ACC1050 Test 1 Questions

Chapters 1-3

On which financial statement would you find how much debt a company has?

Balance sheet

The four financial statements are included in a package companies produce to give to external stakeholders that also includes other important information such as a management discussion and analysis section, notes to the financial statements, and an independent auditor's report. This is useful to learn more about a company. What is this "package" called?

annual report

A balance sheet that groups together similar assets and similar liabilities, using a number of standard classifications and sections, is called a:

classified balance sheet

Which financial statement reports revenues and expenses?

Income statement

The accounting period is an interval of time over which a company records and summarizes its business activity. The length of the accounting period ______:

one week, one month, one quarter, one year

You want to know how much debt the business has at the end of the accounting period

balance sheet

You want to know how much of current debt was repaid during the accounting period

statement of cash flows

You want to know how much goods or services were provided by the business during the accounting period

income statement

You want to know how retained earnings changed over the accounting period

statement of retained earnings

You want to know how much in expenses the business had during the accounting period

income statement and statement of cash flows

You want to know how much in accounts receivable the business has at the end of the accounting period

balance sheet

You want to know the sources and uses of cash for the business during the accounting period

statement of cash flows

You want to know how much in dividends the business paid during the accounting period

statement of retained earnings and statement of cash flows

You want to know how much cash the business has at the end of the accounting period

balance sheet and statement of cash flows

On the income statement, if revenues are MORE than expenses, there is ______; if revenues are LESS than expenses, there is a ______

net income; net loss

Users of accounting information can be divided broadly into two groups: internal users and external users. Customers of a company would be considered:

external users

Which financial statement reports a list of the company's assets (resources owned by the business)?

balance sheet

When a corporation distributes cash to its stockholders, it has paid a(n) _______________.

dividend

Three of the four financial statements are reported for a specific "period of time." Which financial statement is reported at a specific "point in time?"

balance sheet

Every time a company receives cash, its net income increases. Is this a true statement?

no

All businesses are involved in three types of activity: financing, investing, and operating. Paying dividends to stockholders is which type of activity?

financing

Items a business holds for resale in the normal course of business

inventory

Amounts a business owes its suppliers because it received goods or services from its suppliers on account (on credit) but where there is no written promise to pay

accounts payable

Assets without physical substance, such as copyrights, trademarks and franchises

intangible asset

Advance payment a business makes to its suppliers for goods or services to be received in the future

prepaid expenses

Long-term physical assets such as buildings and machinery

property, plant, and equipment

Amounts customers owe a business because they received goods or services from the business on account (on credit)

accounts receivable

Payments a business receives from its customers before it provides goods or services to them

unearned revenue

A written promise to pay, usually because money was borrowed or because goods or services were received on account (on credit)

notes payable

Owners of a corporation, generally called stockholders, purchase shares of ____________, which represents their claim to the corporation.

common stock

Which of the following is NOT a liability?

equipment

A(n) _______ is an accounting professional who conducts an independent examination of a company's financial statements.

auditor

Which of the following are NOT examples of external stakeholders? Choose all that apply.

management of the company

investors in the company

customers of the company

governmental agencies

creditors that provide goods or services to the company

management of the company

Which financial statement reports a list of the company's liabilities (debts and obligations)?

balance sheet

Which of the following is not one of the primary financial statements companies prepare for external stakeholders?

statement of common stock holdings

Current assets are assets that a company expects to convert to cash or use up within _________ or its operating cycle, whichever is longer.

one year

The basic accounting equation is:

asset = liabilities + stockholders’ equity

If you wanted to know where a company spent its cash, which financial statement would you examine?

statement of cash flows

If total liabilities increased by $100,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

increase of $120,000

Borrowing money from a bank is a type of revenue. This statement is:

false

When a company sells goods to or performs services for its customers, the amount earned is called _____.

revenue

Which of the following assets would NOT be a current asset?

