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An examination of the financial statements of a business to ensure that they conform with generally accepted accounting principles is called ? A certification An audit A verification A validation.

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slide1

An examination of the financial statements of a business to ensure that they conform with generally accepted accounting principles is called?

  • A certification
  • An audit
  • A verification
  • A validation
slide2

An examination of the financial statements of a business to ensure that they conform with generally accepted accounting principles is called?

  • A certification
  • An audit
  • A verification
  • A validation
slide3

2. Morrow Corp. makes a credit sales (i.e., sale on account) to a customer. The effect of this transaction on the accounting equation is that?

  • Assets increase and liabilities increase
  • Assets increase and stockholder’s equity increases
  • Liabilities increase and stockholder’s equity decreases
  • Liabilities decrease and stockholder’s equity increases
slide4

2. Morrow Corp. makes a credit sales (i.e., sale on account) to a customer. The effect of this transaction on the accounting equation is that?

  • Assets increase and liabilities increase
  • Assets increase and stockholder’s equity increases
  • Liabilities increase and stockholder’s equity decreases
  • Liabilities decrease and stockholder’s equity increases
slide5

3.On January 1, 2005, Thomas Company paid $1000 for a two-year insurance policy on the building. The accounting period ends December 31. At the end of 2005, the financial statement should report?

  • Prepaid Insurance $500; Insurance Expense $500
  • Prepaid Insurance $0; Insurance Expense $1000
  • Prepaid Insurance $1000; Insurance Expense $0
  • Prepaid Insurance $250; Insurance Expense $250
slide6

3.On January 1, 2005, Thomas Company paid $1000 for a two-year insurance policy on the building. The accounting period ends December 31. At the end of 2005, the financial statement should report?

  • Prepaid Insurance $500; Insurance Expense $500
  • Prepaid Insurance $0; Insurance Expense $1000
  • Prepaid Insurance $1000; Insurance Expense $0
  • Prepaid Insurance $250; Insurance Expense $250
slide7

4.Retained earnings refers to?

  • The amount reported as “the bottom line” on the income statement
  • The accumulated amount of past earnings of a corporation that has not been distributed to shareholders as dividends
  • The total amount of stockholder’s equity for a corporation
  • The amount that shareholders have invested by purchasing a corporation’s stock
slide8

4.Retained earnings refers to?

  • The amount reported as “the bottom line” on the income statement
  • The accumulated amount of past earnings of a corporation that has not been distributed to shareholders as dividends
  • The total amount of stockholder’s equity for a corporation
  • The amount that shareholders have invested by purchasing a corporation’s stock
slide9

5.The amount of rent expense reported on the income statement is?

  • The amount of cash paid for rent in the current period
  • The amount of cash paid for rent in the current period less any unpaid rent at the end of the period
  • The amount of rent used up (incurred) in the current period to help generate revenue
  • An increase in net income
slide10

5.The amount of rent expense reported on the income statement is?

  • The amount of cash paid for rent in the current period
  • The amount of cash paid for rent in the current period less any unpaid rent at the end of the period
  • The amount of rent used up (incurred) in the current period to help generate revenue
  • An increase in net income
slide11

6.The advantages of incorporation include all of the following except?

  • Ability to raise capital
  • Tax deductibility of dividends
  • Ease of transfer of ownership
  • Limited liability of owners
slide12

6.The advantages of incorporation include all of the following except?

  • Ability to raise capital
  • Tax deductibility of dividends
  • Ease of transfer of ownership
  • Limited liability of owners
slide13

7. A cash inflow from financing activities includes?

  • Proceeds from selling investments in equity securities of another company
  • Proceeds from selling equipment
  • Proceeds from issuance of bonds payable
  • Receipt of interest payments
slide14

7. A cash inflow from financing activities includes?

  • Proceeds from selling investments in equity securities of another company
  • Proceeds from selling equipment
  • Proceeds from issuance of bonds payable
  • Receipt of interest payments
slide15

8.Under accrual basis accounting, revenues are?

  • Recognized when they are earned
  • Recognized when cash is received
  • Recognized when they are incurred
  • Recognized when cash is paid
slide16

8.Under accrual basis accounting, revenues are?

