Exam 1 - Spring 2011

Exam 1 - Spring 2011 - Name: ,{Affi'vf ,‘ ' Row: g Exam...

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Unformatted text preview: Name: ,{Affi'vf ,‘ ' Row: g Exam 1 1. What is the primary purpose of financial "= A. Determine the amount of tax liability owed to the government. B. Communicate business transactions to internal management. :{rysure business transactions and communicate those measures to external l sers to make decisions. D. Measure the profitability ofthe company in order to assist employees with making decisions. 2. Which ofthe following groups is not among the externalusers for whom financial statements are prepared? A. Creditors. B. Regulators. C. Investors. fl panagers. waccounting equation is defined as: wets = Liabilities + Stockholders' Equity. B. Assets = Liabilities -Stockholders' Equity. C. Net Income = Revenues -Expenses. D. Liabilities + Revenues = Assets. 4. The costs ofproviding goods and services to customers are referred to as: A. Assets. H 4 . .- enses. C. Liabilities. D. Revenues. 5. Use the following appropriate amounts to calculate net income: Revenues, " gx $12,000; Liabilities, $5,000; Expenses, $4, 00; Assets, $19,000; Dividends, $4,000. a A. $6,999,“ Rf. , («/asr'fifo cow? . 4,000. D. $14,000. 6. Which ofthe following best describes a revenue? A. Resources owned. B. Cash received from a customer. founts earned from prov1d1ng goods and serv1ces to a customer. . Dividends paid to stockholders. 7. Which of the following accounts appears in the statement of stockholders' equity? Supplies. y PB? Cash. x C. Salaries Payable. @é’tained Earnings. VERSION A 8. Which of the following items would not appear in an income statement? A. Salaries expense. B. Advertising expense. C. Service revenue. gash. Wich of the following is not possible when recording a transaction? A ‘r 3 I ’. “abilities increase and assets decrease"; ” k“ . Stockholders' equity increases and assets increase. C. One asset increases and another asset decreases. D. Stockholders' equity decreases and assets decrease. 10. When a payment is made on an account payable: A. Assets and stockholders' equity decrease. emssets and liabilities decrease. . . . u C. L1ab1ht1es and revenues decrease. D. Assets and expenses decrease. 11. Which of the accounts are decreased on the debit side and increased on the credit side? @iabilities, stockholders' equity, and revenues. B. Dividends, liabilities, and assets. C. Expenses, dividends, and stockholders' equity. D. Assets, dividends, and expenses. 12. Which ofthe following is/are true about a "debit"? I. It is part of the double-entry procedure that keeps the accounting equation in balance. 5‘“ II. It represents an increase to assets. ‘3‘” III. It represents a decrease to liabilities. ‘ IV. It is on the right side of a T-account. A. I and II. . IV only. \ , II, and III. D. I, II, III, and IV. 13. Expenses normally carry a balance and are shown in the A. Debit; Statement of stockholders' equity @Debit; Income statement . Credit; Balance sheet 5 ,I ebit; Balance Sheet 1/1. 'T‘lao Fnllnun'nn' qmnnhfo firm rnnnv‘ted Assets $80,000 Liabilities 36,000 Retained Earnings 12.000 What is the balance in the Common Stock account? A. $44,000. 15. Which of the following is not an asset account? A. Supplies. mAccounts Payable. \‘C’Equipment. D. Accounts Receivable. 16. Receiving assets from customers before services are performed results in: A. Prepaid Assets. B. Service Revenue. @nearned Revenues. D. Accounts Receivable. 17. Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11 Pumpkin collected the cash from that customer. What is the impact on Pumpkin's accounting equation from the collection of cash? @10 net effect to the accounting equation. B. Decrease assets and increase liabilities. C. Increase assets and increase liabilities. D. Decrease assets and decrease liabilities. \ 18. Which of the following would increase assets and increase liabilities? Provide services to customers on account. rchase office supplies on account. C. Pay dividends to stockholders. D. Received a utility bill but do not pay for it. 19. The two categories of stockholders' equity usually found in the balance sheet of a corporation are: 7f. Common stock and liabilities. B: Assets and liabilities. ngon stock and retained earnings. ‘ . evenues and expenses. 20. In what order are the following financial statements prepared: (1) balance sheet, (2) income statement, and (3) statement of stockholders' equity? 21. DW has an ending Retained Earnings balance of $51,100. If during the year DW paid dividends of $4,300 and had net income of $22,500, then what was the beginning Retained Earnings balance? A. $24,300. B. $300. H D. $69,300. 22. The financial statement that represents the accounting equation is the: A. income statement. B. Statement of cash flows. @nce sheet. D. utatement of stockholders' equity. 23. For each transaction recorded in an accounting system, the basic equation that mu t be maintained at all times is: ets = Liabilities +Stockholders' Equity. ' . Cash Increases = Cash Decreases. C. Revenues = Expenses + Dividends. D. Kssets = Liabilities. . Which of the following accounts would normally have a credit balance? Payable, Service Revenue, Common Stock. $- Salaries Payable, Unearned Revenue, Delivery Expense. \/ 25. Which ofthe following is not a possible journal entry? A.Credit assets; Debit expenses. D bit assets; Debit stockholders' equity. A C. Credit revenues; Debit assets. D. Debit expenses; Credit liabilities. 