practice q - Flashcards | StudyHippo.com

question

What is the primary objective of most businesses?a. a) To maximize profits b) To pay dividends to stockholders c) To provide a benefit to society d) To manufacture a quality product

answer

a) to maximize profits

question

Which of the following would NOT be an example of a merchandising business? a) Ford Motor Company b) Safeway c) Barnes & Noble d) Starbucks

answer

a) Ford Motor Company

question

Which of the items below is NOT a business organization form? a) Venture entrepreneurship b) Proprietorship c) Partnership d) Corporation

answer

a) Venture entrepreneurship

question

More that 70% of businesses are organized as what type of business? a) Not-for-profit b) Corporation c) Partnership d) Sole proprietorship

answer

d) Sole proprietorship

question

Which of the following is TRUE in regards to a limited liability company? a) It is organized as a corporation. b) It can elect to be taxed as a partnership. c) It provides tax and liability advantages to the owners. d) All are correct.

answer

d) all are correct

question

Under a premium-price emphasis, a business designs products that possess __________ for which customers are willing to pay a premium price. a) unique attributes b) high costs c) competitive efficiencies d) longer warranties

answer

a) unique attributes

question

Which of the following is NOT a characteristic of a cdorporation? a) Corporations are organized as a separate legal taxable entity. b) Ownership is divided into shares of stock. c) Corporations experience an ease in obtaining large amounts of resources by issuing stock. d) A corporation's resources are limited to its individual owners' resources. e) Corporations make up 20% of all businesses

answer

d) Corporations make up 20% of all businesses

question

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a a) proprietorship. b) corporation. c) partnership. d) governmental unit.

answer

b) corporation

question

A low-cost emphasis strives to provide a) no-frills, standardized products and services. b) products and services that provide unique market needs. c) products and services that provide prestige and image for customers. d) products and services that compete on features other than price.

answer

a) no-frills, standardized products and services

question

Which of the following businesses use a premium-price emphasis? a) Value City Furniture b) Abercrombie & Fitch c) Wal-Mart Supercenters d) Southwest Airlines

answer

b) Abercrombie & Fitch

question

Motel 6 is an example of a business using which of the following? a) Low-cost emphasis b) Combination emphasis c) Differentiation strategy d) Premium-price emphasis

answer

a) Low-cost emphasis

question

Which of the following are business stakeholders? a) Stockholders b) Suppliers c) Customers d) All of these

answer

d) all of these

question

The following are examples of internal stakeholders EXCEPT: a) managers. b) creditors. c) employees. d) All of these are internal stakeholders.

answer

b) creditors

question

Which of the following is NOT an example of a capital market stakeholder? a) Banks b) Owners c) Suppliers d) Stockholders

answer

c) suppliers

question

Due to various fraudulent business practices and accounting coverups in the early 2000s, Congress enacted the Sarbanes-Oxley Act of 2002. The act was responsible for establishing a new oversight board for public accountants called the a) Generally Accepted Accounting Practices for Public Accountants Board. b) Public Company Accounting Oversight Board. c) Congressional Accounting Oversight Board. d) None are correct.

answer

b) Public Company Accounting Oversight Board

question

Capital market stakeholders have an interest in the company because a) they provide incentives for the company to market their products. b) they are part of the Marketing Department that is responsible for promoting the products or services to increase the business profits. c) they help market their products to customers or find vendors to supply needed inputs. d) they provide major financing for the business.

answer

d) they provide major financing for the business.

question

Who has first preference to assets in case a business fails? a) Stockholders b) Long-term creditors c) Customers d) Employees

answer

b) Long-term creditors

question

Governments have an interest in the economic performance of business because of a) tax collections. b) community involvement from the business. c) business incentives. d) all of these.

answer

a) tax collections

question

Managers are evaluated primarily on the business's a) tax collections. b) growth. c) economic performance. d) all of these.

answer

c) economic performance

question

Financing activities involve obtaining __________ to operate a business. a) products b) customers c) business incentives d) funds

answer

d) funds

question

When a business borrows money, it incurs a(n) a) tax. b) liability. c) receivable. d) additional equity.

answer

b) liability

question

When a product is sold, this cost is often called a) cost of goods sold. b) revenue. c) products. d) retained earnings.

answer

a) cost of goods sold

question

A note payable requires payment of the amount borrowed plus a) interest. b) cash. c) accounts payable. d) investments.

answer

a) interest

question

Shares of ownership are evidenced by issuing a) bonds payable. b) commercial paper. c) shares of stock. d) notes payable.