  • Recognized when they are earned
  • Recognized when cash is received
  • Recognized when they are incurred
  • Recognized when cash is paid
slide17

9. Which financial statement shows the financial position of a business as of a given date?

  • Balance sheet
  • Income statement
  • Statement of cash flows
  • Statement of retained earnings
slide18

9. Which financial statement shows the financial position of a business as of a given date?

  • Balance sheet
  • Income statement
  • Statement of cash flows
  • Statement of retained earnings
slide19

10.The accounts payable account has a beginning balance of $1000 and we purchased $3000 of inventory on credit during the month. The ending balance was $800. How much did we pay our creditors during the month?

  • $2800
  • $3000
  • $3200
  • $3800
slide20

10.The accounts payable account has a beginning balance of $1000 and we purchased $3000 of inventory on credit during the month. The ending balance was $800. How much did we pay our creditors during the month?

  • $2800
  • $3000
  • $3200
  • $3800
slide21

11.Adjusting entries never include?

  • Prepaid expenses
  • Interest payable
  • Unearned revenue
  • Cash
slide22

11.Adjusting entries never include?

  • Prepaid expenses
  • Interest payable
  • Unearned revenue
  • Cash
slide23

12. If you wanted to know what accounting rules a company follows related to its inventory, where would you look?

  • The notes to the financial statements
  • The income statement
  • The balance sheet
  • The headings to the financial statements
slide24

12. If you wanted to know what accounting rules a company follows related to its inventory, where would you look?

  • The notes to the financial statements
  • The income statement
  • The balance sheet
  • The headings to the financial statements
slide25

13. At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants amounting to $500. On December 31, the owner would show which of the following on its financial statements?

  • Unearned rent revenue of $500
  • Rent Receivable of $500
  • Rent Payable of $500
  • Rent Expense of $500
slide26

13. At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants amounting to $500. On December 31, the owner would show which of the following on its financial statements?

  • Unearned rent revenue of $500
  • Rent Receivable of $500
  • Rent Payable of $500
  • Rent Expense of $500
slide27

14. Which of the following accounts is increased by credit entries and decreased by debit entries?

  • Cash
  • Advertising Expense
  • Equipment
  • Accounts payable
slide28

14. Which of the following accounts is increased by credit entries and decreased by debit entries?

  • Cash
  • Advertising Expense
  • Equipment
  • Accounts payable
slide29

15. The primary objective of financial information is to?

  • Provide information to detect fraud in the preparation of financial statements
  • Provide information about the taxable income of the company
  • Provide managers with information about the efficiency and effectiveness of the production process
  • Provide useful economic information about a business to help external parties make sound financial decisions
slide30

15. The primary objective of financial information is to?

  • Provide information to detect fraud in the preparation of financial statements
  • Provide information about the taxable income of the company
  • Provide managers with information about the efficiency and effectiveness of the production process
  • Provide useful economic information about a business to help external parties make sound financial decisions
slide31

16. Which of the following is the private body responsible for establishing generally accepted accounting principles (GAAP)?

  • PCAOB
  • SEC
  • FASB
  • APB
slide32

16. Which of the following is the private body responsible for establishing generally accepted accounting principles (GAAP)?

  • PCAOB
  • SEC
  • FASB
  • APB
slide33

17.Failure to make an adjusting entry to recognize accrued utilities payable would cause an?

  • Understatement of expenses and liabilities and an overstatement of stockholder’s equity
  • Overstatement of expenses and liabilities and an understatement of stockholder’s equity
  • Understatement of expenses, liabilities, and stockholder’s equity
  • Overstatement of assets, expenses, and stockholder’s equity
slide34

17.Failure to make an adjusting entry to recognize accrued utilities payable would cause an?

  • Understatement of expenses and liabilities and an overstatement of stockholder’s equity
  • Overstatement of expenses and liabilities and an understatement of stockholder’s equity
  • Understatement of expenses, liabilities, and stockholder’s equity
  • Overstatement of assets, expenses, and stockholder’s equity
slide35

18.Which of the following accounts would not be closed at the end of the accounting period?

  • Dividends
  • Sales revenue
  • Cost of goods sold
  • Inventory
slide36

18.Which of the following accounts would not be closed at the end of the accounting period?

  • Dividends
  • Sales revenue
  • Cost of goods sold
  • Inventory
slide37

19. Which accounting principle states that expenses incurred in generating revenue should be recorded in the same period in which the revenue is recognized?

