question

resources owned by a business

answer

assets

question

amounts owed to creditors in the form of debt and other obligations

answer

liabilities

question

the amounts earned on the sale of a companys product, is the increase in assets or decrease in liabilities

answer

revenue

question

are the cost of assets consumed or services used in the process of generating revenue

answer

expenses

question

the owners claim to assets

answer

stockholders equity

question

activities involve collecting the necessary funds to support the business

answer

financing

question

activities involve acquiring the resources necessary to run the business

answer

investing

question

activities involve putting the resources of the business into action to generate profit

answer

operating

question

Corporations generally receive more favorable tax treatment than sole proprietorships and corporations. true or false

answer

false

question

generally receives favorable tax treatment relative to a corporation.

answer

The sole proprietorship form of business organization

question

Which forms of business organization are considered to be separate accounting entities?

answer

Sole proprietorships, corporations, and partnerships

question

nternal users of accounting information include a company's stockholders. true or false

answer

false

question

Which of the following is not an external user of accounting data?

answer

Chief Financial Officer

question

Which of the following did not result from the Sarbanes-Oxley Act?

answer

Tax rates on corporations increased

question

Which of the following is required as a result of SOX?

answer

Top management must certify the financial statements for their company.

question

Interest expense is classified under operating activities on the statement of cash flows. true or false

answer

true

question

Paying interest expense and receiving interest revenue are examples of

answer

Operating activities.

question

The payment of dividends is an example of a(n)

answer

Financing activity.

question

Which of the following is an example of a financing activity?

answer

Issuing shares of common stock

question

Resources owned by a business are referred to as

answer

assets

question

In terms of the principal types of business activities, paying salaries expense is an example of

answer

operating activities.

question

What kind of classification is cost of goods sold?

answer

expense

question

Which of the following would not appear on the income statement?

answer

Dividends paid

question

Which of the following would not appear on the retained earnings statement?

answer

Service revenue

question

Net income will result during a time period when

answer

revenues exceed expenses.

question

Current assets are economic resources that are expected to be converted to cash or used up by the business within one year or the normal operating cycle, whichever is shorter. true or false

answer

false

question

In a classified balance sheet, how are assets usually classified?

answer

Current assets; long-term investments; property, plant, and equipment; and intangible assets

question

In what order are current assets listed?

answer

By liquidity

question

The correct order of presentation in a classified balance sheet for the following current assets is

answer

cash, accounts receivable, inventories, prepaid insurance.

question

A company purchased a tract of land on which it expects to build a production plant on in approximately five years. During the five years before construction, the land will be idle. In what classification should the land be reported?

answer

A long-term investment

question

Which of the following is not classified as a current asset?

answer

patents

question

Which of the following is the correct order for listing current assets on the balance sheet?

answer

Cash, short-term investments, accounts receivable, inventories, prepaid expenses

question

Which of the following is an example of an intangible asset?

answer

Trademarks

question

Which one of the following is not an alternate means of expressing a ratio?

answer

dollar amount

question

Earnings per share is computed by dividing net income

answer

ess preferred stock dividends by the average common shares outstanding.

question

Which is an indicator of profitability?

answer

Earnings per share

question

Issuing new shares of common stock will

answer

increase common stock

question

Which statement is used by most corporations instead of the retained earnings statement?

answer

Statement of stockholders' equity

question

Which one of the following does not affect retained earnings?

answer

Issuance of common stock

question

The current ratio is a liquidity ratio that is computed as current assets divided by current liabilities. true or false

answer

true

question

Which of these measures is an evaluation of a company's ability to pay current liabilities?

answer

current ratio

question

What is measured by current assets minus current liabilities?

answer

Working capital

question

Expenses decrease retained earnings.

answer

true

question

The effect on the basic accounting equation of performing services for cash are to

answer

increase assets and increase stockholders' equity

question

Genesis Company buys equipment for $900 machine on credit. This transaction will immediately affect the

answer

balance sheet only.

question

Retained earnings is decreased by

answer

expenses

question

If an expense is paid with cash

answer

assets will decrease.

question

If cash is received in advance from a customer

answer

liabilities will increase.

question

Receipt of an unearned revenue

answer

ncreases an asset; increases a liability

question

Payment of a dividend

answer

decreases cash; decreases retained earnings.

question

If a company receives cash from a customer before performing services for the customer, then

answer

assets increase and liabilities increase.

question

Every account has a left or credit side and a right or debit side. true or false

answer

true

question

An account is a part of the financial information system and is described by all except which one of the following?

answer

An account is a source document

question

Assets are increased by credits. true or false

answer

false

question

A revenue account

answer

is increased by credits.

question

Which accounts normally have debit balances?

answer

Assets, dividends, and expenses

question

What effects occur when an account payable is paid with cash?

answer

Decreases assets and decreases liabilities

question

Accounts with normal debit balances include

answer

expenses and assets.

question

Accounts with normal credit balances include

answer

liabilities and stockholders' equity.

question

What is evidence that a transaction has occurred?

answer

source document

question

presents management views on the companys ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations

answer

management discussion and analysis

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