GB 518 Week 1 Quiz

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GB 518 Quiz 1

GB518 Financial Accounting Principles and Analysis

Question : If equity is $300,000 and liabilities are $192,000, then assets equal:

Question 2. Question : If assets are $99,000 and liabilities are $32,000, then equity equals:

Question 3. Question : Reebok had income of $150 million and average assets of $1,800 million. Its return on assets is:

Question 4. Question : Unearned revenues are:

                     Revenues that have been earned and received in cash



                                 Revenues that have been earned but not yet collected in cash



                                 Liabilities created when a customer pays in advance for products or services before the revenue is earned

                                 Recorded as an asset in the accounting records



                                 Increases to retained earnings

Question 5. Question : Technological advancement

                     Has replaced accounting



                                 Has not changed the work that accountants do



                                 Has freed accounting professionals to concentrate more on the analysis and interpretation of information

                                 In accounting has replaced the need for decision makers



                                 In accounting is only available to large corporations

Question 6. Question : Of the following accounts, the one that normally has a credit balance is:

                                 Cash



                                 Office Equipment



                                 Sales Salaries Payable



                                 Dividends



                                 Sales Salaries Expense

Question 7. Question : Net Income:

         Decreases equity



                                 Represents the amount of assets owners put into a business



                                 Equals assets minus liabilities



                                 Is the excess of revenues over expenses



                                 Represents the owners' claims against assets

Question 8. Question : Internal users of accounting information include:

                     Shareholders



                                 Customers



                                 Creditors



                                 Government regulators



                                 Line Supervisor

Question 9. Question : A company has twice as much owner’s equity as it does liabilities. If total liabilities are $50,000, what amounts of assets are owned by the company?

                                 $50,000



                                 $100,000



                                 $150,000



                                 $200,000

Question 10. Question : A credit is used to record:

                     An increase in an expense account



                                 An increase in an asset account



                                 An increase in an unearned revenue account



                                 A decrease in a revenue account



                                 A decrease to retained earnings

Question 11. Question : Apatha Company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effects of this transaction include:

                                 Assets increase by $75,000 and expenses increase by $75,000



                                 Assets increase by $75,000 and expenses decrease by $75,000



                                 Liabilities increase by $75,000 and expenses decrease by $75,000

                                 Assets decrease by $75,000 and expenses decrease by $75,000



                                 Assets increase by $75,000 and liabilities increase by $75,000

Question 12. Question : The principle that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash and (3) measures the amount of revenue as the cash plus the cash equivalent value of any non-cash assets received from customers in exchange for goods or services is called the:

                                 Going-concern principle



                                 Cost principle



                                 Revenue recognition principle



                                 Objectivity principle



                                 Business entity principle

Question 13. Question : Which of the following is the primary purpose of accounting?

         To establish a business



                                 To identify, record and communicate business transactions



                                 To deceive stockholders



                                 To keep from paying taxes



                                 To establish credit for a company

Question 14. Question : Assets created by selling goods and services on credit are:

         Accounts payable



                                 Accounts receivable



                                 Liabilities



                                 Expenses

Question 15. Question : Double-entry accounting is an accounting system:

                     That records each transaction twice



                                 That records the effects of transactions and other events in at least two accounts with equal debits and credits

                                 In which the impact of each transaction is recorded in two or more accounts but that could include two debits and no credits

                                 That may only be used if T-accounts are used



                                 That insures that errors never occur

Question 16. Question : An example of a financing activity is:

                     Buying office supplies



                                 Obtaining a long-term loan



                                 Buying office equipment



                                 Selling inventory



                                 Buying land

Question 17. Question : A debit is:

         An increase in an account



                                 The right-hand side of a T-account



                                 A decrease in an account



                                 The left-hand side of a T-account



                                 An increase to a liability account

Question 18. Question : Risk is:

                     Net income divided by average total assets



                                 The reward for investment



                                 The uncertainty about the expected return that will be earned from an investment

                                 Unrelated to expected return

Question 19. Question : Which of the following statements best describes the relationship of U.S. GAAP and IFRS?

                     They are identical



                                 They are entirely different conceptual frameworks



                                 They are similar but not identical



                                 Neither has anything to do with accounting



                                 They both relate only to publicly traded companies

Question 20. Question : Source documents include all of the following except:

                                 Sales tickets



                                 Ledgers



                                 Checks



                                 Purchase orders



                                 Bank statements

Question 21. Question : Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

         38.6%



                                 13.4%



                                 34.9%



                                 25.9%



                                 14.9%

Question 22. Question : An asset created by prepayment of an expense is:

                                 Recorded as a debit to an unearned revenue account



                                 Recorded as a debit to a prepaid expense account



                                 Recorded as a credit to an unearned revenue account



                                 Recorded as a credit to a prepaid expense account



                                 Not recorded in the accounting records until the earnings process is complete

Question 23. Question : Increases in retained earnings from a company’s earnings activities are:

         Assets



                                 Revenues



                                 Liabilities



                                 Stockholder's Equity



                                 Expenses

Question 24. Question : Which of the following accounting principles dictates when expenses are recognized?

         Revenue recognition principle



                                 Monetary unit principle



                                 Business entity principle



                                 Matching principle



                                 Full disclosure principle

Question 25. Question : Prepaid expenses are:

      Payments made for products and services that do not ever expire

                                 Classified as liabilities on the balance sheet



                                 Decreases in retained earnings



                                 Assets that represent prepayments of future expenses



                                 Promises of payments by customers