Exam1a220_f11_KEY_
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Exam1a220_f11_KEY_

Course Number: ACCT 220, Fall 2011

College/University: Saint Louis

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Accounting 220 Fall 2011 Exam 1 Name _______KEY___________ 1. a. b. c. d. e. If an individual asset is increased, then there could be an equal decrease in a specific liability. there could be an equal decrease in stockholders equity. there could be an equal decrease in another asset. none of these is possible. I dont know. 2. a. b. c. d. e. The normal balance of any account is the left side. right side. side...

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220 Fall Accounting 2011 Exam 1 Name _______KEY___________ 1. a. b. c. d. e. If an individual asset is increased, then there could be an equal decrease in a specific liability. there could be an equal decrease in stockholders equity. there could be an equal decrease in another asset. none of these is possible. I dont know. 2. a. b. c. d. e. The normal balance of any account is the left side. right side. side which increases that account. side which decreases that account. I dont know. 3. a. b. c. d. e. To show how successfully your business performed during a period of time, you would report its revenues and expense in the balance sheet. income statement. statement of cash flows. retained earnings statement. I dont know. 4. a. b. c. d. e. Retained earnings at the end of the period is equal to retained earnings at the beginning of the period plus net income minus dividends. retained earnings at the beginning of the period plus net income minus liabilities. net income. assets plus liabilities. I dont know. 5. Which of the following financial statements is concerned with the company at a point in time? Balance sheet. Income statement. Retained Earnings statement. Statement of cash flows. I dont know. a. b. c. d. e. 6. a. b. c. d. e. Dexter Company began the year by issuing $20,000 of common stock for cash. The company recorded revenues of $185,000, expenses of $160,000, and paid dividends of $10,000. What was Dexters net income for the year? $15,000 $35,000 $25,000 $45,000 I dont know. 1 7. a. b. c. d. e. On a classified balance sheet, current assets are customarily listed In the order in which they are expected to be converted into cash In alphabetical order With the largest dollar amounts first In the order of acquisition I dont know. 8 Payments to stockholders are called a. expenses. b. liabilities. c. dividends. d. distributions. 9. Which financial statement would best indicate whether the company relies on debt or stockholders equity to finance its assets? a. Statement of Cash Flows b. Retained Earnings Statement c. Income Statement d. Balance Sheet 10. Ashleys Accessory Shop started the year with total assets of $70,000 and total liabilities of $40,000. During the year the business recorded $110,000 in revenues, $55,000 in expenses, and dividends of $20,000. Stockholders equity at the end of the year was a. $60,000. b. $55,000. c. $65,000. Beg.SE 30 + 110 55 20 = 65.000 d. $35,000. 11. Marvin Services Corporation had the following accounts and balances: Accounts payable Accounts receivable Buildings Cash $12,000 2,000 ? 6,000 Equipment Land Unearned service revenue Total stockholders' equity $14,000 14,000 4,000 ? If the balance of the Buildings account was $34,000, what would be the total of liabilities and stockholders' equity? a. $68,000 b. $70,000 Total Assets (2,000 + 34,000 + 6,000 + 14,000 + 14,000) c. $54,000 d. $50,000 12. 2 In the annual report, where would a financial statement reader find out if the companys financial statements give a fair depiction of its financial position and operating results? a. Notes to the financial statements b. Management discussion and analysis section c. Balance sheet d. Auditors report 13. Benedict Company compiled the following financial information as of December 31, 2012: Revenues $280,000 Common stock 60,000 Equipment 80,000 Expenses 250,000 Cash 70,000 Dividends 20,000 Supplies 10,000 Accounts payable 40,000 Accounts receivable 30,000 Retained earnings, 1/1/12 150,000 Benedicts assets on December 31, 2012 are: a. $470,000 b. $340,000 c. $160,000 d. $190,000 14. Elston Company compiled the following financial information as of December 31, 2012: Revenues $420,000 Common stock 90,000 Equipment 120,000 Expenses 375,000 Cash 105,000 Dividends 30,000 Supplies 15,000 Accounts payable 60,000 Accounts receivable 45,000 Retained earnings, 1/1/12 225,000 Elstons retained earnings on December 31, 2012 are: a. $225,000 b. $270,000 c. $240,000 (225 + 45 = 270 30 = 240) d. $ 15,000 15. Using the following balance sheet and income statement data, what is the total amount of working capital? Current assets $ 14,000 Net income $ 24,000 Current liabilities 8,000 Stockholders equity 42,000 Average assets 80,000 Total liabilities 18,000 Total assets 60,000 Average common shares outstanding was 10,000 a. b. c. d. 3 $ 2,000 $14,000 $ 4,000 $ 6,000 (14 8) 16. Ratios that measure the income or operating success of a company for a given period of time are a. liquidity ratios. b. profitability ratios. c. solvency ratios. d. trending ratios. 