Test bank for financial accounting 4th edition

B increases in retained earnings resulting from delivering goods or services to customers 3.. D decreases in retained earnings resulting from delivering goods or services to customers If

Test Bank for Financial Accounting 4th Edition

Which of the following persons or groups have the ultimate control of a corporation?

1. A) the chief executive officer

2 B) the board of directors

3 C) the audit committee

4 D) the shareholders

Financial statements are:

1. A) reports issued by outside consultants who are hired to analyze key operations of the business

2 B) reports created by management that states it is responsible for the acts of the corporation

3 C) standard documents that tell us how well a business is performing and where it stands in financial terms

4 D) standard documents issued by outside consultants who are hired to analyze key operations of the business in financial terms

All of the following are forms of business organizations except:

1. A) proprietorship

2 B) partnership

3 C) restaurant

4 D) corporation

The accounting equation can be stated as:

1. A) Assets + Liabilities = Shareholders' equity

2 B) Assets = Liabilities + Shareholders' equity

3 C) Assets = Liabilities - Shareholders' equity

4 D) Assets + Shareholders' equity = Liabilities

The owners' interest in the assets of a corporation is known as:

1. A) assets

2 B) shareholders' equity

3 C) expenses

4 D) revenues

On January 1, 2010, total assets for Liftoff Technologies were $125,000; on December

31, 2010, total assets were $145,000 On January 1, 2010, total liabilities were

$110,000; on December 31, 2010, total liabilities were $115,000 What are the amount

of the change and the direction of the change in Liftoff Technologies shareholders' equity for 2010?

1. A) decrease of $15,000

2 B) increase of $15,000

3 C) increase of $30,000

4 D) decrease of $30,000

Claims held by the shareholders (owners) of a corporation are referred to as:

1. A) retained earnings

2 B) share capital

3 C) share capital minus retained earnings

4 D) share capital plus retained earnings

Payables are classified as:

1. A) increases in liabilities resulting from delivering goods or services to customers

2 B) increases in retained earnings resulting from delivering goods or services to customers

3 C) decreases in assets resulting from delivering goods or services to customers

4 D) decreases in retained earnings resulting from delivering goods or services to customers

If assets increase $120,000 during a given period and liabilities decrease $25,000 during the same period, shareholders' equity must:

1. A) increase $95,000

2 B) decrease $145,000

3 C) decrease $95,000

4 D) increase $145,000

If liabilities increase $120,000 during a given period and shareholders' equity decreases

$25,000 during the same period, assets must:

1. A) increases in assets resulting from operations

2 B) increases in retained earnings resulting from operations

3 C) increases in liabilities resulting from purchasing assets

4 D) decreases in retained earnings resulting from operations

How do revenues for a period relate to the beginning and ending balances in retained earnings?

1. A) Revenues will increase the beginning balance of retained earnings for the period

2 B) Revenues will decrease the beginning balance of retained earnings for the period

3 C) Revenues less expenses will either increase or decrease the beginning balance of retained earnings for the period

4 D) Revenues less expenses will either increase or decrease the ending balance of retained earnings for the period

Which of the following best describes a liability?

1. A) Liabilities are a form of share capital

2 B) Liabilities are future economic benefits to which a company is entitled

3 C) Liabilities are accounts receivable of the company

4 D) Liabilities are economic obligations to creditors to be paid at some future date by the company

Shareholders' equity for Raisin Corporation on January 1, 2010 and December 31, 2010 were $60,000 and $75,000, respectively Assets on January 1, 2010 and December 31,

2010 were $115,000 and $105,000, respectively Liabilities on January 1, 2010 were

$55,000 What is the amount of liabilities on December 31, 2010?

Dividends:

1. A) always affect net income

2 B) are distributions to shareholders of assets (usually cash) generated by net income

3 C) cash flow statement

4 D) retained earnings statement

Dividends appear on the:

1. A) retained earnings statement

2 B) income statement

3 C) balance sheet

4 D) both the retained earnings statement and the income statement

Assets appear on the:

1. A) balance sheet

2 B) income statement

3 C) retained earnings statement

4 D) cash flow statement

An investor wishes to assess a company's financial position at the end of the period Which financial statement would the investor probably examine?

1. A) the cash flow statement

2 B) the income statement

3 C) the balance sheet

4 D) the statement of retained earnings

The balance sheet is sometimes also called the:

1. A) statement of operations

2 B) statement of cash position

3 C) statement of financial position

4 D) statement of income and expense

The cash flow statement is divided into three categories relating to cash flows from operating, investing, and:

1. A) management planning activities

4 D) statement of retained earnings

Gains and losses appear on which of the financial statements listed below?

