Acc 201 Sample Test 1form 2 page 1

Acc 201 Sample Test 1form 2 page 1 - E. Reliability...

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Sample Test 1 –Form 2 1. Which of the following is false regarding Retained Earnings? A. Retained Earnings normally have a credit balance. B. Retained Earnings are ultimately increased by revenues. C. Retained Earnings are decreased by dividends. D. Retained Earnings are ultimately decreased by expenses. E. Retained Earnings are an asset like cash. 2. Including information in the financial statements, because the amounts are large enough to influence the decision making process of an informed reader, is an application of which accounting concept? A. Full disclosure principle: you show all information B. Conservatism : making sure you don’t over state your assets, understate L or SE C. Cost-Benefit constraint: D. Materiality constraint
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Unformatted text preview: E. Reliability principle 3. On 12/31/07 Mark's Clothing Inc. reported the following information -- this is a complete list : Cash $10,000 Contributed Capital 25,000 Accounts Payable 10,000 Clothing Inventory 15,000 Equipment 15,000 Notes Payable 5,000 Based on the above information, what is net book value of Mark's clothing on 12/31/07? A. $40,000 B. $10,000 C. $20,000 D. $25,000 E. $15,000 4. On 12/31/06, Amy's Furniture Inc. purchased a delivery truck for $10,000. The truck will be used evenly over the next five years and has a residual value of $2,000. What is the book value of the delivery truck on 12/31/07? A. $10,000 B. $ 8,000 C. $ 2,000 A. $ 8,400 D. $ 1,600...
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This note was uploaded on 03/19/2008 for the course ACCT 201 taught by Professor Anothony during the Fall '07 term at Michigan State University.

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