Fall_2010_ACCT_201_Sample_Exam_1_ANSWERS[1]

Fall_2010_ACCT_201_Sample_Exam_1_ANSWERS[1] - Fall 2011...

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Fall 2011 ACCT 201 Sample Exam 1 Answers Multiple Choice Questions Choose the best answer for each of the following questions. Please circle the letter of your selection on your exam and indicate your selection on your Scantron form as well. 1. An advantage of the corporate form of business is that a. it has limited life. b. its owner’s personal resources are at stake. c. its ownership is easily transferable via the sale of shares of stock. d. it is simple to establish. 2. Joan and Sara met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a a. joint venture. b. partnership. c. corporation. d. proprietorship. 3. Which of the following groups uses accounting information to determine whether the company can pay its obligations? a. Investors in common stock b. Marketing managers c. Creditors d. Chief Financial Officer 4. As of June 30, 2008, Houston Company has assets of $100,000 and stockholders' equity of $5,000. What are the liabilities for Houston Company as of June 30, 2008? a. $85,000 b. $90,000 c. $95,000 d. $100,000 1
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Use the following information for questions 5 and 6. Claire’s Accessory Shop started the year with total assets of $70,000 and total liabilities of $40,000. During the year the business recorded $110,000 in revenues, $55,000 in expenses, and dividends of $20,000. 5. Stockholders’ equity at the end of the year was a. $60,000. b. $55,000. c. $65,000. d. $35,000. 6. The net income reported by Claire’s Accessory Shop for the year was a. $40,000. b. $50,000. c. $65,000. d. $55,000. 7. Which of the following events is not a business transaction? a. Issuance of common stock in exchange for cash b. Hired employees c. Incurred utility expenses for the month d. Earned revenue for services provided Bluestone Company compiled the following financial information as of December 31, 2007: Revenues $280,000 Common stock 60,000 Equipment 80,000 Expenses 250,000 Cash 70,000 Dividends 20,000 Supplies 10,000 Accounts payable 40,000 Accounts receivable 30,000 Retained earnings, 1/1/07 150,000 8. Bluestone’s stockholders’ equity on December 31, 2007 is: a. $210,000 b. $220,000 c. $160,000 d. $240,000 2
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9. An annual report includes all of the following except a. management discussion and analysis section. b. notes to the financial statements. c. an auditor’s report. c d. salary information for all the executives. 10. In a classified balance sheet, assets are usually classified as: a. current assets; long-term assets; property, plant, and equipment; and intangible assets. b. current assets; long-term investments; property, plant, and equipment; and common stocks. c.
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Fall_2010_ACCT_201_Sample_Exam_1_ANSWERS[1] - Fall 2011...

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