  • Historical cost principle
  • Going concern principle
  • Matching principle
  • Revenue recognition principle
slide38

19. Which accounting principle states that expenses incurred in generating revenue should be recorded in the same period in which the revenue is recognized?

  • Historical cost principle
  • Going concern principle
  • Matching principle
  • Revenue recognition principle
slide39

20. Abrahams Corporation reported the following amounts at the end of the first year of operations, December 31, 2009: contributed capital $100,000; sales revenue $400,000; total assets $300,000; $5,000 dividends; and total liabilities $180,000. Retained earnings would be?

  • $20,000
  • $30,000
  • $70,000
  • $80,000
slide40

20. Abrahams Corporation reported the following amounts at the end of the first year of operations, December 31, 2009: contributed capital $100,000; sales revenue $400,000; total assets $300,000; $5,000 dividends; and total liabilities $180,000. Retained earnings would be?

  • $20,000
  • $30,000
  • $70,000
  • $80,000
slide41

21. Which of the following direct effects on the fundamental accounting model is not possible as a result of transaction analysis?

  • Increase a liability and increase an asset
  • Decrease stockholder’s equity and increase an asset
  • Increase an asset and decrease an asset
  • Decrease stockholder’s equity and decrease an asset
slide42

21. Which of the following direct effects on the fundamental accounting model is not possible as a result of transaction analysis?

  • Increase a liability and increase an asset
  • Decrease stockholder’s equity and increase an asset
  • Increase an asset and decrease an asset
  • Decrease stockholder’s equity and decrease an asset
slide43

22. On January 1, 2009, the ledger of Global Corporation correctly showed supplies inventory of $500. During 2009, supplies purchases amounted to $1200. A count (inventory) of supplies on hand at December 31, 2009, showed $600. The 2009 income statement should report supplies expense amounting to?

  • $1200
  • $1100
  • $800
  • $600
slide44

22. On January 1, 2009, the ledger of Global Corporation correctly showed supplies inventory of $500. During 2009, supplies purchases amounted to $1200. A count (inventory) of supplies on hand at December 31, 2009, showed $600. The 2009 income statement should report supplies expense amounting to?

  • $1200
  • $1100
  • $800
  • $600
slide45

23. Assets are?

  • Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services
  • Stockholders’ equity minus liabilities
  • Probable future economic benefits owned by an entity as a result of past transactions
  • The financing provided by the owners and the operations of a business
slide46

23. Assets are?

  • Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services
  • Stockholders’ equity minus liabilities
  • Probable future economic benefits owned by an entity as a result of past transactions
  • The financing provided by the owners and the operations of a business
slide47

24. Which of the following is most often included in current assets?

  • Prepaid expenses
  • Property, plant, and equipment
  • Intangible assets
  • Unearned revenue
slide48

24. Which of the following is most often included in current assets?

  • Prepaid expenses
  • Property, plant, and equipment
  • Intangible assets
  • Unearned revenue
slide49

25. Which characteristic states that accounting information is unbiased and verifiable?

  • Consistency
  • Comparability
  • Relevance
  • Reliability
slide50

25. Which characteristic states that accounting information is unbiased and verifiable?

  • Consistency
  • Comparability
  • Relevance
  • Reliability
slide51

26. On January 1, 2009, the balance in Retained Earnings for Conlon Company was $125,000. During 2009, the company declared and paid cash dividends of $20,000, reported net income of $65,000, sold additional common stock for $10,000. What was the balance of Retained Earnings on December 31, 2009?

  • $210,000
  • $190,000
  • $180,000
  • $170,000
slide52

26. On January 1, 2009, the balance in Retained Earnings for Conlon Company was $125,000. During 2009, the company declared and paid cash dividends of $20,000, reported net income of $65,000, sold additional common stock for $10,000. What was the balance of Retained Earnings on December 31, 2009?

