ACCT 3110 ENTRANCE EXAM

D.
All of the above.

Financial statements can be used by which of the following​ groups?
A.
Individuals
B.
Investors and creditors
C.
Regulatory bodies
D.
All of the above.

A.
Corporation

Nicholas is a software engineer and is starting a consulting practice. What form of business organization limits his liability to the amount he has invested in the​ business?
A.
Corporation
B.
Proprietorship
C.
Partnership
D.
None of the above.

B.
the​ organization's financial accounting system.

An​ organization's investors and creditors will primarily use information provided​ by:
A.
the Internal Revenue Service.
B.
the​ organization's financial accounting system.
C.
the​ organization's managerial accounting system.
D.
the Financial Accounting Standards Board.

A.
useful for making investment and credit decisions.

The primary objective of financial reporting is to provide information
A.
useful for making investment and credit decisions.
B.
on the cash flows of the company.
C.
to the federal government.
D.
about the profitability of the enterprise.

B.
Corporation

Which type of business organization provides the least amount of protection for bankers and other creditors of the​ company?
A.
Proprietorship
B.
Corporation
C.
Partnership
D.
Both a and c

d-510000

Frost Enterprise buys a warehouse for $ 510,000 to use for its East Coast distribution operations. On the date of the​ purchase, a professional appraisal shows a value of $ 600,000 for the warehouse. The seller had originally purchased the building for $ 485,000. Frost has a similar warehouse on the West Coast that has a book value of $ 524,000. Under the historical cost​ principle, Frost should record the building for

a- 524000
b-600000
c-485000
d-510000

A.
Relevance and faithful representation

To be​ useful, information must have which of the following fundamental qualitative​ characteristics?
A.
Relevance and faithful representation
B.
Expediency and relevance
C.
Timeliness and affordability
D.
Faithful representation and diversity

A.
They are converging gradually with U.S. standards.

Which of the following is a true statement about International Financial Reporting​ Standards?
A.
They are converging gradually with U.S. standards.
B.
They are not being applied anywhere in the world​ yet, but soon they will be.
C.
They are more exact​ (contain more​ rules) than U.S. generally accepted accounting principles.
D.
They are considered to be the single strongest set of accounting standards in the world.

B.
historical cost.

Assets are usually reported at their
A.
appraised value.
B.
historical cost.
C.
current market value.
D.
none of the above.

B.
Continuity assumption

Assume that a business is headed for certain bankruptcy and it is evident that its liabilities greatly exceed its assets. Which principle would be violated if its financial statements were prepared using standard U.S.​ GAAP?
A.
Entity assumption
B.
Continuity assumption
C.
Historical cost principle
D.
​Stable-monetary-unit assumption

Assets - Liabilities

Equity=

Revenues - Expenses

Net Income (loss)

Equity= Assets - Liabilities

Accounting Equation

B.
expenses.

The costs of doing business are classifed​ as:
A.
assets.
B.
expenses.
C.
liabilities.
D.
revenues.

C.
$ 190,000.

During the​ year, EcoDry Corporation has $ 310,000 in​ revenues, $ 120,000 in​ expenses, and $ 9,000 in dividend declarations and payments. Net income for the year​ was:
A.
$ 129,000.
B.
$ 199,000.
C.
$ 190,000.
D.
$ 310,000.

D.
Increase assets and increase​ stockholders' equity

How would the issuance of common stock for cash affect the accounting​ equation?
A.
Increase liabilities and decrease​ stockholders' equity
B.
Decrease assets and decrease liabilities
C.
Increase assets and increase liabilities
D.
Increase assets and increase​ stockholders' equity

B.
$ 100,000

Company has current assets of $ 40,000 and​ long-term assets of $ 75,000. Its total liabilities equal $ 15,000. ​Stockholders' equity​ is:
A.
$ 130,000
B.
$ 100,000
C.
$ 90,000
D.
$ 115,000

C.
increased by $ 56,000.

During​ February, assets increased by $ 86,000 and liabilities increased by $ 30,000. Equity must have
A.
decreased by $ 116,000.
B.
increased by $ 116,000.
C.
increased by $ 56,000.
D.
decreased by $ 56,000.

