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A company's financial records at the end of the year included the following amounts:  Cash $70,000 Accounts Receivable 28,000 Supplies 4,000 Accounts Payable 10,000 Notes Payable 5,000 Retained Earnings, beginning of year 17,000 Common Stock 40,000 Service Revenue 53,000 Wages Expense 8,000 Advertising Expense 5,000 Rent Expense 10,000\begin{array}{lr}\text { Cash } & \$ 70,000 \\\text { Accounts Receivable } & 28,000 \\\text { Supplies } & 4,000 \\\text { Accounts Payable } & 10,000 \\\text { Notes Payable } & 5,000 \\\text { Retained Earnings, beginning of year } & 17,000 \\\text { Common Stock } & 40,000 \\\text { Service Revenue } & 53,000 \\\text { Wages Expense } & 8,000 \\\text { Advertising Expense } & 5,000 \\\text { Rent Expense } & 10,000\end{array} What is the amount of total stockholders' equity that would be reported on the Balance Sheet at the end of the year?


A) $30,000
B) $57,000
C) $87,000
D) $102,000

E) None of the above
F) C) and D)

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The income statement would report the amount of:


A) cash at the end of the year.
B) supplies used up during the current year.
C) dividends distributed to owners during the current year.
D) unpaid employee wages at the end of the year.

E) A) and B)
F) B) and C)

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The unit of measure assumption states that:


A) results of business activities should be reported in an appropriate monetary unit.
B) assets should be recorded at cost.
C) a business's financial reports include only the activities of the business.
D) assets equal liabilities plus stockholder's equity.

E) None of the above
F) A) and D)

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Operating activities include:


A) interest paid on a bank loan.
B) the buying or selling of land,buildings,equipment,and other long-term investments.
C) the repayment of loan proceeds to the bank.
D) obtaining a bank loan to cover the payment of wages,rent and other operating costs.

E) A) and B)
F) All of the above

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Mauricio invested $30,000 in Pizza Aroma in exchange for its stock.Pizza Aroma now has:


A) a liability.
B) retained earnings.
C) common stock.
D) net income.

E) A) and B)
F) None of the above

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The main goal of an accounting system is to:


A) capture information about a business so that it can be reported to decision makers.
B) earn a profit for the company's stockholders.
C) prove that assets equal liabilities plus stockholders' equity.
D) provide initial financing for a new startup.

E) C) and D)
F) B) and C)

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What is the missing amount for Notes Payable? A) $207,100 B) $437,800 C) $1,439,200 D) $3,347,700 What is the missing amount for Notes Payable?


A) $207,100
B) $437,800
C) $1,439,200
D) $3,347,700

E) A) and D)
F) All of the above

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Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) -SEC


A) The U.S.agency that must approve mergers between very large publicly owned corporations.
B) The U.S.Board that approves the rules for auditing publicly owned companies.
C) The organization that establishes business laws in the U.S.
D) The Board that establishes the accounting rules that govern American owned corporations.
E) This organization regulates activities associated with the stock market such as the reporting of financial data by publicly owned companies.
F) The national professional organization of accountants.
G) Rules of financial accounting created by the FASB for use in the United States.
H) A set of laws established to strengthen corporate reporting in the United States.
I) The Board that establishes international accounting standards.
J) The U.S.agency that certifies foreign accounting firms to practice in the U.S.

K) C) and F)
L) E) and F)

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Accounts receivable are:


A) amounts the company expects to pay for previous credit sales.
B) amounts the company expects to collect for previous credit sales.
C) always less than the company's cash.
D) reported in the liabilities section of the balance sheet.
E) reported on the income statement.

F) A) and E)
G) A) and D)

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Operating activities,investing activities,and financing activities are presented on the:


A) balance sheet.
B) statement of cash flows.
C) statement of retained earnings.
D) income statement.

E) C) and D)
F) B) and C)

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Coast Company has 5,000 items of building supplies on hand that cost $150,000;a bill from the vendor for $50,000 of these supplies has not yet been paid.The company expects to earn $400,000 for its services when it uses the building supplies.The company's balance sheet would include an asset,Supplies,in the amount of:


A) $5,000.
B) $100,000.
C) $150,000.
D) $400,000.

E) A) and D)
F) All of the above

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Which of the following expressions of the accounting equation is correct?


A) Liabilities + Assets = Stockholders' Equity
B) Stockholders' Equity + Assets = Liabilities
C) Assets = Liabilities - Stockholders' Equity
D) Stockholders' Equity = Assets - Liabilities

E) C) and D)
F) B) and D)

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What amount is represented by letter J in the statement of cash flows? A) ($84,000) B) $84,000 C) ($4,000) D) $44,000 What amount is represented by letter J in the statement of cash flows?


A) ($84,000)
B) $84,000
C) ($4,000)
D) $44,000

E) A) and B)
F) B) and C)

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Which of the following would not be reported as an asset on the balance sheet?


A) Accounts Receivable
B) Supplies
C) Retained Earnings
D) Cash

E) A) and B)
F) A) and C)

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Who has primary responsibility for making sure that a company's financial statements follow GAAP?


A) Management
B) Independent auditors (CPAs)
C) The Securities and Exchange Commission (SEC)
D) The Public Company Accounting Oversight Board (PCAOB)

E) All of the above
F) B) and D)

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What amount is represented by letter L in the statement of cash flows? A) $318,000 B) $170,000 C) ($170,000) D) ($318,000) What amount is represented by letter L in the statement of cash flows?


A) $318,000
B) $170,000
C) ($170,000)
D) ($318,000)

E) A) and B)
F) C) and D)

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Puffin Co.began the year with assets of $120,000 and liabilities of $90,000.During the year assets increased by $14,400 and liabilities decreased by $10,800. What is the amount of Puffin's stockholders' equity at the beginning of the year?


A) $0
B) $30,000
C) $210,000
D) $120,000

E) None of the above
F) A) and D)

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A stock that does not pay a dividend is an undesirable investment.

A) True
B) False

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People or organizations to whom a business owes money are considered:


A) owners of a business.
B) creditors of a business.
C) stockholders of a business.
D) customers of a business.

E) B) and C)
F) A) and C)

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TreeTop Nursery sold $7,500 of goods to customers of which $4,500 has been collected.TreeTop should report revenues of:


A) $7,500.
B) $4,500.
C) $3,000.
D) $0.

E) All of the above
F) B) and C)

Correct Answer

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