question

Which is not one of the three forms of business organization?

answer

Creditorship.

question

Which is an advantage of corporations relative to partnerships and sole proprietorships?

answer

Reduced legal liability for investors.

question

Easy transfer of ownership is a characteristic of which form of business organization?

answer

Corporation.

question

In which forms of business organization are the owners personally liable for all the debts of the business?

answer

Sole proprietorships and partnerships.

question

The proprietorship form of business organization

answer

Generally receives favorable tax treatment relative to a corporation.

question

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

answer

Sole proprietorships, corporations, and partnerships.

question

To which of the following questions will internal users want answers?

answer

All of the above -What selling price for our product will maximize the company's net income? -Which product line is most profitable? -Is cash sufficient to pay dividends to stockholders?

question

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

answer

Chief Financial Officer. (CFO)

question

Which statement about users of accounting information is incorrect?

answer

Regulatory authorities are considered internal users.

question

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

answer

Tax rates on corporations increased. (Created to stop unethical behavior)

question

Which of the following is the most appropriate and modern definition of accounting?

answer

The information system that identifies, records, and communicates the economic events of an organization to interested users.

question

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

answer

Top management must certify the financial statements for their company.

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 not one of the three primary business activities?

answer

Advertising.

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. (Service revenue is reported on the income statement.)

question

In which of the following sequences are the financial statements usually prepared?

answer

Income statement, retained earnings statement, balance sheet, and statement of cash flows.

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?

answer

$110,000 (The sum of the beginning balance of stockholders' equity ($40,000) plus net income ($90,000) less the dividends paid ($20,000) during the period results in the ending balance of $110,000.)

question

Net income will result during a time period when

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 expense 20,000 Rent expense 10,000 How much was Harold's net income?

answer

$45,000 (Net income = Sales revenue - Salaries expense - Rent expense: $75,000 - $20,000 - $10,000 = $45,000.)

question

Which statement presents information as of a specific point in time?

answer

Balance sheet.

question

Which financial statement reports assets, liabilities, and stockholders' equity?

answer

Balance sheet.

question

The ending retained earnings balance appears on:

answer

Both the retained earnings statement and the balance sheet.

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 are total liabilities at the end of the year?

answer

$105,000 (First, determine the ending balance of stockholders' equity, which is the sum of the beginning balance of stockholders' equity plus net income less the dividends. $40,000 + $90,000 - $20,000 = $110,000 At the end of the period, total assets must equal the total of liabilities plus stockholders' equity. Assets = Liabilities + Stockholders' Equity $215,000 = Liabilities + $110,000 Liabilities = $105,000)

question

The balance sheet

answer

Reports the assets, liabilities, and stockholders' equity at a specific date.

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?

answer

$10,000 decrease (Assets = Liabilities + Stockholders' Equity, can be used to determine the answer: ($15,000) + $5,000 = ($10,000))

question

Stockholders' equity represents

answer

Claims of owners.

question

As of December 31, 2012, 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, 2012?

answer

$1,500 (Using the accounting equation, liabilities can be computed by subtracting stockholders' equity from assets, or $3,500 - $2,000 = $1,500.)

question

The segment of a corporation's annual report that describes the corporation's accounting methods is the:

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:

answer

Auditor's opinion.

question

When the auditor is satisfied that the financial statements are provide a fair representation of the company's financial position and results of operation in accordance with generally accepted accounting principles, the auditor will express

answer

Unqualified opinion.

question

An annual report includes all of the following except

answer

A listing of all of the stockholders.

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?

answer

Management discussion and analysis.

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