Practice Exam 1 Chapter 1

Practice Exam 1 Chapter 1 - Practice Exam 1 Summer 2011...

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Practice Exam 1 Summer 2011 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. "Revenues" are best described as: a. decreases in resources resulting from the sale of goods or the provision of services. b. increases in resources resulting from the sale of goods or the provision of services. c. assets used or consumed in the sale of products or services. d. an increase in the financing activities. ____ 2. Which of the following best describes the term "expenses"? a. The cost of assets used in the investing activities of a business. b. The amount of interest or claim that the owners have in the business. c. The future economic resources of a business entity. d. A decrease in resources resulting from the sale of goods or provision of services. ____ 3. Which statement demonstrates the financial success or failure of the company over that specific period of time? a. Statement of Cash Flows b. Statement of Retained Earnings c. Balance Sheet d. Income Statement IPOD CORP IPOD Corporations' end-of-year Balance Sheet consisted of the following amounts. Cash $ 150,000 Accounts Receivable $500,000 700,000 Long-term debt 400,000 Capital stock 1,000,000 Accounts payable 200,000 Retained earnings ? Inventory 350,000 ____ 4. Refer to IPOD Corp. What amount should IPOD report on its Balance Sheet for Total Assets ? a. $1,100,000 b. $1,550,000 c. $1,700,000 d. $1,900,000 Ponzi Corporation
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Ponzi Corporation reported the following information for the year ended December 31, 2010. Net income $100,000 Dividends 6,000 Retained earnings at December 31, 2010 $120,000 ____ 5. Refer to Ponzi Corporation. What was the balance of Retained Earnings at January 1, 2010? a. $ 21,000 b. $ 26,000 c. $106,000 d. $214,000 ____ 6. Refer to Ponzi Corporation. What was the economic effect of the payment of Ponzi's dividends? a. The dividend reduced net income for 2010. b. The dividend should be added to net income if the company's accounting equation is in balance. c. The dividend reduced total retained earnings. d. The dividends must be paid whenever Ponzi Corp. reports net income. ____ 7. Which one of the following is a correct fundamental accounting equation? a. Assets + Liabilities = Equity b. Assets + Retained Earnings = Equity c. Assets + Equity = Liabilities d. Assets = Liabilities + Equity ____ 8. On January 1, 2010, Blackstone Company reported assets of $1,000,000 and liabilities of $600,000. During 2010 assets decreased by $200,000 and Equity decreased $250,000. What is the amount of Equity at Decem- ber 31, 2010. a. $650,000 b. $150,000 c. $400,000 d. $800,000 ____ 9. Which of the following best describes the term "retained earnings" of a company? a.
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Practice Exam 1 Chapter 1 - Practice Exam 1 Summer 2011...

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