1. A) the balance sheet

2 B) the income statement

3 C) the retained earnings statement

4 D) the cash flow statement

Which of the following represent(s) claims to economic resources?

1. A) assets, but not liabilities or owners' equity

2 B) owners' equity, but not assets or liabilities

3 C) liabilities, but not assets or owners' equity

4 D) liabilities and owners' equity, but not assets

The date of the income statement:

1. A) covers one day in time

2 B) covers a period of time, usually for an accounting period

3 C) is not dated

4 D) may cover a period of time or only one day in time, like a snapshot photograph

Operating expenses appear on the income statement:

1. A) directly after gross margin

2 B) directly after cost of goods sold

3 C) directly after revenue

4 D) do not appear on the income statement

Common shares is a component of:

1. A) total assets

2 B) total liabilities

3 C) share capital

4 D) retained earnings

Cost of goods sold is:

1. A) added to sales on the income statement

2 B) deducted from sales on the balance sheet

3 C) deducted from sales on the income statement

4 D) added to sales on the retained earnings statement

Suppose The Fruit Group buys a kiwi for $.10 and sells the kiwi for $.50 The cost of goods sold would be:

1. A) $.10

2 B) $.40

3 C) $.50

4 D) $.05

Net income is:

1. A) deducted from beginning retained earnings on the retained earnings statement

2 B) added to beginning retained earnings on the retained earnings statement

3 C) added to assets on the balance sheet

4 D) deducted from net sales on the income statement

Which of the following represent(s) claims to economic resources?

1. A) assets, but not liabilities or owners' equity

2 B) owners' equity, but not assets or liabilities

3 C) liabilities, but not assets or owners' equity

4 D) liabilities and owners' equity, but not assets

Notes receivable due in 60 days would be classified as a:

1. A) long-term asset on the balance sheet

2 B) current asset on the balance sheet

3 C) current liability on the balance sheet

4 D) long-term liability on the balance sheet

Cash received from the sale of shares would appear:

1. A) as an operating activity on the cash flow statement

2 B) would not appear on a cash flow statement

3 C) as an investing activity on the cash flow statement

4 D) as a financing activity on the cash flow statement

Losses are reported on the:

1. A) income statement

2 B) balance sheet

3 C) cash flow statement

4 D) statement of retained earnings

What is the proper order for the cash flow statement?

1. A) financing activities, investing activities, and operating activities

2 B) operating activities, investing activities, and financing activities

3 C) operating activities, financing activities, and investing activities

4 D) investing activities, financing activities, and operating activities

The ending balance in retained earnings appears on the:

1. A) balance sheet only

2 B) balance sheet and statement of retained earnings

3 C) statement of retained earnings only

4 D) income statement

Cash dividends:

1. A) decrease revenue on the income statement

2 B) increase expenses on the income statement

3 C) decrease retained earnings on the retained earnings statement

4 D) decrease operating activities on the cash flow statement

Common shares appear on the:

1. A) balance sheet

2 B) income statement

3 C) cash flow statement

4 D) retained earnings statement

The repayment of a note payable would be classified as a(n):

1. A) investing activity on a cash flow statement

2 B) financing activity on a cash flow statement

3 C) operating activity on a cash flow statement

4 D) current asset on the balance sheet

The issuance of shares for cash would be classified as a(n):

1. A) investing activity on a cash flow statement

2 B) financing activity on a cash flow statement

3 C) operating activity on a cash flow statement

4 D) current asset on the balance sheet

Income taxes owed to the federal government would be classified as a:

1. A) current asset on the balance sheet

2 B) current liability on the balance sheet

3 C) long-term asset on the balance sheet

4 D) financing activity on the cash flow statement

The balance sheet contains information about:

1. A) liabilities, equity, and expenses

2 B) assets, revenues, and liabilities

3 C) assets, liabilities, and equity

4 D) revenues, expenses, and equity

Which of the following financial statements provides a "snapshot photo" of one moment

in time?

1. A) balance sheet

2 B) income statement

3 C) statement of retained earnings

4 D) cash flow statement

Assets are generally divided into:

1. A) current assets and solvent assets

2 B) current assets and reliable assets

3 C) long-term assets and solvent assets

4 D) current assets and long-term assets

Current assets are assets expected to be converted to cash, sold, or consumed:

1. A) within the next 12 months or within the business's normal operating cycle if less than

a year

2 B) within the next 12 months or within the business's normal operating cycle if longer than a year

3 C) within the next 6 months

4 D) within the next 24 months

Equipment would appear on the:

1. A) income statement with the revenues

2 B) balance sheet with the long-term assets

3 C) balance sheet with the current assets

4 D) income statement with the operating expenses

Depreciation is normally associated with which asset on the balance sheet?