  • $210,000
  • $190,000
  • $180,000
  • $170,000
slide53

27. When a company pays back an amount due to a supplier for a prior purchase?

  • Assets decrease and liabilities decrease
  • Assets increase and stockholder’s equity increases
  • Liabilities increase and stockholder’s equity decreases
  • Assets increase and liabilities decrease
slide54

27. When a company pays back an amount due to a supplier for a prior purchase?

  • Assets decrease and liabilities decrease
  • Assets increase and stockholder’s equity increases
  • Liabilities increase and stockholder’s equity decreases
  • Assets increase and liabilities decrease
slide55

28. The two categories of stockholder’s equity usually found on the balance sheet of a corporation are?

  • Contributed capital and long-term liabilities
  • Contributed capital and property, plant, and equipment
  • Retained earnings and notes payable
  • Contributed capital and retained earnings
slide56

28. The two categories of stockholder’s equity usually found on the balance sheet of a corporation are?

  • Contributed capital and long-term liabilities
  • Contributed capital and property, plant, and equipment
  • Retained earnings and notes payable
  • Contributed capital and retained earnings
slide57

29.Anna Inc. had the following items reported on its most recent financial statements:

Total revenues……………..$500,000

Dividends………………$10,000

Total Assets……………..$425,000

Total Liabilities…………$125,000

Total contributed capital….$100,000

Beginning Retained Earnings…$140,000

What total expenses were reported by Anna for the year?

  • $155,000
  • $275,000
  • $310,000
  • $430,000
slide58

29.Anna Inc. had the following items reported on its most recent financial statements:

Total revenues……………..$500,000

Dividends………………$10,000

Total Assets……………..$425,000

Total Liabilities…………$125,000

Total contributed capital….$100,000

Beginning Retained Earnings….$140,000

What total expenses were reported by Anna for the year?

  • $155,000
  • $275,000
  • $310,000
  • $430,000
slide59

30. Surfing Magazine receives $50,000 from customers on April 1, 2009, for one-year magazine subscriptions. On December 31, 2009, Surfing Magazine should?

  • Report unearned revenue of $55,000
  • Report sales revenue of $50,000
  • Report sales revenue of $37,500
  • Report unearned revenue of $37,500
slide60

30. Surfing Magazine receives $50,000 from customers on April 1, 2009, for one-year magazine subscriptions. On December 31, 2009, Surfing Magazine should?

  • Report unearned revenue of $55,000
  • Report sales revenue of $50,000
  • Report sales revenue of $37,500
  • Report unearned revenue of $37,500
slide61

31. Investing activities?

  • Involve day to day events like selling goods and services, which occur when running a business
  • Involve the buying or selling of land, buildings, equipment, and other long-term investments
  • Only involve financial exchanges
  • All of these
slide62

31. Investing activities?

  • Involve day to day events like selling goods and services, which occur when running a business
  • Involve the buying or selling of land, buildings, equipment, and other long-term investments
  • Only involve financial exchanges
  • All of these
slide63

32. Accumulated depreciation?

  • Is an expense account
  • Is a liability account
  • Is a regular asset account
  • Is an asset contra-account
slide64

32. Accumulated depreciation?

  • Is an expense account
  • Is a liability account
  • Is a regular asset account
  • Is an asset contra-account
slide65

33. Cy’s Bar and Grill has $10,000 in utilities expense during the year. At the beginning of the year, Cy’s had utilities payable amounting to $520. At the end of the year, utilities payable totaled $470. What amount of cash did Cy’s pay for utilities during the year?

  • $9950
  • $10,000
  • $10,050
  • $10,990
slide66

33. Cy’s Bar and Grill has $10,000 in utilities expense during the year. At the beginning of the year, Cy’s had utilities payable amounting to $520. At the end of the year, utilities payable totaled $470. What amount of cash did Cy’s pay for utilities during the year?

  • $9950
  • $10,000
  • $10,050
  • $10,990
slide67

34. At the end of the month, the adjusting journal entry to record the use of supplies would include?

  • An increase to supplies and an increase to expenses
  • A decrease to supplies and an increase to expense
  • An increase to supplies and an increase to revenue
  • A decrease to supplies and a decrease to cash
slide68

34. At the end of the month, the adjusting journal entry to record the use of supplies would include?

  • An increase to supplies and an increase to expenses
  • A decrease to supplies and an increase to expense
  • An increase to supplies and an increase to revenue
  • A decrease to supplies and a decrease to cash
slide69

35. Primary responsibility for the information in a corporation’s financial statements rests with?

  • The shareholders of the corporation
  • The managers of the corporation
  • The Securities and Exchange Commission
  • The certified public accountant who audited the financial statements
slide70

35. Primary responsibility for the information in a corporation’s financial statements rests with?

  • The shareholders of the corporation
  • The managers of the corporation
  • The Securities and Exchange Commission
  • The certified public accountant who audited the financial statements