ACC561 Week 1 Quiz

University of Phoenix, Northern Virginia Campus

ACC 561 Accounting Course

Quiz 2 (Chapters 15-16)

Facilitator: Randolph A. Stanley

Student Name:___________________________

Grade:__________________________________

Instructions: Please answer all questions. Each question worth 1point for a total of 25points. You must only select one answer for each question.

1. Any event that affects the financial position of an organization and requires recording is called a(n)_____.

a. transaction

b. account

c. posting

d. accounting change

2. The _____ is also called the statement of financial position.

a. income statement

b. balance sheet

c. statement of retained earnings

d. statement of cash flows

3. _____ is (are) economic resources that are expected to benefit future activities.

a. Stockholders’ equity

b. Liabilities

c. Assets

d. Retained earnings

4. For a corporation, the excess of the assets over the liabilities is called _____.

a. retained earnings

b. paid-in capital

c. common stock

d. owners’ equity

5. The entity’s economic obligations to nonowners is(are) called _____.

a. owners’ equity

b. liabilities

c. assets

d. retained earnings

6. The _____ discloses the economic resources of the organization and the claims against those resources.

a. balance sheet

b. income statement

c. statement of cash flows

d. statement of retained earnings

7. _____ are sections of the balance sheet.

a. Revenues, assets, and liabilities

b. Assets, liabilities, and expenses

c. Expenses, revenues, and owners’ equity

d. Assets, liabilities, and owners’ equity

8. Identify which one of the following statements is false .

a. Owners’ equity solely represents the profits made by an organization in the current period.

b. Assets are economic resources that are expected to benefit future cash inflows or reduce future cash outflows.

c. Liabilities are economic obligations or claims against the assets of an organization by outsiders.

d. Assets must always equal the sum of liabilities and owners’ equity.

9. The following information was extracted from the accounting records of Ernest Company:

Beginning Paid-In Capital $90,000

Beginning Retained Earnings $210,000

Beginning Assets $455,000

During the period assets increased by $150,000, revenues were $200,000, and expenses were $165,000. The owners made no additional investments.

The amount of Ernest Company’s liabilities at the beginning of the period is _____.

a. $545,000

b. $155,000

c. $300,000

d. $245,000

10. The following information was extracted from the accounting records of Plum Company:

Beginning Paid-In Capital $87,000

Beginning Retained Earnings $211,000

Beginning Assets $455,000

During the period assets increased by $150,000, revenues were $200,000, and expenses were $165,000. The owners made no additional investments.

The amount of Plum Company’s liabilities at the end of the period is _____.

a. $157,000

b. $272,000

c. $150,000

d. $ 45,000

11. The _____ adjusting entry increases owners’ equity and decreases liabilities.

a. depreciation

b. wages

c. deferred revenue

d. unrecorded revenue

12. Unexpired costs are considered_____.

a. assets

b. expenses, if cash has been paid

c. expenses, whether or not cash has been paid

d. adjusted expenses

13. Research and development costs are initially _____.

a. recorded as assets, and written off in a systematic way over a period of years

b. recorded as assets, and are expensed when the goods produced are sold

c. recorded as assets, and are expensed when they are paid in cash

d. expensed

14. Depreciation is computed on_____.

a. equipment and land

b. land and buildings

c. equipment and buildings

d. equipment, land, and buildings

15. Cash collected from the customers before goods are delivered is known as_____.

a. unearned revenue

b. deferred revenue

c. advances from customers

d. all of these answers are correct

16. Current assets are converted to cash or sold or consumed within _____.

a. the longer of one year or one operating cycle

b. the shorter of one year or one operating cycle

c. one fiscal year or one calendar year

d. one calendar year

17. _____ is not a current asset.

a. Accounts Receivable

b. Goodwill

c. Prepaid Expenses

d. None of these answers is correct

18. _____ is not considered in the determination of the operating cycle.

a. Accounts Receivable

b. Merchandise Inventory

c. Cash

d. None of these answers is correct

19. A _____ is not considered a cash equivalent.

a. money market fund

b. treasury bill

c. bank account

d. none of these answers is correct

20. Depreciation is used to _____.

a. establish the current market value of an asset

b. allocate the original cost of an asset to particular periods or products

c. accumulate funds to replace an asset

d. all of these answers are correct

21. The liabilities of Sam Company are listed below:

Accounts payable $20,000

First Mortgage bonds payable $100,000

Debentures payable $80,000

Sam Company liquidated its assets, receiving $140,000 cash. The debenture holders will receive _____ if the debentures are subordinated.

a. $10,000

b. $20,000

c. $40,000

d. $60,000

22. The liabilities of Becky Company are listed below:

Accounts payable $20,000

First Mortgage bonds payable $100,000

Debentures payable $80,000

Becky Company liquidated its assets, receiving $150,000 cash. The debenture holders will receive _____ if the debentures are unsubordinated.

a. $10,000

b. $30,000

c. $40,000

d. $50,000

23. Convertibility allows a bondholder to exchange _____.

a. subordinated debentures for unsubordinated debentures

b. debentures for secured debt

c. bonds for common stock

d. all of these answers are correct

24. Non-operating items on the income statement_____.

a. are revenues and expenses arising from adjusting entries

b. reflect the effects of financial management decisions

c. appear only on corporate income statements

d. appear on the income statement immediately after gross profit

25. A company had the following information:

Cash $6,000 Sales $142,000

Depreciation expense 4,000 Dividends paid 3,000

Prepaid rent 1,400 Rent expense 3,600

Cost of goods sold 69,000 Wage expense 41,000

The net income for the period is_____.

a. $22,400

b. $23,800

c. $24,400

d. $26,800