Project #5836 - Accounting

1.      The rule-making authority within the U.S. that is responsible for promulgating new financial accounting standards is the

a.     Federal Accounting Standards Board.

b.    American Institute of Certified Public Accountants.

c.     International Accounting Standards Board.

d.    Institute of Management Accountants.

e.     Financial Accounting Standards Board.

 

2.      The four primary financial statements included in corporate annual reports are the

a.     Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Working Capital.

b.    Income Statement, Statement of Assets, Cash Flow Statement, and Statement of Fund Balance.

c.     Statement of Equity, Statement of Income, Statement of Cash Flows, and Balance Sheet.

d.    Balance Sheet, Income Statement, Statement of Stockholders’ Equity, and Statement of Cash Flows.

e.     Statement of Fund Balance, Statement of Equity, Balance Sheet, and Income Statement.

 

3.      Respectively, ___ are resources that an organization owns; ___ is/are debts that an organization owes; and ___ is/are amounts that owners have contributed and what the entity has earned for them.

a.     assets; liabilities; revenues

b.    assets; liabilities; stockholders’ equity

c.     assets; stockholders’ equity; liabilities

d.    revenues; liabilities; expenses

e.     revenues; liabilities; stockholders’ equity

     

 

4.      The financial statement that summarizes a business’s revenues and expenses for a specific time period is the

a.     Balance Sheet.

b.    Income Statement.

c.     Statement of Stockholders’ Equity.

d.    Statement of Cash Flows.

e.     Statement of Fund Balance.

 

 

 

 

5.   Amounts owed to a business by customers are called

      a.     cash.

      b.    short-term investments.

      c.     accounts payable.

      d.    accounts receivable.

      e.     revenue.

6.  Amounts owed by businesses to third parties are known as

a.     assets.

b.    liabilities.

c.     stockholders’ equity.

d.    revenues.

e.     expenses.

 

7. A debt or obligation that will be eliminated by giving up current assets or incurring a current liability is a

a.     prepaid asset.

b.    current asset.

c.     current liability.

d.    long-term asset.

e.     long-term liability.

 

8.   Lima Co. has received $12,000 for future subscriptions to The Bean Magazine. Lima should record this amount as a(an)

      a.     long-term investment.

      b.    earned revenue.

      c.     account receivable.

      d.    expense.

      e.     unearned revenue.

 

9.   In 2007, Alca Co. issued a long-term note payable that would come due on May 15, 2011. On its December 31, 2010 balance sheet, this note should be classified as a(an)

      a.     long-term liability.

      b.    short-term liability.

      c.     intangible asset.

      d.    long-term investment.

      e.     expense.

 

10.The owners’ interest in a corporation is represented by

a.     total assets.

b.    long-term liabilities.

c.     total stockholders’ equity.

d.    common stock.

e.     revenues.

 

 

 

11.A share of ownership in a corporation is known as

a.     common stock.

b.    par value.

c.     additional paid-in capital.

d.    retained earnings.

e.     an expense.

 

 

 

12.The specific dollar amount printed on each stock certificate is the

a.     book value.

b.    par value.

c.     net realizable value.

d.    net present value.

e.     market value.

 

13.When a share of stock is first sold, the amount received by the company may be different from the amount printed on the stock certificate. Any amount over that printed amount will be recognized in which of the following accounts?

a.     Common Stock.

b.    Retained Earnings

c.     Revenue from Stock Sales

d.    Additional Paid-In Capital

e.     Long-Term Investment

 

14. The total amount of profits generated by a company and not distributed as dividends to stockholders is called

a.     revenue.

b.    common stock.

c.     par value.

d.    additional paid-in capital.

e.     retained earnings.

 

15.The difference between sales revenue and cost of goods sold during a period is

a.     gross profit.

b.    net income.

c.     operating income.

d.    retained earnings.

e.     accounts receivable.

