietorships and partnerships Partnership and corporation All of the answer choices are correct
answer
Sole proprietorships and partnerships
question
The sole proprietorship form of business organization is classified as a separate legal entity. must have at least two owners in most states. combines the records of the business with the personal records of the owner. generally receives favorable tax treatment relative to a corporation.
answer
generally receives favorable tax treatment relative to a corporation.
question
Which forms of business organization are considered to be separate accounting entities? Entry field with correct answer Only corporations Sole proprietorships and partnerships only Sole proprietorships, corporations, and partnerships Partnerships and corporations only
answer
Sole proprietorships, corporations, and partnerships
question
Which of the following is not an external user of accounting data? Entry field with incorrect answer Labor unions Customers Economic planners Chief Financial Officer
answer
Chief Financial Officer
question
Which of the following did not result from the Sarbanes-Oxley Act? Entry field with correct answer Top management must now certify the accuracy of financial information. Auditors cannot provide non-audit services to the same client. Penalties for fraudulent activity increased. Tax rates on corporations increased.
answer
Tax rates on corporations increased.
question
Which of the following is the most appropriate definition of accounting information? Entry field with correct answer A means of collecting information The interconnected network of subsystems necessary to operate a business Electronic collection and organization of vast amounts of financial information The information system that identifies, records, and communicates the economic events of an organization to interested users
answer
The information system that identifies, records, and communicates the economic events of an organization to interested users
question
The payment of dividends is an example of a(n) Entry field with correct answer Investing activity. Delivery activity. Financing activity. Operating activity.
answer
Financing activity.
question
Which of the following is an example of a financing activity? Entry field with incorrect answer Issuing shares of common stock Selling goods on account Buying delivery equipment Buying inventory
answer
Issuing shares of common stock
question
Resources owned by a business are referred to as revenues. assets. stockholders' equity. liabilities.
answer
assets.
question
What kind of classification is cost of goods sold? Expense Liability Asset Revenue
answer
Expense
question
Which of the following would not appear on the income statement? Net income Interest expense Dividends paid Service revenue
answer
Dividends paid
question
Which of the following would not appear on the retained earnings statement? Entry field with incorrect answer Service revenue Net income Beginning retained earnings balance Dividends
answer
Service revenue
question
Net income will result during a time period when Entry field with correct answer revenues exceed expenses. expenses exceed revenues. assets exceed liabilities. assets exceed revenues.
answer
revenues exceed expenses.
question
The financial statements for Harold Corporation contained the following information: Accounts receivable $ 5,000 Sales revenue 75,000 Cash 15,000 Salaries and wages expense 20,000 Rent expense 10,000 How much was Harold's net income? Entry field with correct answer $15,000 $65,000 $45,000 $60,000
answer
$45,000
question
Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year? Entry field with correct answer $150,000 $130,000 $110,000 $135,000
answer
$110,000
question
Which statement presents information as of a specific point in time? Entry field with incorrect answer Balance sheet Statement of cash flows Retained earnings statement Income statement
answer
Balance sheet
question
Which financial statement reports assets, liabilities, and stockholders' equity? Retained earnings statement. Statement of cash flows. Balance sheet. Income statement.
answer
Balance sheet.
question
The ending retained earnings balance appears on Both the retained earnings statement and the balance sheet. The income statement and the retained earnings statement. The retained earnings statement only. The balance sheet only.
answer
Both the retained earnings statement and the balance sheet.
question
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? $10,000 increase $20,000 increase $10,000 decrease $15,000 decrease
answer
$10,000 decrease
question
Stockholders' equity represents claims of creditors. the difference between revenues and expenses. claims of owners. economics resouces to be used in the future.
answer
claims of owners.
question
As of December 31, 2014, Stoneland Corporation has assets of $3,500 and stockholders' equity of $2,000. How much are the liabilities for Stoneland Corporation as of December 31, 2014? $1,500 $2,000 $1,000 $2,500
answer
$1,500
question
The segment of a corporation's annual report that describes the corporation's accounting methods is the income statement. management discussion and analysis. notes to the financial statements. auditor's report.
answer
notes to the financial statements.
question
The segment of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the r auditor's opinion. income statement. balance sheet. financial statements.
answer
auditor's opinion.
question
Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion? Financial statements Management discussion and analysis Notes to the financial statements Auditor's report
answer
Management discussion and analysis
