ACCT 2301 - Ch 1 Quiz

Which of the following statements about organizational forms of a business is not correct?

The owners of a corporation are legally responsible for the corporation's debts and taxes.

At the end of last year, the company's assets totaled $870,000 and its liabilities totaled $745,000. During the current year, the company's total assets increased by $59,000 and its total liabilities increased by $24,500. At the end of the current year, stockholders' equity was:

$159,500.

Puffin Company began the year with assets of $120,000 and liabilities of $90,000. During the year assets increased by $14,400 and liabilities decreased by $10,800.

What is the amount of Puffin's stockholders' equity at the beginning of the year?

$30,000

Which of the following is not correct?

Assets = Liabilities − Stockholders' Equity

Creditors are owners of a corporation.

False

Investors are mainly interested in the profitability of a company.

True

People or organizations to whom a business owes money are considered:

creditors of a business.

When several parties or individuals can reach similar values in financial statements by using similar methods, the information is said to be:

verifiable

The financial reports of a business include only the activities of the business and not the personal dealings of its stockholders. This is:

the separate entity assumption.

Stockholders' equity is:

the owners' claims on the business.

Assets:

represent the resources presently controlled by a company.

The main goal of an accounting system is to:

capture information about a business so that it can be reported to decision makers.

In the U.S., Generally Accepted Accounting Principles (GAAP) are established by the:

Financial Accounting Standards Board (FASB).

If Blair Industries had $24 million in revenue and net income of $6 million, then its:

expenses must have been $18 million.

Net income is the amount:

by which revenues exceed expenses.

Which of the following financial statements shows how net income (loss) and dividends impacted a stockholders' equity account?

Statement of Retained Earnings

Which of the following statements is prepared as of a point in time?

Balance Sheet

Net income appears on which of the following financial statements?

Income statement and statement of retained earnings.