26. Xenon Corporation borrows $75,000 from First Bank. Xenon Corporation records this transaction with a: A. Debit to Investments. B. Credit to Retained Earnings. @redit to Notes Payable. D. Credit to Interest Expense. 27. Assume that cash is paid for rent to cover the next year. The appropriate debit and credit are: A. Debit Rent Expense, credit Cash. B. Debit Prepaid Rent, credit Rent Expense. mbit Prepaid Rent, credit Cash. fo‘Debit Cash, credit Prepaid Rent. 28. The revenue recognition principle states that we record revenue in the period in which wwewcoallect cash. A True;,Br:F'alsE;-> 29. Under cash-basis accounting, if costs associated with producing revenue in the current year are not paid in cash until the following year, the costs should be expensed in the following year. @E B) False 30. The primary difference between accrual-basis and cash—basis accounting is: a he timing of when revenues and expenses are recorded. . Cash-basis accounting is allowed for financial reporting purposes but not accrual- basis accounting. \Accrual-basis accounting violates both the revenue recognition and matching principles. )QT Adjusting entries are only a necessary part of cash-basis accounting. 31. Which transaction would not be recorded under cash-basis accounting? A. Providing services to customers for cash. B. Purchasing one year of rent in advance. C. Paying salaries to employees. a . urchasing supplies on account. 32. Consider the following events for Sophia Incorporated: April 5 Sophia pumhases volleyballs for $200 on account. April 6 Sophia advertises a sand volleyball camp fer $20 a person. April. 12 Thirty people Sign up for the camp paying a total of $600. April 21 Sophia hosts the sand volleyball camp. April 23 Sophia pays for the volleyballs purchased on April 5. Under accrual-basis accounting, what is the appropriate day to record the revenues from the sand volleyball camp? A. April 5. B. April 6. C. April 12. a» .‘April 21. 33. When a company makes an end—of-period adjusting entry which includes a debit to Supplies Expense, the usual credit entry is made to: A. Accounts Payable. Mama , . D. Retained Earnings. 34. An example of an adjusting entry would not include: A. Recording the use of office supplies. B. Recording the expiration of prepaid insurance. C. Recording unpaid salaries. @ying salaries to company employees. 35. Which ofthe following would not typically be used as an adjusting entry? a. Prepaid Rent Rent Expense mall v/ Unearned Revenue :3. Interest Expense Interest. Payable cl. Unearned Revenue Service Revenue A. Option a @ption b C. Option c D. Option 01 36. A list of all accounts and their balances after updating account balances for adjusting entries is referred to as: A. A trial balance. n adjusted trial balance. C. A post-closing trial balance. D. An accounting trial balance. 37. The following table contains financial information for Trumpeter Inc. before closing entries: $12,000 A C a s h A z A What is the amount of Trumpeter's total assets? A. $81,500 B. $82,500 C. $68,500 4...) ,M 38. The closing entry for expenses includes: A. A debit to Dividends and a credit to all expense accounts. @A debit to Retained Earnings and a credit to all expense accounts. C A debit to Revenues and a credit to Retained Earnings. debit to Revenues and a credit to all expense accounts. 39. The closing entry for expenses includes: A. A debit to Dividends and a credit to all expense accounts. ® A debit to Retained Earnings and a credit to all expense accounts. C. A debit to Revenues and a credit to Retained Earnings. gag ‘.‘ debit to Revenues and a credit to all expense accounts. 40. Which ofthe following is a possible closing entry? A. Debit Cash, credit Service Revenue. B. Debit Cash, credit Retained Earnings. ebit Service Revenue, credit Retained Earnings. D. Debit Dividends, credit Retained Earnings. For the next 5 problems, please write in the correct adjusting entry for Neil Company on December 3152 2010: 1) On August 1“, 2010, Neil Company prepaid 1 year’s worth ofinsurance for a total of $36,000. At that time, the company correctly debited prepaid insurance and credited cash. IV\4jM;a/?(e gjpfifiéfi 15/960 Pr‘cpaéd lfl§qfqncfi lé/‘gad 2) On April 30th, 2010, Neil Company loaned $100,000 to his best friend, Danny. The loan stipulates that interest and principal are due on May 15t 2011. The interest rate is 10%. ji’q r‘étgs’ggtgéfiwé‘. jm 15mg?» WW r 4) /’l/ 3) Neil Company started 2010 with $1200 in supplies. During the year, Neil Company purchased $3000 in supplies. The ending balance of supplies was $2000. Mfifmiffi p / W/ 0 gm 5 £5 4) Neil Company received $1200 from a customer on May 31“. The payment was for rent for the next 12 months (beginning June 1“). MY‘zcar “9%er 7% Pei/3+ w“me 7 63%? 5) Neil Company owed workers $10,000 at the end of the year for work done in December. The workers won't get paid until January 2011. ...
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This note was uploaded on 01/08/2012 for the course ACCT 2103 taught by Professor Burnett during the Fall '08 term at Oklahoma State.

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Exam 1 - Spring 2011 - Name: ,{Affi'vf ,‘ ' Row: g Exam...

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