EXM2XCompPractExamMC - CHAPTER 9 INVENTORIES: ADDITIONAL...

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Dr. M.D. Chase Long Beach State University Accounting 201 Comprehensive Practice Exam 2C Page 1 1. A business organized as a corporation a. is not a separate legal entity in most states. b. requires that stockholders be personally liable for the debts of the business. c. is owned by its stockholders. d. has tax advantages over a proprietorship or partnership. 2. Most business enterprises in the United States are a. proprietorships and partnerships. b. partnerships. c. corporations. d. government units. 3. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? a. Reduced legal liability for investors. b. Harder to transfer ownership. c. Lower taxes. d. Most common form of organization. 4. Borrowing money is an example of a(n) a. delivering activity. b. financing activity. c. investing activity. d. operating activity. 5. Net income results when a. Assets > Liabilities. b. Revenues = Expenses. c. Revenues > Expenses. d. Revenues < Expenses. 6. Retained earnings at the end of the period is equal to a. retained earnings at the beginning of the period plus net income minus liabilities. b. retained earnings at the beginning of the period plus net income minus dividends. c. net income. d. assets plus liabilities. 7. Relevant accounting information a. is information that has been audited. b. must be reported within the operating cycle or one year, whichever is longer. c. has been objectively determined. d. is information that is capable of making a difference in a business decision.
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Dr. M.D. Chase Long Beach State University Accounting 201 Comprehensive Practice Exam 2C Page 2 8. An item is considered material if a. it costs a lot of money. b. it is of a tangible nature. c. it is likely to influence the decision of an investor or creditor. d. the cost of reporting the item is greater than its benefits. 9. Which of the following items has no effect on retained earnings? a. Expense b. Dividends c. Land purchase d. Revenue 10. A debit to an asset account indicates a(n) a. error. b. credit was made to a liability account. c. decrease in the asset. d. increase in the asset. 11. Which accounts normally have credit balances? a. Revenues, liabilities,and dividends. b. Revenues, liabilities,and assets. c. Revenues, liabilities,and retained earnings. d. Revenues, liabilities,and expenses. 12. The unearned revenue account is classified as a(n) a. asset. b. revenue. c. expense. d. liability. 13. Which of the following is an asset? a. Service revenue b. Notes payable c. Supplies expense d. Prepaid rent 14. The matching principle matches a. customers with businesses. b. expenses with revenues. c. assets with liabilities. d. creditors with businesses. 15. A company spends $20 million dollars for an office building.
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EXM2XCompPractExamMC - CHAPTER 9 INVENTORIES: ADDITIONAL...

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