ACCN 2010 Quiz 1

ACCN 2010 Quiz 1 | Tulane University

Question 1

If the retained earnings account increases from the beginning of the year to the end of the year, then

·         net income is greater than dividends.

·         net income is less than dividends.

·         additional investments are less than net losses.

·         a net loss is less than dividends.

 

Question 2

An income statement

·         presents the revenues and expenses for a specific period of time.

·         reports the changes in assets, liabilities, and stockholders’ equity over a period of time.

·         reports the assets, liabilities, and stockholders’ equity at a specific date.

·         summarizes the changes in retained earnings for a specific period of time.

 

Question 3

Ending retained earnings for a period is equal to beginning

·         Retained earnings + Net income + Dividends.

·         Retained earnings – Net income + Dividends.

·         Retained earnings – Net income – Dividends.

·         Retained earnings + Net income – Dividends.

 

Question 3

To show how successfully your business performed during a period of time, you would report its revenues and expenses in the

·         retained earnings statement.

·         income statement.  

·         statement of cash flows.

·         balance sheet.

 

Question 4

Net income results when

·         Revenues = Expenses.

·         Assets > Liabilities.

·         Revenues > Expenses.

·         Revenues < Expenses.

 

Question 5

Which of the following financial statements is concerned with the company at a point in time?

·         Balance sheet .

·         Statement of cash flows

·         Retained Earnings statement

·         Income statement

 

Question 6

In a study session, a classmate makes this statement “Dividends are listed as expenses on the income statement.” What is your best response to this statement?

·         Dividends are deducted from retained earnings on the balance sheet.

·         I’ve been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets.

·         You are right. Revenues and expenses are shown on the income statement. Dividends are a cost of generating revenues and that makes them an expense. Why else would a corporation pay dividends?

·         Dividends represent a portion of corporate profits paid to the shareholders. They belong on the retained earnings statement.  (Correct)

 

Question 7

Waterway Industries began the year with retained earnings of $383000. During the year, the company recorded revenues of $516000, expenses of $376000, and paid dividends of $36000. What was Waterway's retained earnings balance at the end of the year?

·         $852000

·         $552000

·         $516000

·         $487000

 

Question 8

Waterway Industries began the year with retained earnings of $118000. During 2022, the company issued $77500 of common stock for cash. The company recorded revenues of $730000, expenses of $663000, and paid dividends of $43000. What was Waterway's net income for the year 2022?

·         $144500

·         $67000

·         $101500

·         $24000

 

Question 9

A balance sheet shows

·         assets, liabilities, and stockholders’ equity.  

·         expenses, dividends, and stockholders’ equity.

·         revenues, expenses, and dividends.

·         revenues, liabilities, and stockholders’ equity.

 

Question 10

Which of the following is not a satisfactory statement of the accounting equation?

·         Assets = Stockholders’ Equity – Liabilities

·         Assets = Liabilities + Stockholders’ Equity

·         Assets - Stockholders’ Equity = Liabilities

·         Assets - Liabilities = Stockholders’ Equity

 

Question 11

Concord Corporation started the year with total assets of $306000 and total liabilities of $246000. During the year the business recorded $626000 in revenues, $329000 in expenses, and dividends of $61000. Stockholders’ equity at the end of the year was

·         $296000.  

·         $266000.

·         $235000.

·         $357000.

 

Question 12

If total liabilities increased by $89000 and stockholders’ equity increased by $27000 during a period of time, then total assets must change by what amount and direction during that same period?

·         $170000 increase

·         $116000 decrease

·         $143000 increase

·         $116000 increase

 

Question 13

Liabilities

are future economic benefits.

are things of value owned by a business.

possess service potential.

are debts and obligations.

 

Question 14

Stockholders’ equity is comprised of

·         common stock and dividends.

·         net income and retained earnings.

·         common stock and retained earnings.  

·         dividends and retained earnings.

 

Question 15

Why should the income statement be prepared first?

·         The statement of cash flows should be prepared first because it determines the sources of cash. That information is then used in preparing the income statement.

·         Net income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet.  

·         The income statement does not have to be prepared first. Financial statements can be prepared in any order.

·         None of these answer choices are correct.

 

Question 16

Windsor, Inc. compiled the following financial information as of December 31, 2022:

Service revenue               $842000

Common stock    179000

Equipment            254000

Operating expenses         740000

Cash        211000

Dividends                55000

Supplies                   25000

Accounts payable              122000

Accounts receivable           87500

Retained earnings, 1/1/22              427000

 

Windsor's assets on December 31, 2022 are:

 

 

·         $1027500.

·         $1417500.

·         $577500.

·         $508000.

 

Question 17

Which of the following is not one of the three forms of business organization?

·         Investors .

·         Corporations

·         Proprietorships

·         Partnerships

 

Question 18

The operating cycle of a company is the average time that is required to go from cash to

·         inventory in producing revenues.

·         sales in producing revenues.

·         accounts receivable in producing revenues.

·         cash in producing revenues.

 

Question 19

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Nash's Trading Post, LLC

Balance Sheet

December 31, 2022

Cash                      $185000                                Accounts payable            $195000

Accounts receivable                       140000                  Salaries and wages payable         25000

Inventory                            150000                  Mortgage payable           225000

Prepaid insurance                            85000                    Total liabilities    $445000

Stock investments (long-term)                  250000                                 

Land                      250000                                 

Buildings              $300000                                                Common stock  $335000

Less: Accumulated depreciation                (55000) 245000                  Retained earnings           725000

Goodwill                              200000                        Total stockholders' equity      $1060000

Total assets                        $1505000                                        Total liabilities and            stockholders' equity           $1505000

·         $695000

·         $960000

·         $495000

·         $550000

 

Question 20

Wildhorse Co. has assets of $4265000, common stock of $1018000, and retained earnings of $659000. What are the creditors’ claims on their assets?

·         $4772000

·         $1902000

·         $3918000

·         $2588000

 

Question 21

The cost of assets consumed or services used is also known as

·         an asset.

·         an expense.

·         a revenue.

·         a liability.

 

Question 22

Based on the following data, what is the amount of current assets?

Accounts payable            $64000

Accounts receivable       96500

Cash      68500

Intangible assets              96500

Inventory            135500

Long-term investments                167500

Long-term liabilities        196000

Short-term investments               76000

Notes payable   57500

Property, plant, and equipment                1325000

Prepaid insurance            1500

·         $220000

·         $378000

·         $242500

·         $241000

 

Question 23

Which of the following is not considered an asset?

·         Dividends

·         Accounts receivable

·         Inventory

·         Equipment