Question 1

One external user of accounting information with a financial interest in a business is

Accepted Answer

an investor.

Question 2

Which of the following is a satisfactory statement of the accounting equation?

Accepted Answer

Assets = Liabilities + Stockholders\' Equity

Question 3

Which of the following is a measure of liquidity?

Accepted Answer

Working capital

Question 4

Which of the following is legally a separate entity from its owner(s)?

Accepted Answer

Corporation only

Question 5

Net income would not appear in which financial statement?

Accepted Answer

Balance sheet

Question 6

All of the following items would appear on the balance sheet, except

Accepted Answer

Dividends

Question 7

All of the following will affect the balance of Retained Earnings, except

Accepted Answer

investments by stockholders

Question 8

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

Accepted Answer

full disclosure

Question 9

Which of the following accounts is increased with a debit?

Accepted Answer

Dividends

Question 10

Which pair of accounts follows the rules of debit and credit in the opposite manner?

Accepted Answer

Dividends and Medical Fees Earned

Question 11

Which of the following accounts is decreased with a credit?

Accepted Answer

Insurance Expense

Question 12

When collection is made on Accounts Receivable

Accepted Answer

total assets remain the same

Question 13

When a company has performed a service but has not yet received payment, it

Accepted Answer

debits Accounts Receivable and credits Revenue from Services

Question 14

The matching rule relates the least to

Accepted Answer

the cash basis of accounting

Question 15

Which of the following is not an application of accrual accounting?

Accepted Answer

Recording advertising fees earned at the time the cash payment is received

Question 16

The adjustment for estimated income taxes would include a

Accepted Answer

credit to Income Taxes Payable

Question 17

The corporation\'s Store Supplies account showed a beginning debit balance of $200 and supplies purchased of $800. There were $300 of supplies on hand at year end. The adjusting entry would include a

Accepted Answer

debit to Store Supplies Expense for $700

Question 18

Which of the following transactions is most likely not to result in an adjusting entry at the end of the period

Accepted Answer

Payment of this month\'s rent

Question 19

A company\'s five-day weekly payroll of $680 is paid on Fridays. Assume that the last day of the month falls on Wednesday. Which of the following is the required adjusting entry?

Accepted Answer

Debit Salaries Expense $408 and credit Salaries Payable $408

Question 20

Which of the following accounts could decrease as a result of an adjusting entry?

Accepted Answer

Office Supplies

Question 21

A one-year insurance policy was purchased for $2,000 on October 1. The adjusting entry on December 31, year end, for the insurance policy would include a

Accepted Answer

credit to Prepaid Insurance for $500

Question 22

Which of the following errors will cause the trial balance to be out of balance?

Accepted Answer

The balance of an account was incorrectly computed

Question 23

An important purpose of closing entries is to

Accepted Answer

set nominal account balances to zero to begin the next period

Question 24

The entry to record payment of a $1,500 purchase within the 2 percent discount period would include a

Accepted Answer

credit to Purchases Discounts for $30

Question 25

The collection of a $1,000 account beyond the 2 percent discount period would result in a

Accepted Answer

credit to Accounts Receivable for $1,000

Question 26

Under the perpetual inventory system, two entries (or one compound entry of two debits and two credits) are required for all of the following transactions, except

Accepted Answer

the purchase of goods on credit

Question 27

The entry to record a sales return from a customer would require a

Accepted Answer

debit to Sales Returns and Allowances

Question 28

The account Allowance for Uncollectible Accounts is necessary because

Accepted Answer

when recording uncollectible accounts expense, it is not possible to predict specifically which accounts will not be collected

Question 29

Under the allowance method, Uncollectible Accounts Expense is recorded

Accepted Answer

for an estimated amount

Question 30

The general ledger account for Accounts Receivable shows a debit balance of $50,000. Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the year were $500,000. In the past, 2 percent of net sales have proved uncollectible, and an aging of accounts receivable accounts results in an estimate of $13,500 in uncollectible accounts.Using the accounts receivable aging method, the Allowance for Uncollectible Accounts balance (after adjustment) would be

Accepted Answer

$13,500

Question 31

Using the percentage of net sales method, uncollectible accounts expense for the year is estimated to be $54,000. If the balance of the Allowance for Uncollectible Accounts is an $18,000 credit before adjustment, what is the balance after adjustment

Accepted Answer

$72,000

Question 32

Under the allowance method, when a specific account is written off

Accepted Answer

total assets will be unchanged

Question 33

A business accepts a 9 percent, $25,000 note due in 120 days. Assuming simple interest, how much (amount rounded) will the business receive when the note falls due?

