Question 1

Prepare a April 30 balance sheet in proper form for Two Rivers Vending Service from the following alphabetical list of the accounts at April 30:

Accepted Answer

The answer of Prepare a April 30 balance sheet in...

Question 2

If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period,did the assets of the company increase or decrease? By what amount?

Accepted Answer

Assets inc...

Question 3

Which of the following accounts is not included in the calculation of a company's ending equity?

Accepted Answer

A)  Revenues.
B)  Expenses.
C)  Dividends.
D)  Stockholder investments.
E)  Cash.F) B) and C)
G) A) and D)

Question 4

Chou Co.has a net income of $43,000,assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000.Compute its return on assets.

Accepted Answer

A)  8.4%.
B)  17.2%.
C)  14.3%.
D)  15.6%.
E)  1.5%.F) B) and D)
G) A) and D)

Question 5

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit.How does this transaction affect the accounting equation for Atkins?

Accepted Answer

A)  Assets would decrease $1,750 and liabilities would decrease $1,750.
B)  One asset would increase $1,750 and a different asset would decrease $1,750,causing no net change in the accounting equation.
C)  Assets would increase $1,750 and equity would increase $1,750.
D)  Assets would increase $1,750 and liabilities would increase $1,750.
E)  Liabilities would decrease $1,750 and equity would increase $1,750.F) A) and D)
G) B) and E)

Question 6

A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

Accepted Answer

A) True 
 B)False

Question 7

A company acquires equipment for $75,000 cash.This represents a(n) :

Accepted Answer

A)  Operating activity.
B)  Investing activity.
C)  Financing activity.
D)  Revenue activity.
E)  Expense activity.F) A) and B)
G) B) and E)

Question 8

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 9

The difference between a company's assets and its liabilities,or net assets is:

Accepted Answer

A)  Net income.
B)  Expense.
C)  Equity.
D)  Revenue.
E)  Net loss.F) D) and E)
G) A) and B)

Question 10

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 11

If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period,the assets of the business must have:

Accepted Answer

A)  Decreased $105,000.
B)  Decreased $45,000.
C)  Increased $30,000.
D)  Increased $45,000.
E)  Increased $105,000.F) B) and D)
G) A) and B)

Question 12

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Accepted Answer

A) True 
 B)False

Question 13

If a company receives $12,000 from its sole stockholder to establish a corporation,the effect on the accounting equation would be:

Accepted Answer

A)  Assets decrease $12,000 and equity decreases $12,000.
B)  Assets increase $12,000 and liabilities decrease $12,000.
C)  Assets increase $12,000 and liabilities increase $12,000.
D)  Liabilities increase $12,000 and equity decreases $12,000.
E)  Assets increase $12,000 and equity increases $12,000.F) B) and C)
G) D) and E)

Question 14

Revenues are:

Accepted Answer

A)  The same as net income.
B)  The excess of expenses over assets.
C)  Resources owned or controlled by a company
D)  The increase in equity from a company's sales of products and services.
E)  The costs of assets or services used.F) A) and B)
G) A) and C)

Question 15

All of the following are classified as liabilities except:

Accepted Answer

A)  Accounts Receivable.
B)  Notes Payable.
C)  Wages Payable.
D)  Accounts Payable.
E)  Taxes Payable.F) None of the above
G) A) and B)

Question 16

A corporation is:

Accepted Answer

A)  A business legally separate from its owners.
B)  Controlled by the FASB.
C)  Not responsible for its own acts and own debts.
D)  The same as a limited liability partnership.
E)  Not subject to double taxation.F) A) and B)
G) C) and E)

Question 17

Data for Kennedy Realty are as follows:
  Cash dividends of $30,000 were paid to its sole stockholder,Finn Kennedy,during the year.No stock was issued during the year.Using the above data,prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

Accepted Answer

The answer of Data for Kennedy Realty are as follows:
...

Question 18

From an accounting perspective,an event is a happening that affects the accounting equation,but cannot be measured.

Accepted Answer

A) True 
 B)False

Question 19

Rent expense appears on which of the following statements?

Accepted Answer

A)  Balance sheet.
B)  Income statement.
C)  Statement of retained earnings.
D)  Statement of periodic expenses.
E)  Statement of cash flows only.F) All of the above
G) A) and B)

Question 20

The rule that (1) requires revenue to be recognized when goods or services are provided to the customer and (2) at the amount expected to be received from the customer is called the:

Accepted Answer

A)  Going-concern assumption.
B)  Measurement (Cost) principle.
C)  Revenue recognition principle.
D)  Objectivity principle.
E)  Business entity assumption.F) A) and C)
G) B) and C)

Exam 1: Introducing Financial Statements

From an accounting perspective,an event is a happening that affects the accounting equation,but cannot be measured.

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A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

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If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period,did the assets of the company increase or decrease? By what amount?

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Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit.How does this transaction affect the accounting equation for Atkins?

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External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

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Revenues are:

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Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

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The difference between a company's assets and its liabilities,or net assets is:

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If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period,the assets of the business must have:

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All of the following are classified as liabilities except:

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A corporation is:

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Rent expense appears on which of the following statements?

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A company acquires equipment for $75,000 cash.This represents a(n) :

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Prepare a April 30 balance sheet in proper form for Two Rivers Vending Service from the following alphabetical list of the accounts at April 30:

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Which of the following accounts is not included in the calculation of a company's ending equity?

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The rule that (1) requires revenue to be recognized when goods or services are provided to the customer and (2) at the amount expected to be received from the customer is called the:

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Data for Kennedy Realty are as follows: Cash dividends of $30,000 were paid to its sole stockholder,Finn Kennedy,during the year.No stock was issued during the year.Using the above data,prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

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If a company receives $12,000 from its sole stockholder to establish a corporation,the effect on the accounting equation would be:

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Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

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Chou Co.has a net income of $43,000,assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000.Compute its return on assets.

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