B.
increases in retained earnings resulting from selling products or performing services.

Revenues are
A.
increases in​ paid-in capital resulting from the owners investing in the business.
B.
increases in retained earnings resulting from selling products or performing services.
C.
decreases in liabilities resulting from paying off loans.
D.
all of the above

C.
$ 227,000

The​ stockholders' equity of Merkovsky Company at the beginning and end of 2018 totaled $ 117,000 and $ 131,000​, respectively. Assets at the beginning of 2018 were $ 146,000. If the liabilities of Merkovsky Company increased by $ 67,000 in 2018​, how much were total assets at the end of 2018​? Use the accounting equation.
A.
$ 213,000
B.
$ 210,000
C.
$ 227,000
D.
$ 65,000

Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Statement of Retained Earnings

Revenues - Expenses = Net Income

Income Statement

net operating cash flow +/- net investment CF +/- net financial CF= Increase/decrease in cash

Statement of Cash Flows

A.
Income statement

Which financial statement would show how well a company performed over the past​ year?
A.
Income statement
B.
Balance sheet
C.
Statement of cash flows
D.
Statement of retained earnings

C.
Balance sheet

On which financial statement would the ending balance of the account​ "accounts receivable" be​ found?
A.
Income statement
B.
Statement of retained earnings
C.
Balance sheet
D.
Statement of cash flows

A.
Net income

What item flows from the income statement to the statement of retained​ earnings?
A.
Net income
B.
Inventory
C.
Dividends
D.
Cash

B.
Retained earnings

What item flows from the statement of retained earnings to the balance​ sheet?
A.
Cash
B.
Retained earnings
C.
Net income
D.
Dividends

That means to look at the Asset part of the Acct. equation.

How much in resources does Willow have to work​ with?

D.
balance sheet in the current assets section.

The amount a company expects to collect from customers appears on the
A.
statement of cash flows.
B.
balance sheet in the​ stockholders' equity section.
C.
income statement in the expenses section.
D.
balance sheet in the current assets section.

D.
accounts payable.

All of the following are current assets except
A.
accounts receivable.
B.
prepaid expenses.
C.
inventory.
D.
accounts payable.

D.
income statement.

The financial statement that reports revenues and expenses is called the
A.
statement of cash flows.
B.
balance sheet.
C.
statement of retained earnings.
D.
income statement.

D.
statement of financial position.

Another name for the balance sheet is the
A.
statement of operations.
B.
statement of earnings.
C.
statement of profit and loss.
D.
statement of financial position.

D.
Both b and c

Net income appears on which financial​ statement(s)?
A.
Balance sheet
B.
Income statement
C.
Statement of retained earnings
D.
Both b and c

C.
investing activities.

Cash paid to purchase a building appears on the statement of cash flows among the
A.
financing activities.
B.
operating activities.
C.
investing activities.
D.
​stockholders' equity.

A.
Ethics involves making difficult choices under pressure and should be kept in mind in making every​ decision, including those involving accounting.

Which of the following is the most accurate statement regarding ethics as applied to decision making in​ accounting?
A.
Ethics involves making difficult choices under pressure and should be kept in mind in making every​ decision, including those involving accounting.
B.
It is impossible to learn ethical decision​ making, since it is just something you decide to do or not to do.
C.
Ethics is becoming less and less important as a field of study in business.
D.
Ethics has no place in​ accounting, because accounting deals purely with numbers.

D.
All of the above

Which of the following factors should influence business and accounting​ decisions?
A.
Economic
B.
Ethical
C.
Legal
D.
All of the above

All of these are values considered vital by BELA.

Business Ethics Leadership Alliance (BELA) holds four values vital to all their practices.

Which of the following is one of the core value of BELA?
Accountability


Transparency


Legal compliance

All of these are values considered vital by BELA.