answer

c) shares of stock

question

The resources a business owns are called a) assets. b) liabilities. c) earnings. d) stockholders' equity.

answer

a) assets

question

The purchase of factory equipment would be an example of which type of business activity? a) Financing b) Investing c) Operating d) All of these

answer

b) Investing

question

Which of the following is an example of an intangible asset? a) Patent b) Cash c) Land d) Equipment

answer

a) Patent

question

Rights to payments from customers are a) liabilities. b) prepaid expenses. c) accounts receivable. d) accounts payable.

answer

c) accounts receivable

question

Which of the following is considered an asset until consumed? a) Accounts payable b) Prepaid expense c) Accounts receivable d) Stockholders' equity

answer

b) Prepaid expense

question

__________ is the increase in assets from selling products and services. a) Revenue b) Liabilities c) Products d) Stockholders' Equity

answer

a) Revenue

question

Cash collected from sales during the normal course of business would be an example of which type of business activity? a) Operating b) Investing c) Financing d) None of these

answer

a) Operating

question

Costs incurred in operating a business are also known as a) revenues. b) expenses. c) liabilities. d) dividends.

answer

b) expenses

question

The role of accounting in business is best defined as a) an information system that provides reports to stakeholders about the economic activities and condition of a business. b) a method of forecasting the future profitability of a company. c) the policies, procedures, and strategies used in a business. d) transaction analysis.

answer

a) in information system that provides reports to stakeholders about the economic activities and condition of a business

question

Debts owed by a business are referred to as a) accounts receivable. b) equities. c) stockholders' equity. d) liabilities.

answer

d) liabilities

question

Reporting the financial condition of a business at a point in time and the changes in the financial condition of a business over a period of time are the two major objectives of a) tax accounting. b) union contracts. c) managerial accounting. d) financial accounting.

answer

d) financial accounting

question

Which statement is normally prepared first? a) Income statement b) Balance sheet c) Statement of cash flows d) Retained earnings statement

answer

a) income statement

question

A summary of revenue and expenses for a specific period of time is a(n) a) income statement. b) balance sheet. c) statement of cash flows. d) retained earnings statement.

answer

a) income statement

question

Gilbert, Inc. had the following account balances at September 30, 2010. What is Gilbert's net income for the month of September? Accounts Payable - 5,000 Capital Stock - 10,000 Cash - 14,300 Equipment - 15,400 Fees Earned - 54,400 Miscellaneous Expense - 18,200 Rent Expense - 4,150 Retained Earnings - 6,550 Wages Expense - 13,900 a) $32,450 b) $27,450 c) $6,550 d) $18,150

answer

d) $18,150

question

Browning, Inc. had revenues of $234,000, expenses of $175,000, and dividends of $30,000 during 2010. Which of the following statements is correct? a) Net income for 2010 totaled $29,000. b) Net income for 2010 totaled $59,000. c) Total retained earnings increased by $59,000 during 2010. d) Total retained earnings decreased by $30,000 during 2010.

answer

b) net income for 2010 totaled $59,000

question

A summary of changes in the earnings retained in the corporation for a specific period of time is a(n) a) income statement. b) balance sheet. c) statement of cash flows. d) retained earnings statement.

answer

d) retained earnings statement

question

A list of assets, liabilities, and owners' equity as of a specific date is a(n) a) income statement. b) balance sheet. c) statement of cash flows. d) retained earnings statement.

answer

b) balance sheet

question

Which of the following is an appropriate representation of the accounting equation? a) Assets + liabilities = stockholders' equity b) Assets = liabilities + stockholders' equity c) Assets = liabilities d) Assets = liabilities + retained earnings

answer

b) Assets = liabilities + stockholders' equity

question

A summary of the cash receipts and cash payments for a specific period of time is a(n) a) income statement. b) balance sheet. c) statement of cash flows. d) retained earnings statement.

answer

c) statement of cash flows

question

The portion of a corporation's net income retained in the business is called a) income statement. b) balance sheet. c) statement of cash flows. d) retained earnings.

answer

d) retained earnings

question

The debt created by a business when it makes a purchase on account is referred to as an a) account payable. b) account receivable. c) asset. d) expense payable.