buildings

Another label for stockholders' claims on a company's assets (stockholders' claim to the corporation) is:

equity

Paying cash dividends to stockholders is a type of expense. This statement is:

false

in which forms of business organization are the owners personally liable for all the debts of the business

sole proprietorships and partnerships

corporations generally receive more favorable tax treatment than sole proprietorships and partnerships

false

which of the following is the most appropriate definition of accounting

the information system that identifies, records, and communicates the economic events of an organization to interested users

to which of the following questions will internal users want answers

what selling price for our product will maximize the company’s net income, which product line is most profitable, is cash sufficient to pay dividends to stockholders

the balance sheet reports assets and claims to those assets at a specific point in time

true

which financial statement reports assets, liabilities, and stockholders’ equity

balance sheet

an annual report includes all of the following except

a listing of all of the stockholders

which of the following would not appear on the income statement

dividends paid

which of the following is not an external user of accounting data. customers, economic planners, chief financial officer, labor unions

chief financial officer

stockholders’ equity represents

claims of owners

which of these items are liabilities of white glove cleaning service. cash, accounts payable, dividends, accounts receivable, supplies, equipment, salaries and wages payable, service revenue, rent expense

accounts payable and salaries and wages payable

net income = revenue - expense

true

cash received from customers

operating activity

cash paid to stockholders (dividends)

financing activity

cash received from issuing new common stock

financing activity

cash paid to suppliers

operating activity

cash paid to purchase a new office building

investing activity

would the item appear on a balance sheet or income statement

income tax expense

income statement

would the item appear on a balance sheet or income statement

inventory

balance sheet

would the item appear on a balance sheet or income statement

accounts payable

balance sheet

would the item appear on a balance sheet or income statement

retained earnings

balance sheet

would the item appear on a balance sheet or income statement

equipment

balance sheet

would the item appear on a balance sheet or income statement

sales revenue

income statement

would the item appear on a balance sheet or income statement

cost of goods sold

income statement

would the item appear on a balance sheet or income statement

common stock

balance sheet

would the item appear on a balance sheet or income statement

accounts receivable

balance sheet

would the item appear on a balance sheet or income statement

interest expense

income statement

the liabilities of sheridan company are $102,600 and the stockholders’ equity is $262,200. what is the amount of sheridan’s total assets

$364,800

the total assets of sunland company are $193,800 and its stockholders’ equity is $91,200. what is the amount of its total liabilties

$102,600

the total assets of carla vista co are $912,000 and its liabilties are equal to one-fourth of its total assets. what is the amount of carla vista’s stockholders equity

$684,000

if total liabilities decreased by $15,000 and stockholders’ equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during the same period?

$10,000 decrease

classify the financial item

accounts payable

current liability

classify the financial item

accounts receivable

current asset

classify the financial item

accumulated depreciation - equipment

property, plant, and equipment

classify the financial item

buildings

property, plant, and equipment

classify the financial item

cash

current asset

classify the financial item

interest payable

current liabilities

classify the financial item

goodwill

intangible assets

classify the financial item

income taxes payable

current liabilities

classify the financial item

inventory

current assets

classify the financial item

stock investments (to be sold in 7 months)

current assets

classify the financial item

land (in use)

property, plant, and equipment

classify the financial item

mortgage payable

long-term liabilities

classify the financial item

supplies

current assets

classify the financial item

equipment

property, plant, and equipment

classify the financial item

prepaid rent

current assets

current assets are economic resources that are expected to be converted to cash or used up by the business within one year or the normal operating cycle, whichever is shorter

false

Which of the following would be considered external stakeholders?

Customers

Employees

Investors

Lenders

Management

customers, investors, lenders

indicate what type of activity each is (operating, investing or financing

Cash received from customers for goods and/or services provided

operating activity

indicate what type of activity each is (operating, investing or financing

Cash received from borrowing money

financing activity

indicate what type of activity each is (operating, investing or financing

Cash received from issuing common stock

financing activity

indicate what type of activity each is (operating, investing or financing

Cash received from the sale of property and equipment

investing activity

indicate what type of activity each is (operating, investing or financing

Cash paid for repayment of borrowed money

financing activity

indicate what type of activity each is (operating, investing or financing

Cash paid for dividends

financing activity

indicate what type of activity each is (operating, investing or financing

Cash paid to suppliers or employees for goods and/or services received

operating activity

indicate what type of activity each is (operating, investing or financing

Cash paid for new property and equipment purchased

investing activity