Financial Accounting Quizes 1-3 – Flashcards
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Total assets are $70,000, total liabilities, $40,000, and contributed capital is $20,000; therefore, retained earnings are $15,000
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False
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The payment of a cash dividend to stockholders increases stockholders' equity
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False
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The accounting model for the balance sheet is: Assets + Libilities = Stockholders' Equity
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False
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A decision maker who wants to understand a company's financial statements muct carefully read the notes to the financial statements because the notes provide useful supplemental information
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True
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Generally accepted accounting principals almost never change once created
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False
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The Beta Corp. had 2009 revenues of $200,000, expenses of $140,000, and an income tax rate of 30%. Net income after taxes would be A-60,000 B-18,000 C-42,000 D-48,000
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C
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Which of the following reports the cash inflows, outflows and change in cash for period A-Income Statement B-Balance Sheet C-Statement of cash flows D-Auditors report
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C
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Financial Accounting A-provides info primarily for external decision makers B-is required for corporations but probably would not be done by other business entities C-provides info primarily for the use of managers of a company D-has been practices in this country for approximately the last 15 years
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A
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What financial statement would you look at to dertmine the dividends declared by a business? A-Income statement B-Statement of retained earnings C-statement of cash flows D-balance sheet
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B
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Which of the following is not considered to be a liability? A-AP B-NP C-Wage payable D-COGS
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D
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A primary objective of accounting is to disclose the fair market value of assets on the balance sheet so investors and dreditors know their current value
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False
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The historical cost principle measures assets and liabilities at the historical cash-equivelent amounts.
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True
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Liabilities are listed on the balance sheet in the order of their maturity, meaning how soon they are due to be paid.
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True
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The payment of a liability in cash will decrease stockholders' equity.
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False
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The duality of effects means that every transaction must affect both sides of the accounting equation.
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False
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Which of the following statements about stockholders' equity is NOT correct? A-SE is the shareholders' residual interest in the company resulting from the difference in assets and liabilities B-SE accounts are increased with credits C-SE results only from contributions of the owners D-the purchase of land for cash has no effect on SE
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C
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In what order woudl the assets be listed on a balance sheet? A-Cash, AR, Inventory, Pland and Equipment B-Cash, Inventory, AR, Plant and Equipment C-Cash, AR, Market Securities, Inventory D-None
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A
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Which of the following events will cause retained earnings to increase? A-Dividends declared B-Net income reported C-Net loss reported D-Issuance of stock
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B
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Which of the following would not be considered a current asset? A-inventories B-Prepaid expense C-land D-AR
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C
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A corp received $200,000 cash investment by its owners. The effect on the accounting equation was; A-A & L each increase by 200,000 B-A & R each increase by 200,000 C-SE and R each increase by 200,000 SE & A each increase by 200,000
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D
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Under accrual accounting, interest expense would be recognized when interest has accrued with the passage of time even though cash has not been paid.
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True
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When a business pays for a 2 year insurance policy it has incurred an expense
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False
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Revenue collected in advance of being earned represents a liability until it is earned
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True
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Expense accounts are debited to recognize an incurred expense and not usually credited
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True
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The balance sheet is always prepared before the income statement
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False
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Which of the following is true about the time perios assumption? A-It assumes we value the business property at the end of every month B-It is the cutoff point for an asset and liability recognition C-It keeps the company's transactions seperate and apart from those of the owners D-It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes
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D
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Financial analysts look to the income statement to determine: A-whether the co. has gathered sufficient cash to pay its bills B-if the company has invested too much cash in its inventory C-whether the co. has generated income from operations D-if the co. has too much debt
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C
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A landlord received 5000 in cash for Dec rent but the tenants rent is 8000. Which of the following is true for the the year end? A-8000 would be reported on the statement of cash flows B-8000 would appear on the balance sheet as a receivable C-8000 would appear on the income statement as rent revenue earned D-5000 would appear on the balance sheet as prepaid rent
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C
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During 2010, a co. earned revenues amounting to 700,000, of which 630,000 was collected in cash; the balance will be collected in Jan 2011. the 2010 income statement of the co should report the following amount for service revenuse: A-630,000 B-700,000 C-70,000 D-1,330,000
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B
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Which of the following is an example of revenue or expense recognized in the current period's income statement? A-Cash received from a client before the lawyers represent s them in court B-inventory purchased by a retail store C-Wage costs owed to employees who worked during the period D-Cash collected from AR
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C
