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accounting exam number 1, Exams of Financial Accounting

Ahmadabad University Financial Accounting

finance and accounting exam number 2

Typology: Exams

2020/2021

Uploaded on 01/11/2023

goldstar22 🇮🇳

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ACC 2301 EXAM 1 Review - Brown

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ACC 2301 EXAM 1 REVIEW

1. The primary objective of financial reporting is to provide information

A. to the federal government

B. about the profitability of the enterprise

C. regarding the cash flows of the enterprise

D. that is useful for making investment and lending decisions

2. How much are total liabilities if owners’ equity is $38,000 and total assets are $56,000?

A. $94,000

B. $18,000

C. $20,000

D. $74,000

3. Revenues are

A. increases in paid-in-capital resulting from the owners putting money into the

businesses

B. increases in retained earnings resulting from selling products or performing

services

C. increases in liabilities resulting from borrowing money

D. all of the above

4. The financial statement which presents a summary of the revenues and expenses of an

entity is called the

A. Statement of Retained Earnings

B. Statement of Cash Flows

C. Income Statement

D. Balance Sheet

5. Another name for the balance sheet is

A. Statement of Operations

B. Statement of Earnings

C. Statement of Profit and Loss

D. Statement of Financial Position

6. Which of the following is an acceptable variation of the accounting equation?

A. Assets – Liabilities = Stockholders’ Equity

B. Assets + Liabilities = Stockholders’ Equity

C. Assets = Liabilities - Stockholders’ Equity

D. Assets + Stockholders’ Equity = Liabilities

7. The amount of dividends paid by a company to its owners is shown on the

A. Balance Sheet

B. Income Statement

C. Statement of Retained Earnings

D. Income Statement and Retained Earnings Statement

Partial preview of the text

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ACC 2301 EXAM 1 REVIEW

The primary objective of financial reporting is to provide information A. to the federal government B. about the profitability of the enterprise C. regarding the cash flows of the enterprise D. that is useful for making investment and lending decisions
How much are total liabilities if owners’ equity is $38,000 and total assets are $56,000? A. $94, B. $18, C. $20, D. $74,
Revenues are A. increases in paid-in-capital resulting from the owners putting money into the businesses B. increases in retained earnings resulting from selling products or performing services C. increases in liabilities resulting from borrowing money D. all of the above
The financial statement which presents a summary of the revenues and expenses of an entity is called the A. Statement of Retained Earnings B. Statement of Cash Flows C. Income Statement D. Balance Sheet
Another name for the balance sheet is A. Statement of Operations B. Statement of Earnings C. Statement of Profit and Loss D. Statement of Financial Position
Which of the following is an acceptable variation of the accounting equation? A. Assets – Liabilities = Stockholders’ Equity B. Assets + Liabilities = Stockholders’ Equity C. Assets = Liabilities - Stockholders’ Equity D. Assets + Stockholders’ Equity = Liabilities
The amount of dividends paid by a company to its owners is shown on the A. Balance Sheet B. Income Statement C. Statement of Retained Earnings D. Income Statement and Retained Earnings Statement

If assets increased by $20,000 during a given period and liabilities decreased by $4, during the same period, stockholder’ equity must have A. Increased by $16, B. Increased by $24, C. Decreased by $24, D. Decreased by $16,
The amount of an entity’s receivables as of a given date generally appears on A. the income statement in the expenses section B. the income statement in the revenues section C. the balance sheet in the stockholders’ equity section D. the balance sheet in the current asset section
All of the following accounts generally are classified as current assets except A. Furniture B. Accounts Receivable C. Office Supplies D. Cash
Increases in stockholders’ equity arise from A. Investments in the business by owners B. Earning net income C. Borrowing money D. Both A and B but not C
The amount of net income reported on the income statement also appears on the A. Balance Sheet B. Statement of Financial Position C. Statement of Retained Earnings D. Both A and B but not C
The ending balance of retained earnings appears on A. Both the Statement of Retained Earnings and the Balance Sheet B. The Retained Earnings Statement only C. The Income Statement only D. The Balance Sheet only
The stockholders’ equity section of Campus Crates at the beginning and end of 2016 amounted to $15,000 and $18,000, respectively. Assets at the beginning of 2016 were $25,000. If the liabilities of Campus Crates decreased by $8,000 in 2016, what was the amount of assets at the end of 2016? A. $20, B. $16, C. $2, D. Some other amount
Cujo Company had the following amounts at the dates indicated:

Receiving payment from a customer on account (collection of an account receivable) will A. increase total assets B. have no effect on total assets C. decrease liabilities D. increase stockholders’ equity
Purchasing office equipment for cash will A. increase both total assets and total liabilities B. decrease both total assets and stockholders’ equity C. have no effect on total assets, total liabilities, or stockholders’ equity D. decrease both total liabilities and stockholders’ equity
Purchasing a building for $100,000 by paying cash of $20,000 and obtaining a mortgage for $80,000 will A. increase both total assets and total liabilities by $100, B. increase both total assets and total liabilities by $80, C. decrease total assets and increase total liabilities by $20, D. decrease both total assets and total liabilities by $20,
What is the effect on total assets and stockholder’s equity of paying the electric bill as soon at it is received each month? Total Assets Stockholders’ Equity A. Decrease Decrease B. No Effect No Effect C. Decrease No Effect D. No Effect Decrease
Which of the following transactions would increase an asset and increase a liability? A. Payment of an account payable B. Purchasing office equipment for cash C. An owner investment of cash into the business D. Borrowing money from a bank
Which of the following transactions would increase an asset and increase stockholders’ equity? A. Performing a service on account for a customer B. Collecting cash from a customer on an account receivable C. Borrowing money from a bank D. Purchasing supplies on account
What is the first place a transaction is recorded? A. Ledger B. Trial Balance C. Journal D. Account