 

16.GAAP refers to

      a.     government adjusted accounting principles.

      b.    generally accepted accounting principles.

      c.     general accrual accounting principles.

      d.    granted annual accounting period.

      e.     governmentally approved accounting principles.

17.The requirement for publicly owned companies to issue quarterly and annual financial statements is mandated by the

a.     Securities and Exchange Commission.

b.    Financial Accounting Standards Board.

c.     New York Stock Exchange.

d.    Internal Revenue Service.

e.     American Institute of CPAs.

18.Requiring the transactions of a business be accounted for separately from the personal transactions of its owners reflects the

a.     entity concept.

b.    historical cost principle.

c.     unit of measurement concept.

d.    going concern assumption.

e.     revenue recognition rule.

 

19.  A trial balance is prepared at the end of the accounting period

a.     and lists all accounts contained in the chart of accounts.

b.    and lists all general ledger accounts and their balances.

c.     and, if debits equal credits, verifies that the accounting records are correct.

d.    to determine that revenues and expenses are equal.

e.     to determine that the balance sheet is in balance.

 

20.In a perpetual inventory system,

a.     the Inventory and Cost of Goods Sold accounts are updated once a period.

b.    temporary accounts, such as Purchases and Purchase Discounts, are used.

c.     the availability of computer technology is generally not considered important.

d.    a purchase of goods would require a debit to Inventory and a credit to either Cash    or Accounts Payable.

e.     no entry is made for Cost of Goods Sold expense when goods are sold to customers.

 

21. When goods are shipped

a.     FOB shipping point, the buyer obtains legal title to the goods when the goods are received by the buyer.

b.    FOB destination, the seller retains legal title to the goods until the goods reach the shipping point.

c.     FOB shipping point, the buyer obtains legal title to the goods when the goods are shipped and also pays for the related delivery charges.

d.    FOB destination point, the buyer obtains legal title to the goods when the goods reach the shipping point and the seller pays for the related delivery charges.

e.     FOB shipping point, the seller retains legal title to the goods until the goods reach the buyer but the buyer pays for the related delivery charges.

 

 

 

22.  When LIFO perpetual inventory costing is used, which costs are included in ending               inventory and cost of goods sold?

            Ending inventory        Cost of goods sold

      a.        Newest                      Oldest

      b.       Oldest                        Newest

      c.        Newest                      Average

      d.       Oldest                        Average

      e.        Average                     Average

 

23.A depreciation method that allocates an equal amount of depreciation expense to each year of an asset’s estimated useful life is the

a.     amortization method.

b.    double-declining balance method.

c.     straight-line method.

d.    allowance estimation method.

e.     units-of-production method.

 

24.A depreciation method under which annual depreciation expense is computed by multiplying twice the straight-line rate times an asset’s book value at the beginning of the year is the

a.     amortization method.

b.    double-declining balance method.

c.     straight-line method.

d.    allowance estimation method.

e.     units-of-production method.

 

25.A depreciation method in which depreciation expense for any given period is a function of the level of asset usage during that period is the

a.     amortization method.

b.    double-declining balance method.

c.     straight-line method.

d.    allowance estimation method.

e.     units-of-production method.

 

On January 1, 2010, Run & Go Pizza purchased a delivery truck for $50,000. The truck has a $5,000 salvage value and a four-year (or 56,250 miles) useful life. During 2010, the company put 15,750 miles on the delivery truck.

 

26.If Run & Go uses the straight-line method, how much depreciation expense should Run & Go recognize in 2010?

a.     $  3,150

b.    $  3,500

c.     $11,250

d.    $12,500

e.     none of the above

 

27.If Run & Go uses the double-declining balance method, how much depreciation expense should Run & Go recognize in 2010?

a.     $  6,300

b.    $  7,000

c.     $22,500

d.    $25,000

e.     none of the above

 

28.If Run & Go uses the units-of-production method, how much depreciation expense should Run & Go recognize in 2010?

a.     $  8,000

b.    $  9,000

c.     $11,250

d.    $12,500

e.     $12,600

 

29.  Allocating the cost of natural resources to the periods these assets provide economic benefit to an entity is called

a.     amortization.

b.    depletion.

c.     depreciation.

d.    deterioration.

e.     degradation.

