Test_1-form_2 - Sample Test 1 Form 2 1. Which of the...

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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 B. Conservatism C. Cost-Benefit constraint D. Materiality constraint 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 D. $ 8,400 E. $ 1,600 1
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5. On December 31, 2007 Larry's Golf Shop Inc. purchased a one-year fire insurance policy for the year 2008, paying $5000 cash. What is the net effect of this transaction on Total Assets, Total Liabilities and Total Stockholders’ Equity as of December 31,2007? A. Total Assets decrease, Total Liabilities decrease, and Total Stockholders’ Equity decrease B. Total Assets increase, Total Liabilities unaffected, and Total Stockholders’ Equity increase C. Total Assets unaffected, Total Liabilities increase, and Total Stockholders’ Equity unaffected D. Total Assets decrease, Total Liabilities increase, and Total Stockholders’ Equity decrease E. Total Assets unaffected, Total Liabilities unaffected, and Total Stockholders’ Equity unaffected 6. On December 31, 2007, Tracey’s Ice Cream Shop sold a piece of land for $10,000 cash that originally cost Tracey $15,000. What is the correct entry to record this transaction?
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Test_1-form_2 - Sample Test 1 Form 2 1. Which of the...

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