17. Use the following data to determine the total dollar amount of assets to be classified as current assets. Koonce Office Supplies Balance Sheet December 31, 2012 Cash $ 130,000 Accounts Payable Prepaid Insurance 60,000 Accounts Receivable 100,000 Inventory 140,000 Land held for Investment 150,000 Land 180,000 Buildings $200,000 Less Accumulated Depreciation (40,000) 160,000 Trademarks 140,000 Total Assets $1,060,000 a. b. c. d. 18. Common Stock Retained Earnings Total Stockholders Equity Total Liabilities and Stockholders Equity 20,000 160,000 $320,000 $240,000 500,000 $740,000 $1,060,000 $580,000. $430,000. $360,000. $290,000. Use the data following to calculate the current ratio (Round to two places). Koonce Office Supplies Balance Sheet December 31, 2012 Cash $ 130,000 Accounts Payable Prepaid Insurance 60,000 Accounts Receivable 100,000 Inventory 140,000 Land held for Investment 150,000 Land 180,000 Buildings $200,000 Less Accumulated Depreciation (40,000) 160,000 Trademarks 140,000 Total Assets $1,060,000 a. b. c. d. 4 $ 140,000 Salaries Payable Mortgage Payable Total Liabilities 1.81 : 1. 1.44 : 1. 3.07 : 1. 2.69 : 1. (430/60) $ 140,000 Salaries Payable Mortgage Payable Total Liabilities Common Stock Retained Earnings Total Stockholders Equity Total Liabilities and Stockholders Equity 20,000 160,000 $320,000 $240,000 500,000 $740,000 $1,060,000 19. N3 Corporation has assets of $3.6 million, common stock of $936,000, and retained earnings of $571,000. What are the creditors claims on their assets? a. $3,235,000 b. $1,507,000 c. $2,093,000 3,600,000 1,507,000 (936,000 + 571,000) d. $3,965,000 20. The following information is available for Bradshaw Corporation and Newell Corporation: Bradshaw Corporation Newell Corporation (in millions) 2012 2011 2012 2011 Preferred stock dividends 25 10 0 30 Net income 500 480 490 520 Shares outstanding at the end 200 180 150 200 of the year Shares outstanding at the 180 150 200 220 beginning of the year Based on this information, what is the amount of Bradshaw's earnings per share (rounded to two decimals) for 2012? a. $2.76 b. $2.50 475 / 190 c. $1.25 d. $1.32 21. At December 31, 2012 Lowery Company had retained earnings of $2,184,000. During 2012 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2012 was $402,000. The retained earnings balance at the beginning of 2012 was: a. $2,552,000 b. $1,816,000 (2,184,000 + 34,000 402,000) c. $1,914,000 d. $2,454,000 22. Using the following balance sheet and income statement data, what is the current ratio? Current assets $ 9,000 Net income $ 12,000 Current liabilities 4,000 Stockholders equity 24,000 Average assets 44,000 Total liabilities 6,000 Total assets 30,000 Average common shares outstanding was 10,000 a. b. c. d. 23. 5 1.75 : 1 2.00 : 1 0.44 : 1 2.25: 1 (9 / 4) The going concern assumption is inappropriate when a. the business is just starting up. b. liquidation appears likely. c. market values are higher than costs. 24. d. the business is organized as a proprietorship. Collection of a $600 Accounts Receivable a. increases an asset $600; decreases an asset $600. b. increases an asset $600; decreases a liability $600. c. decreases a liability $600; increases stockholders equity $600. d. decreases an asset $600; decreases a liability $600. 25. The purchase of an asset for cash a. increases assets and stockholders equity. b. increases assets and liabilities. c. decreases assets and increases liabilities. d. leaves total assets unchanged. 26. Powers Corporation received a cash advance of $500 from a customer. As a result of this event, a. assets increased by $500. b. equity increased by $500. c. liabilities decreased by $500. d. Both a and b. 27. Which of the following correctly identifies normal balances of accounts? a. Assets Debit Liabilities Credit Common Stock Credit Revenues Debit Expenses Credit b. Assets Liabilities Common Stock Revenues Expenses c. Assets Liabilities Common Stock Revenues Expenses 6 Credit Debit Debit Credit Debit d. Assets Liabilities Common Stock Revenues Expenses 28. Debit Credit Credit Credit Credit Debit Credit Credit Credit Debit The best interpretation of the word credit is the a. offset side of an account. b. increase side of an account. c. right side of an account. d. decrease side of an account. 29. In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200 and the total of the credit entries to the Cash account amounted to $800. The Cash account has a a. $800 credit balance. b. $400 debit balance. c. $1,200 debit balance. d. $400 credit balance. 30. Barnes Company showed the following balances at the end of its first year: Cash $11,000 Prepaid insurance 700 Accounts receivable 3,500 Accounts payable 2,800 Notes payable 4,200 Common stock 5,400 Dividends 700 Revenues 21,000 Expenses 17,500 What did Barnes Company show as total credits on its trial balance? a. $34,100 b. $33,400 c. $32,700 d. $34,800 31. , 32. 33. 7 During January 2012, Carey Services Inc. paid a cash dividends of $2,000. This transaction a. reduces stockholders' equity by $2,000. b. increases stockholders' equity by $2,000. c. reduces net income by $2,000. d. increases expenses by $2,000. The Unearned Service Revenue account is classified as a(n) a. asset. b. revenue. c. expense. d. liability. Which of the following errors, each considered individually, would cause the trial balance to be out of balance? a. A payment of $148 to a creditor was posted as a debit to Accounts Payable and a debit of $148 to Cash. b. Cash of $530 received from a customer on account was posted as a debit of $350 to Cash and as a credit of $350 to Accounts Payable. c. A payment of $59 for supplies was posted as a debit of $95 to Supplies and a credit of $95 to Cash. d. A transaction was not posted.
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