ADM 2340 G Fall 2008- Quiz No 1 SOLUTIONS

ADM 2340 G Fall 2008- Quiz No 1 SOLUTIONS - ADM 2340 G Quiz...

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ADM 2340 G Quiz No. 1 Financial Accounting - Fall 2008 Time Limit 1 hour PART 1 Multiple Choice 18 Mark Record Your Answers on the Scantron Sheet 1.What is the initial investment by the shareholders in a company called? a. Owners’ capital b. Shareholders’ capital c. Retained earnings d. Shareholders’ equity 2 Which of the following is not a qualitative characteristic of accounting information? a. Comparability b. Reliability c. Liquidity d. Understandability 3 The constraints on the qualities of accounting information are: a. Comparability and consistency b. Understandability and neutrality c. Cost/benefit and materiality d. Verifiability and timeliness 4. Which of the following is the balance sheet equation? a. Assets = liabilities – shareholders' equity b. Assets = liabilities × shareholders' equity c. Assets = liabilities ÷ shareholders' equity d. Assets = liabilities + shareholders' equity During a recent week, Alma and Associates received $10,000 from clients for services valued at $28,000. The balance is to be received within 30 days. Use this information to answer questions 5 and 6 5. The effect of this transaction in the accounting records would be: a. + $28,000 revenue = + $10,000 cash + $18,000 accounts receivable b. + $18,000 net income = + $18,000 assets c. + $10,000 revenue = + $10,000 cash d. + $28,000 revenue = + $28,000 accounts receivable 6. The effect on the balance sheet equation for this transaction would be: a. + $10,000 cash = – $18,000 accounts payable + $28,000 retained earnings b. + $10,000 cash – $18,000 accounts receivable = $28,000 retained earnings c. + $10,000 cash + $18,000 accounts receivable = + $28,000 retained earnings
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ADM 2340 G Fall 2008- Quiz No 1 SOLUTIONS - ADM 2340 G Quiz...

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