Financial accounting provides information for decision makers outside the entity.

Which of the following statements is correct?

managerial accounting provides information for decision makers outside the entity.



Financial accounting provides information for decision makers outside the entity.

Financial accounting provides information for decision makers inside the entity, such as business managers.


Financial and managerial accounting information are analyzed together by both internal and external users of accounting information.

Investments from stockholders

Which of the following events increases the equity in a business?

Sale of inventory

Purchase of inventory

Payment of interest on a loan

Investments from stockholders

Payment of rent

Net increase of $110,000

(140+120-150)

Jason Jewelers reported the following in its statement of cash flows:



Net cash provided by operating activities

$140,000

Net cash provided by investing activities

120,000

Net cash used by financing activities

150,000



What is the total net increase or decrease in cash reported by Jason Jewelers?

Net decrease of $210,000


Net increase of $210,000


Net increase of $110,000


Net decrease of $10,000

$85,000 increase
(245-120-40)

During the year, Patriot Partners had $245,000 in revenues, $120,000 in expenses, and $40,000 in declared dividends.

What was the total change in Retained Earnings during the year?
$125,000 increase

$165,000 decrease

$165,000 increase

$85,000 increase

Equity

____________ represents the "insider claims" of business.

Revenue


Divdends

Liabilities

Equity

The income statement is prepared first because its result, Net Income, is needed as part of the other financial statements.

Why is the income statement the first financial report prepared?

The income statement is prepared first because accounts included on the income statement are all temporary accounts that must be closed before preparing the remaining financial statements.

The income statement is prepared first because its result, Net Income, is the most important financial measurement used by decision makers.

The income statement is prepared first because its result, Net Income, is needed as part of the other financial statements.

There is no required order for preparing financial statements. The income statement can be completed at any point in the financial reporting process.

the entity assumption

The owner of Shady Grove Company has the bookkeeper write company checks to pay for his personal items. This violates __________.

the matching principle

the stable-monetary-unit assumption

the entity assumption

the materiality concept

implies that accounting data from the business is isolated and will be the same regardless of the personal finances of its owners.

the entity assumption

The statement of cash flows reports cash flows from operating, investing, and capital activities.

Which of the following statements regarding financial statements is NOT correct?

The statement of cash flows reports cash flows from operating, investing, and capital activities.

Revenues and expenses are only reported on the income statement.

The ending balance of retained earnings is shown on both the statement of retained earnings and the balance sheet.

Assets and liabilities are only reported on the balance sheet.

125,000

During the year, Patriot Partners had $245,000 in revenues, $120,000 in expenses, and $40,000 in declared dividends.

What was Patriot's net income for the year?

$245,000

$205,000

$125,000

$85,000

Entity assumption

Sue Mason owns a bagel shop as a sole proprietorship. Sue includes her personal home, car, and boat on the books of her business. Which of the following is violated?

The stable-monetary-unit assumption

Entity assumption

Going-concern assumption

Cost principle

13,250 (10,000+2500+750)
bc the rest would be considered LT assets

Barton Industries had the following asset accounts at year end:



Cash-$10,000

Accounts Receivable-2,500

Supplies-750

Equipment-12,000

Building-70,000

Land-112,000

What are Barton's total current assets?

$13,250

$25,250

$83,250

$10,750

Owners of a corporation are called members.

Which of the following statements regarding business organizations is NOT correct?

Owners of a corporation are called members.

The business is liable for company debts in a Limited Liability Company.

In a limited liability partnership, each partner is only liable for partnership debts to the extent of his or her investment in the partnership.

The owner of a proprietorship is personally liable for all the business debts.

The cost principle requires assets to be recorded on the books at their cost.

Cost principle assumption

A business is said to be a going-concern if they will remain in business for the foreseeable future.