1. A) Land

2 B) accounts receivable

3 C) inventory

4 D) equipment

Cash would appear on the:

1. A) income statement with the revenues

2 B) retained earnings statement with the net income

3 C) balance sheet with the current assets

4 D) balance sheet with the current liabilities

Which of the following persons or groups have the ultimate control of a

corporation?

1. A) the chief executive officer

2 B) the board of directors

3 C) the audit committee

4 D) the shareholders

Financial statements are:

1. A) reports issued by outside consultants who are hired to analyze key operations of the business

2 B) reports created by management that states it is responsible for the acts of the corporation

3 C) standard documents that tell us how well a business is performing and where it stands in financial terms

4 D) standard documents issued by outside consultants who are hired to analyze key operations of the business in financial terms

All of the following are forms of business organizations except:

1. A) proprietorship

2 B) partnership

3 C) restaurant

4 D) corporation

The accounting equation can be stated as:

1. A) Assets + Liabilities = Shareholders' equity

2 B) Assets = Liabilities + Shareholders' equity

3 C) Assets = Liabilities - Shareholders' equity

4 D) Assets + Shareholders' equity = Liabilities

The owners' interest in the assets of a corporation is known as:

1. A) assets

2 B) shareholders' equity

3 C) expenses

4 D) revenues

On January 1, 2010, total assets for Liftoff Technologies were $125,000; on December

31, 2010, total assets were $145,000 On January 1, 2010, total liabilities were

$110,000; on December 31, 2010, total liabilities were $115,000 What are the amount

of the change and the direction of the change in Liftoff Technologies shareholders' equity for 2010?

3 C) share capital minus retained earnings

4 D) share capital plus retained earnings

Payables are classified as:

1. A) increases in liabilities resulting from delivering goods or services to customers

2 B) increases in retained earnings resulting from delivering goods or services to

customers

3 C) decreases in assets resulting from delivering goods or services to customers

4 D) decreases in retained earnings resulting from delivering goods or services to

customers

If assets increase $120,000 during a given period and liabilities decrease $25,000 during the same period, shareholders' equity must:

1. A) increase $95,000

2 B) decrease $145,000

3 C) decrease $95,000

4 D) increase $145,000

If liabilities increase $120,000 during a given period and shareholders' equity decreases

$25,000 during the same period, assets must:

1. A) increases in assets resulting from operations

2 B) increases in retained earnings resulting from operations

3 C) increases in liabilities resulting from purchasing assets

4 D) decreases in retained earnings resulting from operations

How do revenues for a period relate to the beginning and ending balances in retained earnings?

1. A) Revenues will increase the beginning balance of retained earnings for the period

2 B) Revenues will decrease the beginning balance of retained earnings for the period

3 C) Revenues less expenses will either increase or decrease the beginning balance of retained earnings for the period

4 D) Revenues less expenses will either increase or decrease the ending balance of retained earnings for the period

Which of the following best describes a liability?

1. A) Liabilities are a form of share capital

2 B) Liabilities are future economic benefits to which a company is entitled

3 C) Liabilities are accounts receivable of the company

4 D) Liabilities are economic obligations to creditors to be paid at some future date by the company

Shareholders' equity for Raisin Corporation on January 1, 2010 and December 31, 2010 were $60,000 and $75,000, respectively Assets on January 1, 2010 and December 31,

2010 were $115,000 and $105,000, respectively Liabilities on January 1, 2010 were

$55,000 What is the amount of liabilities on December 31, 2010?

1. A) always affect net income

2 B) are distributions to shareholders of assets (usually cash) generated by net income

3 C) cash flow statement

4 D) retained earnings statement

Dividends appear on the:

1. A) retained earnings statement

2 B) income statement

3 C) balance sheet

4 D) both the retained earnings statement and the income statement

Assets appear on the:

1. A) balance sheet

2 B) income statement

3 C) retained earnings statement

4 D) cash flow statement

An investor wishes to assess a company's financial position at the end of the period Which financial statement would the investor probably examine?

1. A) the cash flow statement

2 B) the income statement

3 C) the balance sheet

4 D) the statement of retained earnings

The balance sheet is sometimes also called the:

1. A) statement of operations

2 B) statement of cash position

3 C) statement of financial position

4 D) statement of income and expense

The cash flow statement is divided into three categories relating to cash flows from operating, investing, and:

1. A) management planning activities

4 D) statement of retained earnings

Gains and losses appear on which of the financial statements listed below?

1. A) the balance sheet

2 B) the income statement

3 C) the retained earnings statement

4 D) the cash flow statement