acct 211 midterm #1
What section of a cash flow statement shows the cash spent on new equipment during the past
accounting period? - correct answer The investing section
Corporations generally receive more favorable tax treatment than sole proprietorships and partnerships.
- correct answer FALSE
In which forms of business organization are the owners personally liable for all the debts of the
business? - correct answer Sole proprietorships and partnerships
Which of the following is not an external user of accounting data? - correct answer chief financial officer
Which of the following is required as a result of SOX? - correct answer Public companies must present
audited financial statements.
Which of the following is not one of the three primary business activities? - correct answer Advertising
In terms of the principal types of business activities, paying salaries expense is an example of - correct
answer operating activities.
The financial statements for Harold Corporation contained the following information:
Accounts receivable $ 5,000
Sales revenue 75,000
Cash 15,000
Salaries and wages expense 20,000
Rent expense 10,000
How much was Harold's net income? - correct answer Net income= Revenue - Expenses $45,000
In which of the following sequences are the financial statements usually prepared? - correct answer
Income statement, retained earnings statement, balance sheet, and statement of cash flows
What section of a cash flow statement shows the cash spent on new equipment during the past
accounting period? - correct answer The investing section
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. - correct answer FALSE
Current liabilities are $10,000, long-term liabilities are $20,000, common stock is $50,000, and retained
earnings totals $70,000. How much is total stockholders' equity? - correct answer SE= Retained earnings
+ Common Stock = $120,000
For 2014, Stoneland Corporation reported net income, $24,000; net sales, $400,000; and average shares
outstanding, 6,000. There were no preferred stock dividends. How much was the 2014 earnings per
share? - correct answer Earnings per share= net income - preferred dividends / Average shares
outstanding = $4.00
At December 31, 2014, Shorts Company had retained earnings of $2,184,000. During 2014, the company
issued stock for $98,000, and paid dividends of $34,000. Net income for 2014 was $402,000. How much
was the retained earnings balance at the beginning of 2014? - correct answer Retained earnings +
dividends - net income = beginning balance $1,816,000
Which of the following ratios measures the ability of the company to survive over a long period
of time? - correct answer Solvency ratios
For what purpose might a company use free cash flow? - correct answer -Acquire property, plant, and
equipment
-Pay additional dividends
-Pay off debts
=All of the answer choices are correct
What are the accounting rules that have substantial authoritative support and are recognized as a
general guide for financial reporting purposes in the U. S.? - correct answer Generally accepted
accounting principles
GAAP
A company can change to a new method of accounting if management can justify that the new method
results in terms of - correct answer more meaningful financial information.
Expenses decrease retained earnings. - correct answer TRUE
Payment of a dividend - correct answer decreases cash; decreases retained earnings.
An account is a part of the financial information system and is described by all except which one of the
following? - correct answer An account is a source document
Which accounts normally have debit balances? - correct answer Assets, dividends, and expenses
Which of the following is the correct sequence of events? - correct answer Analyze a transaction; record
it in the journal; post it to the ledger
Where is the first place every transaction is recorded? - correct answer In the journal
What type of account is unearned revenue? - correct answer Liability
Accounts are listed on the trial balance in - correct answer the order that they appear in the ledger.
Which of the following is not one of the primary types of the financing activities in the statement of cash
flows? - correct answer Buying equipment
on 1/8th the company issued 30,000 common stock and received the cash. - correct answer DR= cash
CR= common stock
on 1/10th the company purchased supplies on the account in the amount of 3,000. - correct answer
DR=supplies
CR= accounts payable
on 1/12 the company received 10,000 cash for service provided - correct answer DR=cash
CR= service revenue
on 1/15 the company received 1,800 dollar repair invoice for repairing company equipment on account -
correct answer DR=repair expense
CR= accounts payable
on 1/18 the company paid the repair expense for the invoice received on 1/15 - correct answer
DR=accounts payable
CR= cash
on 1/20 the company paid office rent in the amount of 275 - correct answer DR=rent expense
CR= cash
on 1/25 the company received 650 in advance for service to provided in the month of April - correct
answer DR=cash
CR= unearned service revenue
on 1/31 the company purchased insurance policy for 3 years in the amount of 2,800 - correct answer
DR=prepaid insurance
CR= cash
salaries and wages payable - correct answer current liability
service revenue - correct answer N/A
interest payable - correct answer current liability
goodwill - correct answer intangible assets
depreciation expense - correct answer N/A
mortgage payable - correct answer long term liability
investment in real estate - correct answer long term liability
equipment - correct answer property, plant, and equipment
accumulated depreciation - correct answer property plant and equipment
debt investments (short term) - correct answer current assets
retained earnings - correct answer stockholders equity
unearned service revenue - correct answer current liabilities
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