Going Concern Assumption

The stable-monetary-unit assumption requires accountants to assume the dollars purchasing power is stable over time.

stable-monetary-unit assumption

cash and accounts receivable

Current assets include __________.

cash and land

prepaid expenses and building

cash and accounts receivable

accounts receivable and equipment

Net increase of $40,000
(147-122+15)

JayBird Jewelers reported the following in its statement of cash flows:



Net cash provided by operating activities

$147,000

Net cash used by investing activities

122,000

Net cash provided by financing activities

15,000



What is the total net increase or decrease in cash reported by JayBird?

Net increase of $284,000

Net increase of $254,000

Net decrease of $10,000

Net increase of $40,000

Net Income
Sale of Stock

Increases the Walt Disneys stockholder's equity

Net loss
dividends

Decreases the Walt Disneys stockholder's equity

A.
A representative from the local university contacts the manager of the shop to get a list of catering services.

All of the following events at a sandwich shop are transactions except

A.
A representative from the local university contacts the manager of the shop to get a list of catering services.
B.
A customer purchases a sandwich.
C.
The accountant for the sandwich shop pays the electric bill.
D.
A delivery of coffee beans purchased on account from the local roaster is received.

D.
Inventory

Identify the asset from the following list of​ accounts:
A.
Retained Earnings
B.
Common Stock
C.
Notes Payable
D.
Inventory

B.
Accounts Receivable.

Amounts owed to a company by its customers would​ be:
A.
Inventory.
B.
Accounts Receivable.
C.
Prepaid Expenses.
D.
Accounts Payable.

D.
None of the listed accounts is an asset.

Which of the following is an​ asset?
A.
Salary Expense
B.
Common Stock
C.
Service Revenue
D.
None of the listed accounts is an asset.

A.
increases assets and increases liabilities.

Thorpe Corporation purchases a new delivery truck and signs a note payable at the truck dealership for the total cost. The impact of this transaction on Thorpe Corporation
A.
increases assets and increases liabilities.
B.
increases assets and increases​ stockholders' equity.
C.
decreases assets and increases liabilities.
D.
increases assets and decreases​ stockholders' equity.

D.
increases assets.

Adam Corporation issues stock to Cara Riley in exchange for​ $24,000 cash. The impact on Adam​ Corporation's assets from this transaction
A.
decreases assets.
B.
Not enough information is provided to determine the impact on assets.
C.
does not have any impact on assets.
D.
increases assets.

A.
increases assets and increases​ stockholders' equity.

Blake Company completed a consulting job and billed the customer​ $5,000. The impact on Blake Company from this transaction

A.
increases assets and increases​ stockholders' equity.
B.
increases liabilities and decreases​ stockholders' equity.
C.
increases assets and increases liabilities.
D.
decreases liabilities and increases​ stockholders' equity.

C.
Balance sheet

Accounts Receivable will appear on which of the following financial​ statements?
A.
Statement of retained earnings
B.
Income statement
C.
Balance sheet
D.
Statement of cash flows

B.
no impact on total assets.

If a corporation purchases a delivery van for​ $35,000 cash, the net impact of this transaction will be
A.
an increase in both assets and liabilities of​ $35,000.
B.
no impact on total assets.
C.
a decrease in total assets of​ $35,000.
D.
an increase in total assets of​ $35,000.

C.
$ 104,000
(50+33+21)

a new​ company, completed these transactions.

1. Stockholders invested $ 50,000 cash and inventory with a fair value of $ 33,000.
2. Sales on​ account, $ 21,000.
What will Cartex​'s total assets​ equal?
A.
$ 71,000
B.
$ 83,000
C.
$ 104,000
D.
$ 50,000

B.
increase​ stockholders' equity.

An investment of cash by stockholders into the business will
A.
have no effect on total assets.
B.
increase​ stockholders' equity.
C.
decrease total assets.
D.
decrease total liabilities.

D.
All of the listed choices are correct.

Purchasing a laptop computer on account will
A.
increase total assets.
B.
increase total liabilities.
C.
have no effect on​ stockholders' equity.
D.
All of the listed choices are correct.

