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Exam 1: Introducing Financial Accounting

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Question 51

Multiple Choice

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The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

A) Cash was received from providing services to a customer.
B) The company paid an amount due on credit.
C) Equipment was purchased for cash.
D) A utility bill was received for the current month, to be paid in the following month.
E) Advertising expense for the month was paid in cash.

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

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Question 52

Multiple Choice

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

A) Revenues.
B) Expenses.
C) Dividends.
D) Common stock.
E) Cash.

F) A) and D)
G) C) and D)

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Question 53

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The accounts of Odie Company with the increases or decreases that occurred during the past year are as follows: Except for net income, an investment of $3,000 by the stockholder, and a dividend of $11,000 by the stockholder, no other items affected the stockholders' equity balance. Using the balance sheet equation, compute net income for the past year.

External users of accounting information include all of the following except:

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

An income statement reports on investing and financing activities.

A corporation is:

The accounting equation implies that: Assets + Liabilities = Equity.

Net income occurs when revenues exceed expenses.

If assets are $99,000 and liabilities are $32,000, then equity equals:

Define risk and return and discuss the relation between them.

Marsha Bogswell is the owner of Bogswell Legal Services, Inc. Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogswell Legal Services, Inc.?

The accounts of Mason Company at the end of the past year report the following amounts: If the beginning equity for the year was $173,000, calculate the ending equity for Mason Company.

Return on assets is often stated in ratio form as the amount of average total assets divided by income.

The statement of cash flows identifies cash flows separated into operating, investing, and financing activities over a period of time.

Risk is the uncertainty about the return we will earn.

Which of the following accounting principles require that all goods and services purchased be recorded at actual cost?

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Classify the following activities according to the appropriate section of the statement of cash flows. a. Operating activity b. Investing activity c. Financing activity ____ 1. Cash received from a one-time sale of used office equipment. ____ 2. Cash paid for dividends to stockholders. ____ 3. Cash received from customers. ____ 4. Cash received from owner contributions. ____ 5. Cash paid for utilities. ____ 6. Cash paid for a delivery van to be used in the business.

________________________________ explains changes in the stockholders' claim on the business's assets from net income or loss, and dividends over a period of time.