Week 1 questions

1 In which forms of business organization are the owners personally liable for all the debts of the business?

�

Sole proprietorships and corporations�

�

�

Sole proprietorships and partnerships�

�

�

Partnership and corporation�

�

�

All of the answer choices are correct�

�

2 Which of the following is not an external user of accounting data?

�

Customers�

�

�

Economic planners�

�

�

Chief Financial Officer�

�

�

Labor unions�

�

3 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?

�

$45,000�

�

�

$15,000�

�

�

$65,000�

�

�

$60,000�

�

4 In which of the following sequences are the financial statements usually prepared?

�

Balance sheet, statement of cash flows, income statement and retained earnings statement.�

�

�

Income statement, retained earnings statement, balance sheet, and statement of cash flows.�

�

�

Income statement, balance sheet, retained earnings statement, and statement of cash flows.�

�

�

Balance sheet, retained earnings statement, statement of cash flows, and income statement.�

�

5 Which of the following are not considered to be primary users of financial statements in countries outside the U.S.?

�

Central government planners�

�

�

Tax authorities�

�

�

Economic advisors�

�

�

Private investors�

�

6 For 2017, 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 2017 earnings per share

�

$4.00�

�

�

$0.06�

�

�

$16.67�

�

�

$66.67�

�

7 The following ratios are available for Leer Inc. and Stable Inc.

�

Current Ratio�

�

Debt to Assets Ratio�

�

Earnings per Share�

�

�

Leer Inc.�

2:1�

�

75%�

�

$3.50�

�

�

Stable Inc.�

1.5:1�

�

40%�

�

$2.75�

�

�

��Compared to Stable Inc., Leer Inc. has

�

lower liquidity, higher solvency, and higher profitability.�

�

�

higher liquidity, lower solvency, and higher profitability.�

�

�

higher liquidity, higher solvency, but profitability cannot be compared based on information provided.�

�

�

higher liquidity and lower solvency, but profitability cannot be compared based on information provided.�

�

8 At December 31, 2017, Shorts Company had retained earnings of $2,184,000. During 2017, the company issued stock for $98,000, and paid dividends of $34,000. Net income for 2017 was $402,000. How much was the retained earnings balance at the beginning of 2017?

�

$1,816,000�

�

�

$2,454,000�

�

�

$1,914,000�

�

�

$2,552,000�

�

9Which of the following ratios measures the ability of the company to survive over a long period of time?

�

Current ratios�

�

�

Liquidity ratios�

�

�

Profitability ratios�

�

�

Solvency ratios�

�

10 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.?

�

Generally accepted accounting standards�

�

�

Generally accepted accounting principles�

�

�

Generally accepted auditing principles�

�

�

General accounting principles�

�

��