GB518 - Unit 1 - Quiz

Question 1.         Question :           Creditors' claims on the assets of a company are called:

                                                  Net losses

                                                  Expenses

                                                  Revenues

                                                  Equity

                                                  Liabilities

Question 2.         Question :           If assets are $99,000 and liabilities are $32,000, then equity equals:

                                                  $32,000

                                                  $67,000

                                                  $99,000

                                                  $131,000

                                                  $198,000

Question 3.         Question :           The principle prescribing that financial statements reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue is the:

                                                  Going-concern principle

                                                  Business entity principle

                                                  Objectivity principle

                                                  Cost Principle

                                                  Monetary unit principle

Question 4.         Question :           If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period, the assets of the business must have:

                                                  Decreased $105,000

                                                  Decreased $45,000

                                                  Increased $30,000

                                                  Increased $45,000

Question 5.         Question :           If equity is $300,000 and liabilities are $192,000, then assets equal:

                                                  $108,000

                                                  $192,000

                                                  $300,000

                                                  $492,000

                                                  $792,000

Question 6.         Question :           Net Income:

                                                  Decreases equity

                                                  Represents the amount of assets owners put into a business

                                                  Equals assets minus liabilities

                                                  Is the excess of revenues over expenses

                                                  Represents the owners' claims against assets

Question 7.         Question :           Distributions of assets by a business to its stockholders are called:

                                                  Dividends

                                                  Expenses

                                                  Assets

                                                  Retained earnings

                                                  Net Income

Question 8.         Question :           Which accounting assumption assumes that all accounting information is reported monthly or yearly?

                                                  Business entity assumption

                                                  Monetary unit assumption

                                                  Value assumption

                                                  Cost assumption

                                                  Time period assumption

Question 9.         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 $75,000

Question 10.      Question :           Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

                                                  38.6%

                                                  13.4%

                                                  34.9%

                                                  25.9%

                                                  14.9%

Question 11.      Question :           The description of the relation between a company's assets, liabilities and equity, which is expressed as Assets = Liabilities + Equity is known as the:

                                                  Income statement equation

                                                  Accounting equation

                                                  Business equation

                                                  Return on equity ratio

                                                  Net income

Question 12.      Question :           Reebok had income of $150 million and average assets of $1,800 million. Its return on assets is:

                                                  8.33%

                                                  83.3%

                                                  12.0%

                                                  120%

Question 13.      Question :           Which of the following elements are found on the Balance Sheet?

                                                  Service Revenue

                                                  Net Income

                                                  Operating Activities

                                                  Utilities Expense

                                                  Retained Earnings

Question 14.      Question :           Which of the following elements are found on the income statement?

                                                  Cash

                                                  Accounts Receivable

                                                  Common Stock

                                                  Retained Earnings

                                                  Salaries Expense

Question 15.      Question :           Internal users of accounting information include:

                                                  Shareholders

                                                  Customers

                                                  Creditors

                                                  Government regulators

                                                  Line Supervisor

Question 16.      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 earnings

Question 17.      Question :           If Beginning Retained Earnings was $184,300, the company distributed $46,000 in dividends and Ending Retained Earnings was $345,000, what was the net income for the period?

                                                  $154,700

                                                  $206,700

                                                  $114,700

                                                  $575,300

                                                  $160,700

Question 18.      Question :           Double-entry accounting is an accounting system:

                                                  That records each transaction twice

                                                  That records the effects of transactions and other events in at least two accounts with equal debits and credits

                                                  In which the impact of each transaction is recorded in two or more accounts but that could include two debits and no credits

                                                  That may only be used if T-accounts are used

                                                  That insures that errors never occur

Question 19.      Question :           Ethical behavior requires:

                                                  That an auditors' pay not depend on the figures in the client's reports

                                                  Auditors to invest in businesses they audit

                                                  Analysts to report information favorable to their companies

                                                  Managers to use accounting information to benefit themselves

                                                  That an auditor provides a favorable opinion

Question 20.      Question :           The financial statement that shows: beginning and ending retained earnings balances and the effects of net income (loss) and a dividend for the period is the:

                                                  Statement of financial position

                                                  Statement of cash flows

                                                  Balance sheet

                                                  Income statement

                                                  Statement of retained earnings

Question 21.      Question :           An example of a financing activity is:

                                                  Buying office supplies

                                                  Obtaining a long-term loan

                                                  Buying office equipment

                                                  Selling inventory

                                                  Buying land

Question 22.      Question :           Unearned revenues are:

                                                  Revenues that have been earned and received in cash

                                                  Revenues that have been earned but not yet collected in cash

                                                  Liabilities created when a customer pays in advance for products or services before the revenue is earned

                                                  Recorded as an asset in the accounting records

                                                  Increases to retained earnings

Question 23.      Question :           Of the following accounts, the one that normally has a credit balance is:

                                                  Cash

                                                  Office Equipment

                                                  Sales Salaries Payable

                                                  Dividends

                                                  Sales Salaries Expense

Question 24.      Question :           Increases in retained earnings from a company's earnings activities are:

                                                  Assets

                                                  Revenues

                                                  Liabilities

                                                  Stockholder's Equity

                                                  Expenses

Question 25.      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 expenses

                                                  Promises of payments by customers