Accepted Answer

$25,740

Question 34

The interest on a three-month, 12 percent, $8,800   note receivable is

Accepted Answer

$264

Question 35

Under the perpetual inventory system, the entry to record a purchase return would include an entry to which account?

Accepted Answer

Merchandise Inventory

Question 36

Gross margin is

Accepted Answer

not an account

Question 37

Applying the lower-of-cost-or-market rule follows which of the following accounting conventions

Accepted Answer

Conservatism

Question 38

Under the perpetual inventory system, in addition to making the entry to record a sales return, a company would

Accepted Answer

debit Merchandise Inventory and credit Cost of Goods Sold

Question 39

Amounts earned from sales of products or services

Accepted Answer

Revenues

Question 40

Owners\' claims to resources

Accepted Answer

Stockholders\' equity

Question 41

Distributions to stockholders

Accepted Answer

Dividends

Question 42

Costs of selling products or services.

Accepted Answer

Expenses

Question 43

Resources owned.

Accepted Answer

Assets

Question 44

Amounts owed

Accepted Answer

Liabilities

Question 45

Change in owners\' claims to resources

Accepted Answer

Statement of stockholders\' equity

Question 46

Profitability of the company

Accepted Answer

Income statement

Question 47

Change in cash as a result of operating, investing, and financing activities

Accepted Answer

Statement of cash flows

Question 48

Resources equal creditors\' and owners\' claims to those resources

Accepted Answer

Balance sheet

Question 49

Group that has been given power by Congress to enforce the proper application of financial reporting rules for companies whose securities are publicly traded

Accepted Answer

Securities and Exchange Commission

Question 50

Independent, private-sector group that is primarily responsible for setting financial reporting standards in the United States

Accepted Answer

Financial Accounting Standards Board

Question 51

Independent intermediaries that help to ensure that management appropriately applies financial reporting rules in preparing the company\'s financial statements.

Accepted Answer

Auditors

Question 52

Body that is attempting to develop a single set of high-quality, understandable global accounting standards.

Accepted Answer

International Accounting Standards Board

Question 53

A common denominator is needed to measure all business activities

Accepted Answer

Monetary unit

Question 54

Economic events can be identified with a particular economic body

Accepted Answer

Economic entity

Question 55

In the absence of information to the contrary, it is anticipated that   a business entity will continue to operate indefinitely

Accepted Answer

Going concern

Question 56

The economic life of a company can be divided into artificial time   intervals for financial reporting

Accepted Answer

Periodicity

Question 57

Use the following appropriate amounts to calculate net income: Revenues, $11,600; Liabilities, $4,400; Expenses, $4,000; Assets, $18,800; Dividends, $2,000

Accepted Answer

$7,600

Question 58

On January 1, 2012, Gucci Brothers Inc. started the year with a $493,000 balance in retained earnings and a $591,000 balance in common stock. During 2012, the company earned net income of $101,000, paid a dividend of $15,200, and issued more common stock for $21,000. What is total stockholders\' equity on December 31, 2012

Accepted Answer

$1,190,800

Question 59

DW has an ending retained earnings balance of $51,600. If during the year DW paid dividends of $4,700 and had net income of $22,000, then what was the beginning retained earnings balance

Accepted Answer

$34,300

Question 60

What is the primary purpose of financial accounting

Accepted Answer

Measure business transactions and communicate those measures to external users to make decisions

Question 61

Which of the following groups is not among the external users for whom financial statements are prepared

Accepted Answer

Managers

Question 62

The form of business organization that is legally separate from its owners is a

Accepted Answer

Corporation

Question 63

The account type that represents payments to stockholders is called

Accepted Answer

Dividends

Question 64

The accounts that represent resources owed to creditors are called

Accepted Answer

Liabilities

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