D.
accomplish both a and b.

Performing a service on account will
A.
increase​ stockholders' equity.
B.
increase total assets.
C.
increase total liabilities.
D.
accomplish both a and b.

D.
have no effect on total assets.

Receiving cash from a customer on account will
A.
decrease liabilities.
B.
increase​ stockholders' equity.
C.
increase total assets.
D.
have no effect on total assets.

D.
have no effect on total​ assets, total​ liabilities, or​ stockholders' equity.

Purchasing computer equipment for cash will
A.
decrease both total assets and​ stockholders' equity.
B.
decrease both total liabilities and​ stockholders' equity.
C.
increase both total assets and total liabilities.
D.
have no effect on total​ assets, total​ liabilities, or​ stockholders' equity.

B.
increase both total assets and total liabilities by $ 75,000.

Purchasing a building for $ 105,000 by paying cash of $ 30,000 and signing a note payable for $ 75,000 will
A.
decrease total assets and increase total liabilities by $ 30,000.
B.
increase both total assets and total liabilities by $ 75,000.
C.
increase both total assets and total liabilities by $ 105,000.
D.
decrease both total assets and total liabilities by $ 30,000.

B.
Decrease
Decrease

What is the effect on total assets and​ stockholders' equity of paying the telephone bill as soon as it is received each​ month?
Total assets
​Stockholders' equity
A.
Decrease
No effect
B.
Decrease
Decrease
C.
No effect
No effect
D.
No effect
Decrease

C.
Buying equipment on account

Which of the following transactions will increase an asset and increase a​ liability?
A.
Paying an account payable
B.
Issuing stock
C.
Buying equipment on account
D.
Purchasing office equipment for cash

B.
Performing a service on account for a customer

Which of the following transactions will increase an asset and increase​ stockholders' equity?
A.
Collecting cash from a customer on an account receivable
B.
Performing a service on account for a customer
C.
Purchasing supplies on account
D.
Borrowing money from a bank

D.
Increases in liabilities and​ stockholders' equity are credited.

Which of the following debit and credit rules is​ correct?
A.
Decreases in assets and liabilities are credited.
B.
Increases in assets and liabilities are debited.
C.
Increases in liabilities and​ stockholders' equity are debited.
D.
Increases in liabilities and​ stockholders' equity are credited.

30,000

3k + (29k)= (26k)
(26k) + x = 4k

x= 30k

A​ firm's beginning Cash balance was $ 3,000. At the end of the​ period, the balance was $ 4,000. If total cash paid out during the period was $ 29,000​, the amount of cash receipts was

A.
increase liabilities.

A credit entry to an account will
A.
increase liabilities.
B.
decrease revenues.
C.
increase expenses.
D.
increase assets.

C.
Dividends are increased by credits.

Which statement is​ false?
A.
Liabilities are decreased by debits.
B.
Revenues are increased by credits.
C.
Dividends are increased by credits.
D.
Assets are increased by debits.

C.
Journal

Where is a transaction first​ recorded?
A.
Trial balance
B.
Account
C.
Journal
D.
Ledger

debit​ Cash, debit Accounts​ Receivable, credit Service Revenue.

An attorney performs services of​ $1,100 for a client and receives​ $400 cash with the remainder on account. The journal entry for this transaction would

A.
debit​ Cash, debit Service​ Revenue, credit Accounts Receivable.
B.
debit​ Cash, credit Accounts​ Receivable, credit Service Revenue.
C.
debit​ Cash, credit Service Revenue
D.
debit​ Cash, debit Accounts​ Receivable, credit Service Revenue.

C.
Debit
Supplies

Credit
Accounts Payable

Credit
Cash

A doctor purchases medical supplies of​ $640 and pays​ $290 cash with the remainder on account. The journal entry for this transaction would be which of the​ following?