 

30.A contract between a corporation and the state in which it was created and identifies the corporation’s principal rights and obligations is called

a.     articles of indemnification.

b.    consent decree.

c.     corporate by-laws.

d.    corporate charter.

e.     corporate indenture.

 

31.The maximum number of shares that a corporation may issue is called the number of

a.     authorized shares.

b.    common shares.

c.     outstanding shares.

d.    preferred shares.

e.     issued shares.

 

32.The class of stock comprising the residual ownership interest in a corporation is called

a.     common stock.

b.    issued stock.

c.     preferred stock.

d.    treasury stock.

e.     collateralized stock.

 

Grambling Corporation issued 500 shares of common stock for $22 per share.

 

33.  If the common stock is no par value, how should Grambling record this transaction?

a.     Common Stock                                 11,000

                   Cash                                                          11,000

b.    Cash                                                  11,000

                   Additional Paid-In Capital                       11,000

c.     Cash                                                  11,000

                   Common Stock                                              500

                   Additional Paid-In Capital                       10,500

d.    Cash                                                  11,000

                    Common Stock                                        11,000

e.     Cash                                                  11,000

                    Stockholders’ Equity                               11,000

 

34.If the common stock has a $5 par value, how should Grambling record this transaction?

a.     Common Stock                                 11,000

                     Cash                                                        11,000

b.    Cash                                                  11,000

                     Additional Paid-In Capital                     11,000

c.     Cash                                                  11,000

                     Common Stock                                         2,500

                     Additional Paid-In Capital                       8,500

d.    Cash                                                  11,000

                     Common Stock                                       11,000

e.     Cash                                                  11,000

                     Stockholders’ Equity                              11,000

 

35.  Companies typically want to have the most stability in generating positive cash flows from

a.     investing activities.

b.    operating activities.

c.     investing activities.

d.    property, plant and equipment sales.

e.     sales of common, rather than preferred, stock.

 

 

 

 

 

 

 

 

 

 

 

36.During 2010, Bates Company earned net income of $275,000 which included depreciation expense of $34,000. The company had a loss on the sale of equipment of $2,000 and the following changes in account balances occurred:

            Increase in accounts payable                                 $12,000

            Increase in inventory                                                 9,000

            Decrease in accounts receivable                                8,000

            Decrease in prepaid expenses                                  10,000

            Decrease in accrued liabilities                                   7,000

Based upon this information, what amount will be shown for net cash provided by operating activities for 2010?

      a.     $289,000

      b.    $307,000

      c.     $321,000

      d.    $323,000

      e.     $325,000

 

37. The level of sales at which no profits are generated and no losses are incurred is the

a.     break-even point.

b.    contribution margin.

c.     degree of operating leverage.

d.    gross margin.

e.     margin of safety.

 

38.Contribution margin is

      a.     revenue remaining after product and period costs are covered.

      b.    sales less cost of goods sold.

      c.     revenue remaining after variable costs are covered.

      d.    also known as gross profit margin.

      e.     constant even when there is a change in unit selling price.

 

39.Anthony Industries manufactures lawnmowers. The selling price of a lawnmower is $300 and variable costs are $180 per unit. Fixed costs are $1,200,000 per period. What is Anthony’s break-even point in units?

a.            4,000

b.           6,667

c.          10,000

d.    1,200,000

e.     none of the above.

 

40.A cost that changes on a per-unit basis inversely with changes in activity levels is a(an)

a.     fixed cost.

b.    indirect cost.

c.     mixed cost.

d.    direct cost.

e.     variable cost.

 

Subject Business
Due By (Pacific Time) 05/11/13
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