Acct301 1. (TCO 1) Which of the following is a primary user of accounting information with a direct financial interest

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1. (TCO 1) Which of the following is a primary user of accounting information with a direct financial interest in the business? 

Taxing authority

Creditor

Regulatory agency

Labor union

 

2. (TCO 1) Expenses are incurred _________. 

to generate revenues.

only on rare occasions.

to produce assets.

to produce liabilities.

 

3. (TCO 1) Which of the following financial statements is concerned with the company at a point in time? 

Balance Sheet

Income Statement

Retained Earnings Statement

Statement of Cash Flows

 

4. (TCO 1) Pinson Company began the year with retained earnings of $210,000. During the year, the company recorded revenues of $300,000, expenses of $228,000, and paid dividends of $24,000. What was Pinson’s retained earnings at the end of the year? 

$306,000

$258,000 

$486,000

$282,000

 

5. (TCO 4) Qualitative characteristics associated with relevant accounting information are _________. 

consistency, faithful representation, and timely.

predict future events, provide feedback about prior expectations, and timely.

neutral, predict future events, and reliability.

consistency and materiality.

 

6. (TCO 4) Using the following balance sheet and income statement data, what is the current ratio?

Current assets $9,000 Net income $12,000

Current liabilities 4,000 Stockholders’ equity 24,000

Total assets 30,000 Total liabilities 6,000

Average common shares outstanding was 10,000 

1.75:1

2.00:1

0.44:1

2.25:1 

 

7. (TCO 4) Using the following balance sheet and income statement data, what is the total amount of working capital?

Current assets $7,000 Net income $12,000

Current liabilities 4,000 Stockholders’ equity 21,000

Total assets 30,000 Total liabilities 9,000

Average common shares outstanding was 10,000 

$21,000

$7,000

$2,000

$3,000 

 

8. (TCO4) Using the following balance sheet and income statement data, what is the debt to total assets ratio?

Current assets $9,000 Net income $12,000

Current liabilities 4,000 Stockholders’ equity 24,000

Total assets 30,000 Total liabilities 6,000

Average common shares outstanding was 10,000 

44%

20% 

38%

50%

 

9. (TCO 2) Powers Company paid its office rent of $1,000 with cash. As a result of this event, _________. 

assets decreased by $1,000.

equity increased by $1,000.

equity decreased by $1,000.

both assets decreased by $1,000 and equity decreased by $1,000.

 

10. (TCO 2) Which accounts normally have debit balances? 

Assets, expenses, and revenues

Assets, expenses, and retained earnings

Assets, liabilities, and dividends

Assets, expenses, and dividends

 

11. (TCO 2) In the first month of operations, the total of the debit entries to the cash account amounted to $700 and the total of the credit entries to the cash account amounted to $300. The cash account has a _________ 

$400 credit balance.

$700 debit balance.

$400 debit balance. 

$300 credit balance.

 

12. (TCO 2) A trial balance would only help in detecting which one of the following errors? 

A transaction that is not journalized

A journal entry that is posted twice

Offsetting errors made in recording the transaction

A transposition error when transferring the debit side of a journal entry to the ledger

 

13. (TCO 3) From an internal control standpoint, the asset most susceptible to improper diversion and use is _________ 

prepaid insurance.

cash.

buildings.

land.

 

14. (TCO 3) Sam’s Grocery Store has the following policy: Only one cashier can have access to a cash drawer. Which internal control principle supports that policy?

Documentation procedures

Segregation of duties

Physical controls

Establishment of responsibilities

 

15. (TCO 3) For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation? 

Check for $43 recorded as $34

Deposit of $500 recorded by bank as $50

A returned $200 check recorded by bank as $20

Check for $35 recorded as $53

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