answer

a) account payable

question

If there was no beginning retained earnings, net income of $20,000, and ending retained earnings of $6,000, how much were dividends? a) $10,000 b) $4,000 c) $6,000 d) $14,000

answer

d) $14,000

question

During 2010, Smith Corporation had an increase in total assets of $70,000 and an increase in total liabilities of $90,000. Assuming that capital stock increased by $5,000 and no dividends were paid, calculate Smith's net income or net loss for 2010. a) Net loss of $15,000 b) Net loss of $20,000 c) Net loss of $25,000 d) Net income of $15,000

answer

c) net loss of $25,000

question

The "rules" of accounting are called a) income tax regulations. b) SEC regulations. c) Internet rules. d) Generally Accepted Accounting Principles.

answer

d) Generally Accepted Accounting Principles

question

Which principle determines the amount initially entered into the records for purchases? a) Cost principle b) Going concern concept c) Business entity concept d) Objectivity concept

answer

a) Cost principle

question

Recording revenue when a sale is made most directly relates to which concept? a) Going concern concept b) Periodicity concept c) Matching concept d) Adequate disclosure concept

answer

c) Matching concept

question

Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept? a) Business entity concept b) Going concern concept c) Objectivity concept d) Adequate disclosure concept

answer

b) Going concern concept

question

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n) a) prior period statement. b) statement of retained earnings. c) income statement. d) balance sheet.

answer

c) income statement

question

Including all relevant data a reader needs to understand the financial condition and performance of a business refers to which concept? a) Adequate disclosure concept b) Going concern concept c) Objectivity concept d) Business entity concept

answer

a) Adequate disclosure concept

question

Cash investments made by the stockholders of the business are reported on the statement of cash flows in the a) financing activities section. b) investing activities section. c) operating activities section. d) supplemental statement.

answer

a) financing activities section

question

The basic financial statements do NOT include the a) income statement. b) tax return. c) balance sheet. d) statement of cash flows.

answer

b) tax return

question

Which of the following is NOT an element of the financial accounting system? a) A set of rules for determining the recording of economic events b) A framework for preparing financial statements c) A set of rules for the stock exchange d) Controls to determine whether errors occur during recording

answer

c) a set of rules for the stock exchange

question

If a $15,000 purchase of equipment for cash is incorrectly recorded as an increase to equipment and as an increase to cash, at the end of the period assets will a) exceed liabilities and stockholders' equity by $15,000. b) equal liabilities and stockholders' equity. c) exceed liabilities and stockholders' equity by $30,000. d) exceed liabilities and stockholders' equity by $40,000.

answer

c) exceed liabilities and stockholders' equity by $30,000

question

Which of the following is NOT considered to be a liability? a) Note payable b) Accounts receivable c) Unearned revenues d) Accounts payable

answer

b) Accounts receivable

question

Which of the following statements is NOT true about liabilities? a) Liabilities are debts owed to outsiders. b) Account titles of liabilities often include the term "payable." c) Cash received before services are performed is considered to be a liability. d) Liabilities do not include wages owed to employees of the company.

answer

d) liabilities do not include wages owed to employees of the company

question

Which of the following accounts is a stockholders' equity account? a) Cash b) Capital Stock c) Prepaid Insurance d) Accounts Payable

answer

b) Capital Stock

question

Which of the following group of accounts are all assets? a) Cash, Accounts Payable, Buildings b) Accounts Receivable, Revenue, Cash c) Prepaid Expenses, Buildings, Patents d) Unearned Revenues, Prepaid Expenses, Cash

answer

c) Prepaid expenses, Buildings, Patents

question

Which of the following situations increase stockholders' equity? a) Supplies are purchased on account. b) Services are provided on account. c) Cash is received from customers. d) Utility bill will be paid next month.

answer

b) Services are provided on account

question

Stockholders' Equity will be reduced by all of the following accounts EXCEPT: a) Revenues b) Expenses c) Dividends d) All of the above reduce Stockholders' Equity.

answer

a) Revenues

question

Expenses can be defined as a) assets consumed. b) services used in the process of generating revenues. c) costs that have been incurred during the normal course of business. d) all of these.

answer

d) all of these

question

The gross increases in stockholders' equity attributable to business activities are called a) assets. b) liabilities. c) revenues. d) net income.

answer

c) revenues

question

The payment of $15,000 for expenses was recorded by Spears Co. as an increase in cash of $15,000 and a decrease in retained earnings of $15,000. What is the effect of this error on the accounting equation? a) Total assets will exceed total liabilities and stockholders' equity by $15,000. b) Total assets will exceed total liabilities and stockholders' equity by $30,000. c) Total assets will be less than total liabilities and stockholders' equity by $30,000. d) The error will not affect the accounting equation.

