test1_pract_2010fall_solutions-3

test1_pract_2010fall_solutions-3 - ACCT 207 Practice Test...

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ACCT 207 Practice Test Fall 2008 The separate entity assumption means: a. A company’s financial statements reflect only the business activities of that company b. Each separate owner’s fiancés must be revealed in the financial statements c. Each separate entity that has a claim on a company’s assets must be shown in the financial statements d. All of the above 2. Investing activities: a. Involve day to day events like selling goods and services, which occur when running a business b. Involve the buying or selling of land, buildings, equipment, and other longer-term investments c. Only involve financial exchanges d. All of the above 3. Assets: a. Represent the amounts earned by a company b. Must equal the liabilities of a company c. Must equal the stockholders equity of the company d. Represent the resources owned by a company 4. The Super Nova Rock Star Company paid a dividend to stockholders. This will be reported on the: a. Audit report b. Income statement c. Balance sheet d. Statement of retained earnings 5. At the end of last year, the company’s assets totaled $860,000 and its liabilities totaled $740,000. During the current year, the company’s total assets increased by $58,000 and its total liabilities increased by $24,000. At the end of the current year, a. Stockholder’s equity was $154,000 b. Stockholder’s equity was $120,000 c. Stockholder’s equity was $34,000 d. Stockholder’s equity was $178,000 6. When should a company recognize revenue? a. When delivery has occurred or services have been provided (rendered) b. When the price is fixed or determinable c. When there is persuasive evidence of an arrangement for customer payment and payment is reasonably assured d. All of the above are necessary to recognize revenue
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7. Failure to adjust for accrued wages at year end will result in an a. Overstatement of liabilities b. Understatement of stockholder’s equity c. Overstatement of net income d. Understatement of assets 8. A company that receives money in advance of performing a service a. Debits cash and credits prepaid fees b. Debits unearned fees and credits accounts payable c. Debits cash and credits unearned fees d. Debits cash and credits accounts receivable 9. Accumulated depreciation is classified as a
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test1_pract_2010fall_solutions-3 - ACCT 207 Practice Test...

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