A.
Debit
Supplies
Debit
Accounts Payable

Credit
Cash

B.
Debit
Supplies
Debit
Accounts Receivable

Credit
Cash

C.
Debit
Supplies

Credit
Accounts Payable

Credit
Cash

D.
Debit
Supplies

Credit
Accounts Receivable

Credit
Cash

c.
debits Land and Building and credits Common Stock.

The journal entry to record the acquisition of land and a building by issuing common stock
A.
debits Common Stock and credits Land and Building.
B.
debits Land and credits Common Stock.
C.
debits Land and Building and credits Common Stock.
D.
debits​ Land, Building, and Common Stock.

A.
debits Supplies and credits Accounts Payable.

The journal entry to record the purchase of supplies on account
A.
debits Supplies and credits Accounts Payable.
B.
credits Supplies and debits Cash.
C.
credits Supplies and debits Accounts Payable.
D.
debits Supplies Expense and credits Supplies.

D.
debit Accounts Payable and credit Cash.

The journal entry to record a payment on account will
A.
debit Cash and credit Expenses.
B.
debit Accounts Payable and credit Retained Earnings.
C.
debit Expenses and credit Cash.
D.
debit Accounts Payable and credit Cash.

A.
a debit entry is recorded on the left side of a​ T-account.

In a​ double-entry accounting​ system,
A.
a debit entry is recorded on the left side of a​ T-account.
B.
half of all the accounts have a normal credit balance.
C.
​liabilities, stockholders'​ equity, and revenue accounts all have normal debit balances.
D.
both a and b are correct.

C.
​Journal, ledger, trial​ balance, financial statements

Which is the correct sequence for recording transactions and preparing financial​ statements?
A.
​Ledger, trial​ balance, journal, financial statements
B.
Financial​ statements, trial​ balance, ledger, journal
C.
​Journal, ledger, trial​ balance, financial statements
D.
​Ledger, journal, trial​ balance, financial statements

A.
Assets

The following accounts have normal debit​ balances:
A.
Assets
B.
Revenues
C.
Liabilities
D.
All of the listed accounts have a normal debit balance.

C.
liabilities will be understated.

If the credit to record the purchase of supplies on account is not​ posted,
A.
​stockholders' equity will be understated.
B.
expenses will be overstated.
C.
liabilities will be understated.
D.
assets will be understated.

C.
cash will be overstated.

If the credit to record the payment of an account payable is not​ posted,
A.
cash will be understated.
Your answer is not correct.B.
expenses will be understated.
C.
cash will be overstated.
D.
liabilities will be understated.

A.
A trial balance is the same as a balance sheet.

Which statement is​ false?
A.
A trial balance is the same as a balance sheet.
B.
A trial balance lists all the accounts with their current balances.
C.
A trial balance can be taken at any time.
D.
A trial balance can verify the equality of debits and credits.

Cash is credited for $12,000.

A business makes a cash payment of $12,000 to a creditor.

Which of the following occurs?

Cash is credited for $12,000.


Both Cash and Accounts Payable are credited for $12,000.


Cash is debited for $12,000.

Accounts Payable is credited for $12,000.

Retained Earnings

Which of the following accounts increases with a credit?

Cash

Dividends

Rent Expense

Retained Earnings

no change in the total assets

(B/c they are exchanging an asset for another)

Ravel Co. purchased supplies with $200,000 of its cash. As a result, there was __________.

Journalize transactions, post to the accounts, prepare a trial balance

Which sequence of actions correctly summarizes the accounting process?

debts and obligations owed to creditors

Liabilities are ________.

List of all the accounts with their balances

A trial balance is which of the following?

$900,000

(800,000 + 100,000)

Vaughn-Williams Co. has total assets of $800,000 and stockholders' equity of $300,000. It purchased $100,000 of supplies on account and collected $50,000 on account from its customers.

As a result, the company's total assets would now be __________.

Net income - dividends
(20,000 - 15,000) = 5,000

During the current year, a corporation earned income of $20,000, sold common stock for cash of $30,000, paid dividends of $15,000, and paid off debt of $5,000.

The retained earnings account ________.