answer

b) Total assets will exceed total liabilities and stockholders' equity by $30,000

question

Which of the following will increase stockholders' equity? a) Expenses > revenues b) Owner investment c) Accounts payable d) Dividends

answer

b) owner investment

question

A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded. a) framework b) control c) set of rules d) transaction

answer

d) transaction

question

The statement of cash flows is integrated with the balance sheet because: a) the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet. b) the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet. c) the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet. d) the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet.

answer

a) the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet.

question

Hodges, Inc. had the following assets and liabilities as of September 30, 2011: Assets $56,327 Liabilities $28,416 What is the stockholders' equity of Hodges as of September 30, 2011? a) $0 b) $27,911 c) $84,743 d) Cannot be determined with this information

answer

b) $27,911

question

Hodges, Inc. had the following assets and liabilities as of September 30, 2011: Assets $56,327 Liabilities $28,416 If assets increased by $3,914 and equity increased by $2,290, what is the increase or decrease in liabilities of Hodges as of October 31, 2011? a) ($1,624) b) $1,624 c) $6,204 d) ($6,204)

answer

b) $1,624

question

Rush Corporation borrowed $25,000 from the bank. Which of the following accurately shows the effects of the transaction? a) Increase cash $25,000 and decrease notes payable $25,000 b) Increase cash $25,000 and increase notes payable $25,000 c) Decrease cash $25,000 and decrease notes payable $25,000 d) Decrease cash $25,000 and increase notes payable $25,000

answer

b) Increase cash $25,000 and increase notes payable $25,000

question

Flow, Inc. received cash from fees earned. How does this transaction affect the Statement of Cash Flows? a) Increase cash from Operating Activities b) Increase cash from Investing Activities c) Increase cash from Financing Activities d) No effect on the Statement of Cash Flows

answer

a) increase cash from Operating Activities

question

Philip Corporation purchased equipment on account. What is the effect of this transaction? a) Cash will decrease and equipment will increase. b) Total assets will remain unchanged. c) Cash flow from Investing Activities will decrease. d) Total assets and total liabilities will both increase.

answer

d) Total assets and total liabilities will both increase

question

Johnson, Inc. paid rent expense of $3,500 for the month of October. How are the accounts affected due to this transaction? a) Increase in cash $3,500 and increase in retained earnings $3,500 b) Increase in cash $3,500 and decrease in retained earnings $3,500 c) Decrease in cash $3,500 and decrease in retained earnings $3,500 d) Decrease in cash $3,500 and increase in retained earnings $3,500

answer

c) Decrease in cash $3,500 and decrease in retained earnings $3,500

question

Johnson, Inc. purchased land for cash. What effect does this transaction have on the following accounts: a) Increase in Cash and decrease in Land b.) Decrease in Cash and decrease in Land c) Increase in Cash and increase in Land d) Decrease in Cash and increase in Land

answer

d) Decrease in Cash and increase in Land

question

Johnson, Inc. issued $15,000 in capital stock in exchange for cash. What is the effect of this transaction? a) Total assets remain unchanged. b) Cash flow from Financing Activities will increase. c) Net Income will increase. d) Total Retained Earnings will increase.

answer

b) Cash flow from Financing Activities will increase

question

Johnson, Inc. receives $5,000 cash for fees earned. What is the effect of this transaction? a) Total assets remain unchanged. b) Cash flow from Financing Activities will increase. c) Net income will increase. d) Retained earnings will remain unchanged.Q

answer

c) Net income will increase

question

Stockholders' Equity will be increased by all of the following accounts EXCEPT: a) Dividends b) Revenues c )Owner investments d )All of the above increase Stockholders' Equity.

answer

a) Dividends

question

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation. This transaction would affect which two financial statement elements? a) Assets and stockholders' equity b) Assets and liabilities c) Liabilities and stockholders' equity d) None of these

answer

a) Assets and stockholders' equity

question

BNC Company earns revenues and as a result collects cash. Which of the following financial statement elements are increased? a) Cash only b) Stockholders' equity only c) Liabilities d) Cash and stockholders' equity

answer

d) Cash and stockholders' equity

question

DAF Company paid a utility bill of $300 and paid rent of $700 in December. By how much would these events reduce stockholders' equity? a) $300 b) $1,000 c) $400 d) $700

answer

b) $1,000

question

Declaring and paying cash dividends affects which balance sheet accounts? a) Cash only b) Stockholders' equity only c) Cash and stockholders' equity d) Cash and capital stock

answer

c) Cash and Stockholders' Equity

question

Which of the following transactions changes the mix of assets only? a) Paid for supplies with cash b) Borrowed money from Second National Bank c) Received money for fees earned d) Received a utility bill

answer

a) Paid for supplies with cash

question

If Assets have a balance of $40,000 and Stockholders' Equity has a balance of $30,000, then Liabilities must have a balance of a) $70,000. b) $30,000. c) $40,000. d) $10,000.