Which of the following is not a temporary retained earnings account? A. Common Stock B. Salary Expense C. Service Revenue D. Dividends
Which of the following statements is false? A. Dividends are increased by credits. B. Assets are increased by debits. C. Revenues are increased by credits. D. Liabilities are decreased by debits.
The journal entry to record an owner investment of land and a building into the business includes a A. debit to land and a credit to building B. debit to land and a credit to common stock C. debit to common stock and a credit to building D. debit to building and a debit to common stock
The journal entry to record the purchase of supplies on account consists of a A. debit to supplies and a credit to accounts payable. B. credit to supplies and a debit to cash. C. debit to supplies expense and a credit to supplies. D. credit to supplies and a debit to accounts payable.
If the debit amount of an entry to record the purchase of supplies on account is not posted: A. Liabilities will be understated B. Expenses will be overstated C. Assets will be understated D. Stockholders’ equity will be understated
The journal entry to record a payment on account will include a A. debit to accounts payable and a credit to retained earnings B. debit to cash and a credit to expenses C. debit to accounts payable and a credit to cash D. debit to expenses and a credit to cash
If the credit amount of an entry to record the payment of an account payable was not posted: A. Liabilities will be understated B. Expenses will be understated C. Stockholders’ equity will be overstated D. Assets will be overstated

A. Supplies D. Supplies Accounts Payable Accounts Receivable Cash Cash B. Supplies E. Supplies Cash Accounts Payable Accounts Payable Cash C. Supplies Cash

Which of the following lists gives the correct sequence of accounting procedures? A. Ledger, trial balance, journal, financial statements B. Journal, ledger, trial balance, financial statements C. Financial statements, trial balance, ledger, journal D. Financial statements, journal, ledger, trial balance E. Ledger, journal, trial balance, financial statements
On January 1 of the current year, Aladdin Company paid $600 rent to cover six months (January-June). Aladdin recorded this transaction as follows: Prepaid Rent 600 Cash 600 Aladdin Company prepares adjusting entries at the end of each month. Based on these facts, the adjusting entry at the end of January should include A. A credit to Prepaid Rent for $500. B. A debit to Prepaid Rent for $500. C. A credit to Prepaid Rent for $100. D. A debit to Prepaid Rent for $100.
Assume the same facts as in the previous problem. Aladdin’s adjusting entry at the end of February should include a debit to Rent Expense in the amount of a. $100. b. $200. c. $400. d. $500.
If an adjusting entry is not made to record the expired portion of a prepaid expense, net income for the period will be A. Understated. B. Overstated. C. Unaffected. D. None of the above.
Solar Company prepares monthly adjusting entries. On March 31, an adjusting entry was made to record salary expense for employee salaries that have been earned in March but which will not be paid until the first week in April. Which of the following

statements best describes the effect of this adjusting entry upon the major elements of the accounting equation? A. Assets are not affected, liabilities are increased, and stockholder’s equity is increased. B. Assets are decreased, liabilities are increased, and stockholder’s equity is decreased. C. Assets are not affected, liabilities are increased, and stockholder’s equity is decreased. D. Assets are decreased, liabilities are not affected, and stockholder’s equity is decreased.

On April 1, 2015, Metro Insurance Company sold a one-year insurance policy to a customer covering the period 4/1/15 to 4/1/16. The amount of the policy was $ and was paid in full by the customer on April 1, 2015. Metro made the following journal entry to record the sale: Cash 960 Unearned Revenue 960 Although nine months have passed, no adjusting entries pertaining to this policy have been recorded by Metro because Metro prepares annual financial statements rather than monthly statements. Based on these facts, the adjusting entry needed by Metro at the end of 2015 is A. Unearned Revenue 720 Insurance Revenue 720 B. Insurance Revenue 240 Unearned Revenue 240 C. Unearned Revenue 240 Insurance Revenue 240 D. Insurance Revenue 720 Unearned Revenue 720
The Unearned Revenue account of Jack Company began 2015 with a normal balance of $5,700 and ended 2015 with a normal balance of $12,500. During 2015, the Unearned Revenue account was debited for $19,900 reflecting revenue that became earned in
1. Based on these facts, how much cash was received and credited to Unearned Revenue in 2015? A. $19, B. $44, C. $33, D. $26,
What is the effect on the financial statements of recording depreciation on plant assets? A. Net income, assets, and stockholder’s equity are all decreased.

C. No revenue should be recognized until the final game is completed. D. None of the $400 should be recognized as revenue unless the team makes the playoffs.

First Bank made a 6-month loan to a local business. When does First Bank recognize interest revenue on this loan? A. When the loan is made B. When the interest is collected C. Only at the maturity of the note D. As time goes by
Best Electronics sold a large television set for $3,500. In addition, the customer purchased a 3-year service contract for an additional $300. How should Best Electronics report these amounts in its income statement? A. Report revenue of $3,800 at the time of sale. B. Report revenue of $3,500 at the time of sale and spread the $300 revenue over the three years covered by the service contract. C. Report revenue as it is collected in cash. D. Defer the entire amount ($3,800) and report it as revenue when the service period has expired.
Revenue generally is considered earned by an enterprise when A. The customer places the order. B. The customer receives the goods. C. The customer makes payment. D. The customer remits a letter of satisfaction.