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GB518 Financial Accounting Principles and Analysis
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- Question : Which of the following elements are found on the income statement?
Cash
Accounts Receivable Common Stock Retained Earnings Salaries Expense</code></pre></li>
Question 2. Question : Fast-Forward had cash inflows from operations of $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:
$40,500 increase
$40,500 decrease
$134,500 decrease
$134,000 increaseQuestion 3. 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 accountQuestion 4. Question : Which of the following elements are found on the Balance Sheet?
Service Revenue
Net Income
Operating Activities
Utilities Expense
Retained EarningsQuestion 5. 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 earningsQuestion 6. 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 $75,000Question 7. Question : Of the following accounts, the one that normally has a credit balance is:
Cash
Office Equipment
Sales Salaries Payable
Dividends
Sales Salaries ExpenseQuestion 8. Question : The primary objective of financial accounting is:
To serve the decision-making needs of internal users
To provide financial statements to help external users analyze and interpret an organization's activities
To monitor and control company activities
To provide information on both the costs and benefits of managing products and services
To know what, when and how much to produceQuestion 9. Question : The debt ratio is used:
To measure the amount of equity relative to the expenses
To reflect the risk associated with a company's debts
Only by banks when a business applies for a loan
To determine how much debt a firm should pay offQuestion 10. 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 principleQuestion 11. Question : Creditors’ claims on the assets of a company are called:
Net losses
Expenses
Revenues
Equity
LiabilitiesQuestion 12. Question : An example of a financing activity is:
Buying office supplies
Obtaining a long-term loan
Buying office equipment
Selling inventory
Buying landQuestion 13. Question : A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000 and purchased for $137,000. The land should be recorded in the purchaser’s books at:
$95,000
$137,000
$138,500
$140,000
$150,000Question 14. 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 expensesQuestion 15. 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
$200,000Question 16. Question : The main purpose of adjusting entries is to:
Record external transactions and events
Record internal transactions and events
Recognize assets purchased during the period
Recognize debts paid during the period
Correct errorsQuestion 17. Question : Which of the following statements is incorrect?
An income statement reports revenues earned less expenses incurred
An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments
Interim financial reports can be based on one-month or three-month accounting periods
Property, plant and equipment are referred to as plant assetsQuestion 18. Question : On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
Debit Prepaid Insurance, $1,800; credit Cash, $1,800
Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440
Debit Prepaid Insurance, $360; credit Insurance Expense, $360
Debit Insurance Expense, $360; credit Prepaid Insurance, $360
Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440Question 19. Question : A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:
Debit Unpaid Salaries $600 and credit Salaries Payable $600
Debit Salaries Expense $400 and credit Salaries Payable $400
Debit Salaries Expense $600 and credit Salaries Payable $600
Debit Salaries Payable $400 and credit Salaries Expense $400Question 20. Question : Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?
Cash $ 6,754 Dividends $ 2,000
Accounts receivable $ 13,733 Consulting fees earned $ 13,718
Office supplies $ 2,625 Rent expense $ 3,673
Land $ 37,153 Salaries expense $ 6,642
Office equipment $ 14,535 Telephone expense $ 560
Accounts payable $ 6,463 Miscellaneous expense $ 280
Common stock $ 54,490 Retained Earnings ?
$0
$13,718
$13,155
$13,284Question 21. Question : Unearned revenue is reported on the financial statements as:
A revenue on the balance sheet
A liability on the balance sheet
An unearned revenue on the income statement
An asset on the balance sheet
An operating activity on the statement of cash flowsQuestion 22. Question : Which of the following identifies the proper order of the accounting cycle?
Analyze, Journalize, Unadjusted Trial Balance
Analyze, Post, Unadjusted Trial Balance
Journalize, Post, Adjusted Trial Balance
Unadjusted Trial Balance, Adjusted Trial Balance, Close
Adjusted Trial Balance, Adjustments, Financial StatementsQuestion 23. Question : The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:
Cash basis accounting
The matching principle
The time period principle
Accrual basis accounting
Revenue basis accountingQuestion 24. Question : A balance sheet that places the assets above the liabilities and equity is called a(n):
Report form balance sheet
Account form balance sheet
Classified balance sheet
Unadjusted balance sheetQuestion 25. Question : A classified balance sheet:
Measures a company's ability to pay its bills on time
Organizes assets and liabilities into important subgroups
Presents revenues, expenses and net income
Reports operating, investing and financing activitiesQuestion 26. Question : A company purchased a new truck at a cost of $42,000 on July 1, 2011. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. How much depreciation expense will be recorded for the truck for the year ended December 31, 2011?
$3,250
$3,500
$4,000
$6,500
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