answer

d) $10,000

question

If Liabilities have a balance of $10,000 and Stockholders' Equity has a balance of $60,000, then Assets must have a balance of a) $50,000. b) $60,000. c) $70,000. d) $10,000.

answer

c) $70,000

question

Total Assets - Beginning of the year = $100,000 Total Liabilities - Beginning of the year = $60,000 Total Assets - End of the year = $500,000 Total Liabilities- End of the year = $325,000 Refer to Exhibit 2-1. What is net income, assuming no stock was issued and no dividends were paid? a) $215,000 b) $175,000 c) $135,000 d) $40,000

answer

c) $135,000

question

Total Assets - Beginning of the year = $100,000 Total Liabilities - Beginning of the year = $60,000 Total Assets - End of the year = $500,000 Total Liabilities- End of the year = $325,000 Refer to Exhibit 2-1. What is net income, assuming no stock was issued and dividends of $25,000 were paid? a) $110,000 b) $150,000 c) $160,000 d) $200,000

answer

c) $160,000

question

Total Assets - Beginning of the year = $100,000 Total Liabilities - Beginning of the year = $60,000 Total Assets - End of the year = $500,000 Total Liabilities- End of the year = $325,000 Refer to Exhibit 2-1. What is net income, assuming $50,000 of stock was issued and no dividends were paid? a) $110,000 b) $85,000 c) $70,000 d) $200,000

answer

b) $85,000

question

Total Assets - Beginning of the year = $100,000 Total Liabilities - Beginning of the year = $60,000 Total Assets - End of the year = $500,000 Total Liabilities- End of the year = $325,000 Refer to Exhibit 2-1. What is net income, assuming $50,000 of stock was issued and $25,000 of dividends were paid? a) $110,000 b) $150,000 c) $190,000 d) $15,000

answer

a) $110,000

question

Gibbs Company has $16,000 in Retained Earnings, $27,000 in Assets, and $5,000 in Liabilities. How much is in Common Stock? a) $22,000 b) $16,000 c) $11,000 d) $6,000

answer

d) $6,000

question

A to Z Corporation engaged in the following transaction "Paid a $10,000 cash dividend." On the Statement of Cash Flows, the transaction would be classified as a.) Cash Flows from Operating Activities. b) Cash Flows from Investing Activities. c) Cash Flows from Financing Activities. d) Noncash transaction.

answer

c) Cash Flows from Financing Activities.

question

A to Z Corporation engaged in the following transaction "Purchased a building for $80,000 cash." On the Statement of Cash Flows, the transaction would be classified as a) Cash Flows from Operating Activities. b) Cash Flows from Investing Activities. c) Cash Flows from Financing Activities. d) Non-cash transaction.

answer

b) Cash Flows from Investing Activities

question

A to Z Corporation engaged in the following transaction "Issued a $30,000 note payable to borrow cash from the bank." On the Statement of Cash Flows, the transaction would be classified as a) Cash Flows from Operating Activities. b) Cash Flows from Investing Activities. c) Cash Flows from Financing Activities. d) Non-cash transaction.

answer

c) Cash Flows from Financing Activities.

question

An increase in Stockholders' Equity from revenues earned will also result in an increase in a) liabilities. b) assets. c) expenses. d) cash flow from financing activities.

answer

b) assets

question

For EFG Co., the transaction "Payment to creditors" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) decrease stockholders' equity.

answer

b) decrease total assets

question

For EFG Co., the transaction "Cash sales to customers" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) decrease stockholders' equity.

answer

a) increase total assets

question

For EFG Co., the transaction "Payment of interest expense" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) increase stockholders' equity.

answer

b) decrease total assets

question

For EFG Co., the transaction "Purchase of store equipment with cash" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) decrease stockholders' equity.

answer

c) have no effect on total assets

question

For EFG Co., the transaction "Payment of dividends" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) increase stockholders' equity.

answer

b) decrease total assets

question

For EFG Co., the transaction "Purchase of store equipment with a note payable" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) decrease total liabilities.

