ACCT 472.21 Ch 1 – Flashcards
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Black Keys Company began the year with stockholders' equity of $185,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and paid dividends of $20,000. What was Black Keys' stockholders' equity at the end of the year?
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$225,000
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Ethics are the standards of conduct by which one's actions are judged as
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right or wrong, honest or dishonest, fair or unfair.
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If the retained earnings account increases from the beginning of the year to the end of the year, then
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net income is greater than dividends.
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Stockholders' equity is increased by
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revenues.
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Revenues are
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gross increases in stockholders' equity resulting from business activities
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The amount of stockholders' equity in a business is not affected by
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A. The percentage of total assets held in cash
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The ending retained earnings amount is shown on
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both the balance sheet and the retained earnings statement
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A balance sheet shows
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assets, liabilities, and stockholders' equity
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Stockholders' equity is decreased by all of the following except
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A. sales of stock.
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A business organized as a corporation
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C. is owned by its stockholders.
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If total liabilities increased by $8,000, then
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C. assets must have increased by $8,000, or stockholders' equity must have decreased by $8,000.
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The accounting equation for Quattro Enterprises is as follows:
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d
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If services are rendered for credit, then
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stockholders' equity will increase.
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The body of theory underlying accounting is not based on
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physical laws of nature.
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Which of the following is not an advantage of the corporate form of business organization?
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Unlimited personal liability for stockholders
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In order to increase comparability, in recent years, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as
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A. convergence
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Collection of a $1,000 Accounts Receivable
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A. increases an asset $1,000; decreases an asset $1,000.
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If total liabilities increased by $17,000 during a period of time and stockholders' equity decreased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)
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C. $11,000 increase
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Owner's equity is best depicted by the following
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D. Assets - Liabilities.
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The Duce Company has five plants nationwide that cost a total of $100 million. The current fair value of the plants is $500 million. The plants will be recorded and reported as assets at
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A. $100 million
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Which of the following will not cause a change in the stockholders' equity of a business
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A. An increase in prepaid expenses.
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The accounting equation for Quattro Enterprises is as follows: If Quattro purchases office equipment on account for $15,000, the accounting equation will change to
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D. d
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The common characteristic possessed by all assets is
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D. future economic benefit.
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The balance sheet is frequently referred to as
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B. the statement of financial position.
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John and Sam met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a
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B. partnership.
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The cost of an asset and its fair value are
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D. the same on the date of acquisition.
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A small neighborhood barber shop that is operated by its owner would likely be organized as a
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D. proprietorship.
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If Quattro purchases office equipment on account for $15,000, the accounting equation will change to
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D
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All of the financial statements are for a period of time except the
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C. balance sheet.
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Which of the following is true regarding the corporate form of business organization?
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C. The revenues of corporations are greater than the combined revenues of partnerships and proprietorships.
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Mofro's Computer Repair Shop started the year with total assets of $270,000 and total liabilities of $180,000. During the year, the business recorded $450,000 in computer repair revenues, $270,000 in expenses, and Mofro paid dividends of $45,000. The net income reported by Mofro's Computer Repair Shop for the year was
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C. $180,000.
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The partnership form of business organization
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B. is a common form of organization for service-type businesses.
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Which of the following is not an advantage of the corporate form of business organization
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C. Unlimited personal liability for stockholders
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Liabilities
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B. are existing debts and obligations.
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A net loss will result during a time period when
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C. expenses exceed revenues.
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The basic accounting equation cannot be restated as
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D. Assets + Liabilities = Stockholders' Equity.
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If supplies that have been purchased are used in the course of business, then
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C. stockholders' equity will decrease
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Ted Leo is the proprietor (owner) of Ted's, a retailer of golf apparel. When recording the financial transactions of Ted's, Ted does not record an entry for a car he purchased for personal use. Ted took out a personal loan to pay for the car. What accounting concept guides Ted's behavior in this situation?
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B. Economic entity assumption
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A dividend is
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A. a distribution of the company's earnings to its stockholders.
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The final step in solving an ethical dilemma is to
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C. identify the alternatives and weigh the impact of each alternative on stakeholders.
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All of the following are steps in analyzing ethics cases in financial reporting except
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B. contact law enforcement regarding any violations of corporate ethics codes