answer

a) increase total assets

question

For EFG Co., the transaction "Payment of quarterly taxes" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) increase stockholders' equity.

answer

b) decrease total assets

question

For EFG Co., the transaction "Receipt of interest income" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) decrease total liabilities.

answer

a) increase total assets

question

For EFG Co., the transaction "Receipt of a utility bill" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) decrease total liabilities.

answer

c) have no effect on total assets

question

For EFG Co., the transaction "Billed a customer for fees earned" would a) increase total assets. b) decrease total assets. c) have no effect on total assets. d) increase total liabilities.

answer

a) increase total assets

question

The income statement for August indicates net income of $50,000. The corporation also paid $10,000 in dividends during the same period. If there was no beginning balance in stockholders' equity, what is the ending balance in stockholders' equity? a) $40,000 b) $50,000 c) $10,000 d) $60,000

answer

a) $40,000

question

Anthony, Inc. buys land for $50,000 cash. The net affect on assets is a) $50,000 increase. b) $0. c) $50,000 decrease. d) $25,000 increase.

answer

b) $0

question

Declaring and paying cash dividends affects which accounts? a) Cash only b) Capital stock only c) Cash and retained earnings d) Cash and capital stock

answer

c) cash and retained earnings

question

Buying equipment for cash affects which accounts? a) Cash only b) Retained earnings only c) Equipment and retained earnings d) Cash and equipment

answer

d) cash and equipment

question

Receiving cash for fees earned affects which financial statement elements? a) Assets only b) Stockholders' equity only c) Assets and stockholders' equity d) Assets and liabilities

answer

c) Assets and stockholders' equity

question

Paying expenses affects which financial statement elements? a) Assets only b) Stockholders' equity only c) Assets and stockholders' equity d) Assets and liabilities

answer

c) Assets and stockholders' equity

question

The payment of a liability a) decreases assets and stockholders' equity. b) increases assets and decreases liabilities. c) decreases assets and increases liabilities. d) decreases assets and decreases liabilities.

answer

d) decreases assets and decreases liabilities.

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows CASH:

answer

b) balance sheet

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows SALARY EXPENSE:

answer

a) income statement

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows UNEARNED REVENUE:

answer

b) balance sheet

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows DEPRECIATION EXPENSE:

answer

a) income statement

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows CAPITAL STOCK:

answer

b) balance sheet

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows CASH FLOWS FROM OPERATING ACTIVITIES:

answer

d) statement of cash flows

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows ACCOUNTS RECEIVABLE:

answer

b) balance sheet

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows BEGINNING BALANCE OF RETAINED EARNINGS:

answer

c) retained earnings statement

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows NOTES PAYABLE:

answer

b) balance sheet

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows ACCOUNTS PAYABLE:

answer

b) balance sheet

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows CHANGES IN CURRENT ASSETS AND LIABILITIES:

answer

d) statement of cash flows

question

Match the item with the appropriate financial statement. a) income statement b) balance sheet c) retained earnings statement d) statement of cash flows TOTAL EXPENSES:

answer

a) income statement

question

Other descriptive titles for fixed assets would include a) plant assets. b) property, plant, and equipment. c) other long-term assets d) both plant assets and property, plant, and equipment.

answer

d) both plant assets and property, plant, and equipment

question

A capital expenditure would appear on the a) income statement under operating expenses. b) balance sheet under fixed assets. c) balance sheet under current assets. d) income statement under other expenses.

answer

b) balance sheet under fixed assets

question

If a capital expenditure is treated as a revenue expenditure, then a) expenses are overstated and owners' equity is understated. b) expenses are overstated and assets are overstated. c) expenses are understated and owners' equity is overstated. d) net income is overstated and owners' equity is understated.

answer

expenses are overstated and owners' equity is understated.

question

f a revenue expenditure is treated as a capital expenditure, then a) expenses are overstated and owners' equity is understated. b) expenses are overstated and assets are overstated. c) expenses are understated and owners' equity is overstated. d) net income is overstated and owners' equity is understated.

answer

expenses are understated and owners' equity is overstated.

question

Which of the following expenditures would NOT be included in the cost of an asset? a) Freight costs b) Vandalism c) Sales tax d) Surveying fees

answer

vandalism

question

A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land? a. $93,500 b. $91,550 c. $85,700 d. $89,600

answer

$89,600

question

All amounts paid to get an asset in place and ready for use are referred to as a. capital expenditures. b. revenue expenditures. c. residual value. d. cost of an asset.

answer

cost of an asset

question

The removal of an old building to make the land ready for its intended use is charged to a. land. b. land improvements. c. buildings. d. operating expenses.

answer

land

question

Expenditures that add to the utility of fixed assets for more than one accounting period are a. committed expenditures. b. revenue expenditures. c. current expenditures. d. capital expenditures.

answer

capital expenditures

question

Which of the following should be included in the acquisition cost of a piece of equipment? a. Transportation costs b. Installation costs c. Testing costs prior to placing the equipment into production d. All of these

answer

all of these

question

Which of the following is an example of a capital expenditure? a. Cleaning the carpet in the front room b. Tune-up for a company truck c. Replacing an engine in a company car d. Replacing all burned-out light bulbs in the factory

answer

replacing an engine in a company car

question

Land improvements include a. fences. b. trees and shrubs. c. outdoor lighting. d. All of the above.

answer

all of the above

question

Which of the following is NOT a fixed asset? a. Equipment b. Buildings c. Land held for investment d. All of these are fixed assets.

answer

land held for investment

question

Book value is defined as a. current market value less residual value. b. cost less residual value. c. current market value less accumulated depreciation. d. cost less accumulated depreciation.

answer

cost less accumulated depreciation

question

What type of depreciation occurs when an asset can no longer provide services at the level originally intended? a. Physical depreciation b. Market depreciation c. Cost depreciation d. Functional depreciation

answer

functional depreciation

question

Salvage value has a similar meaning as a. residual value. b. scrap value. c. book value. d. both residual value and scrap value.

answer

both residual value and scrap value

question

Depreciable cost equals a. cost less accumulated depreciation. b. book value less residual value. c. cost less residual value. d. market value less residual value.

answer

cost less residual value

question

Which of the following is NOT characteristic of the accumulated depreciation account? a. Accumulated depreciation represents cash reserved for asset replacement. b. Accumulated depreciation is a contra-asset account. c. Accumulated depreciation may be disclosed in the notes to the financial statements. d. All of these are characteristic of the accumulated depreciation account.

answer

Accumulated depreciation represents cash reserved for asset replacement.

question

Which method of depreciation considers residual value in computing the normal periodic depreciation? a. Straight-line b. MACRS c. Double-declining-balance d. All of these

answer

Straight-line

question

The accounting term depreciation measures a. an asset's market value decline. b. the amount of cash a company sets aside for asset replacement. c. the amount of asset cost allocated to expense over periods benefited. d. anticipated losses if sold in the used market.

answer

the amount of asset cost allocated to expense over periods benefited.

question

Accelerated depreciation is primarily used for a. the financial statements of large companies. b. the financial statements of small companies. c. income tax purposes. d. both financial reporting and income taxes by most companies.

answer

income tax purposes

question

Recording depreciation a. decreases net income and cash flows. b. decreases net income and has no effect on cash flows. c. decreases net income, assets, and cash flows. d. decreases net income and has no effect on assets and cash flows.

answer

decrease net income and has no effect on cash flows

question

To measure depreciation, all of the following must be known EXCEPT a. market value. b. residual value. c. historical cost. d. estimated life.

answer

market value

question

A machine was purchased for $60,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense? a. $13,200 b. $12,000 c. $11,000 d. $10,800

answer

$10,800

question

Equipment was purchased for $18,000. It has a useful life of 5 years and a residual value of $2,000. What is depreciation expense for year one under the double-declining-balance method? a. $6,400 b. $3,200 c. $7,200 d. $3,600

answer

$7200

question

Computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000 and an estimated useful life of 5 years. Determine the second year's depreciation using straight-line depreciation. a. $10,200 b. $22,400 c. $11,200 d. $12,200

answer

$10,200

question

Equipment was purchased for $30,000. It has a useful life of 5 years and a residual value of $4,000. What is depreciation expense for year two under the double-declining-balance method? a. $5,200 b. $6,000 c. $6,240 d. $7,200

answer

$7200

question

On September 1, a machine with a useful life of 8 years and a residual value of $3,000 was purchased for $47,000. What is depreciation expense in the year of purchase under straight-line depreciation assuming a December 31 year-end? a. $3,917 b. $3,667 c. $1,958 d. $1,833

answer

$1,833

question

A machine with a useful life of 10 years and a residual value of $4,000 was purchased for $30,000. What is annual depreciation under the straight-line method? a. $3,000 b. $3,400 c. $2,600 d. $5,200

answer

$2,600

question

If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000, the company must a. recognize a loss on the income statement under other expenses. b. recognize a loss on the income statement under operating expenses. c. recognize a gain on the income statement under other revenues. d. Gains and losses are not to be recognized upon the sell of fixed assets.

answer

recognize a loss on the income statement under other expenses.

question

If a fixed asset is sold and the book value is less than cash received, the company must a. recognize a loss on the income statement under other expenses. b. recognize a loss on the income statement under operating expenses. c. recognize a gain on the income statement under other revenues. d. Gains and losses are not to be recognized upon the sell of fixed assets.

answer

recognize a gain on the income statement under other revenues.

question

A fixed asset with a cost of $30,000 and accumulated depreciation of $25,000 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset? a. $2,500 loss b. $1,500 loss c. $2,500 gain d. $1,500 gain

answer

$1,500 loss

question

A gain is recorded on the sale of fixed assets when a. the asset is sold for a price less than its book value. b. the asset's book value is less than the cash received. c. accumulated depreciation is less than the cash received. d. None of the above.

answer

the asset's book value is less than the cash received.

question

A fully depreciated asset must be a. removed from the books. b. kept on the books until sold or discarded. c. disclosed only in the notes to the financial statements. d. recognized on the income statement as a loss.

answer

kept on the books until sold or discarded

question

A company sold a delivery truck for $18,000 cash. The truck cost $47,500 and had accumulated depreciation of $36,000 as of the date of sale. The entry to record the sale would include a. an increase in accumulated depreciation for $36,000. b. a decrease in delivery truck for $11,500. c. a loss for $6,500. d. a gain for $6,500.

answer

a gain for $6,500.

question

A company sold office furniture costing $16,500 with accumulated depreciation of $14,000 for $1,800 cash. The entry to record the sale would include a. a loss for $700. b. an increase in accumulated depreciation for $14,000. c. a decrease in office furniture for $2,500. d. a decrease in cash for $1,800.

answer

a loss for $700.

question

A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold. a. $7,350,000 b. $7,500,000 c. $5,000,000 d. $7,650,000

answer

$7,350,000

question

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called a. depletion. b. deferral. c. amortization. d. depreciation.

answer

depletion.

question

The Drilling Company purchased a mining site for $500,000 on July 1, 2010. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2010 the company extracted 6,500 tons of ore. The depletion expense for 2010 is a. $37,700. b. $42,000. c. $32,500. d. $27,300.

answer

$27,300

question

Goodwill is a. amortized similar to other intangibles. b. only written down if an impairment in value occurs. c. charged to expense immediately. d. amortized over 40 years or its economic life, whichever is shorter.

answer

only written down if an impairment in value occurs.

question

Which of the following is NOT an intangible asset? a. Goodwill b. Trademark c. Copyrights d. Long-term receivable

answer

long-term receivable

question

Which intangible assets are amortized over their useful life? a. Trademarks b. Goodwill c. Patents d. All of these

answer

patents

question

Intangible assets are used in operations but a. cannot be specifically identified. b. cannot be sold. c. lack physical substance. d. cannot be long-lived.

answer

lack physical substance.

question

The exclusive right to use a certain name or symbol is called a a. franchise. b. patent. c. trademark. d. copyright.

answer

trademark

question

NBC Company purchased a patent from ABC for $144,000. At the time of purchase the patent had been in existence for 10 years. What is the first year's amortization? a. $7,200 b. $18,000 c. $12,000 d. $14,400

answer

$14,400

question

Expenditures for research and development are generally recorded as a. current operating expenses. b. assets and amortized over their estimated useful life. c. assets and amortized over 40 years. d. current assets.

answer

current operating expenses.

question

The cost of a patent should be amortized a. over 20 years. b. over its economic life. c. over 20 years or its economic life, whichever is shorter. d. only if an impairment occurs.

answer

over 20 years or its economic life, whichever is shorter.

question

A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 12-year economic life. The entry to record amortization would include a. an increase in amortization expense for $33,500. b. an increase in research and development expense for $670,000. c. a decrease in patent for $55,833. d. an increase in accumulated amortization for $670,000.

answer

a decrease in patent for $55,833

question

Fixed assets are ordinarily presented in the balance sheet a. at current market values. b. at replacement costs. c. at cost less accumulated depreciation. d. in a separate section along with intangible assets.

answer

at cost less accumulated depreciation

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