Acc 212 First Exam

Front 1

External users of accounting information include present and potential stockholders, bankers and other creditors, and management.

Back 1

False

Front 2

The amount of earnings distributed to stockholders can be found in the income statement.

Back 2

False

Front 3

When an entity's revenues exceed its expenses for a period of time, the entity will report a net loss.

Back 3

False

Front 4

If a company prepares a statement of stockholders' equity, net income is added to retained earnings on this statement.

Back 4

True

Front 5

Because market values are subjective, many assets are carried on the balance sheet at their acquisition cost.

Back 5

True

Front 6

The going concern assumption infers that a company will continue to operate indefinitely.

Back 6

True

Front 7

Materiality deals with the size of an error in accounting information.

Back 7

True

Front 8

Current assets, other than cash, will be converted into cash or assigned to expenses within a company's operating cycle.

Back 8

True

Front 9

Three common categories of long-term assets are: 1) property, plant, and equipment, 2) investments, and 3) intangibles.

Back 9

True

Front 10

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

Back 10

True

Front 11

Investing activities are needed to provide the funds to start a business.

Back 11

False

Front 12

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

Back 12

False

Front 13

The initial step in the recording process is posting.

Back 13

False

Front 14

Under the cost principle, assets are always carried at their current market value.

Back 14

False

Front 15

Every accounting transaction affects both the balance sheet and the income statement.

Back 15

False

Front 16

A debit entry increases assets, decreases liabilities, or decreases owners' equity.

Back 16

True

Front 17

The normal balance of the dividends account is a credit.

Back 17

False

Front 18

The equality of debits and credits in a trial balance means that all entries were correctly posted to the accounts.

Back 18

False

Front 19

Which one of the following events involves a liability for a business?
a. Loans to be repaid to banks
b. Inventories purchased for cash
c. Amounts invested by the owners
d. Stock sold to the general public

Back 19

A. Loans to be repaid to banks

Front 20

Chance Company reports the following information at December 31, 2010:
Revenue $140,000
Cash $30,000
Accounts Payable 40,000
Dividends 10,000
Expenses 85,000

What is Chance Company's Net Income?
a. $15,000
b. 45,000
c. 55,000
d. 65,000

Back 20

c. $55,000

Front 21

What parties have claim to company's assets?

Back 21

Stockholders and Creditors

Front 22

3 Financial Statements that a potential stockholder might be interested in?

Back 22

1) Statement of RE
2) Balance Sheet
3) Income Statement

Front 23

The accounting equation?

Back 23

A=L+SE

Front 24

Accumulation of net income less dividends paid out?

Back 24

retained earnings

Front 25

Time element of balance sheet?

Back 25

Moment of time

Front 26

Computation of Retained Earnings?

Back 26

RE+NI-D=RE

Front 27

FASB?

Back 27

Financial Accounting Standards Board

Front 28

SEC?

Back 28

Securities and Exchange Commission

Front 29

IRS?

Back 29

Internal Revenue Service

Front 30

Two things we need for financial statements?

Back 30

Relevant and reliable

Front 31

Objective of financial reporting?

Back 31

To provide information for decision-making

Front 32

What determines if an asset is current?

Back 32

One year or less liquidity

Front 33

3 Intangible Assets?

Back 33

Patents, Copyrights, and Long-Term Assets

Front 34

How to find current ratio?

Back 34

CA/CL

Front 35

How quickly asset can be converted to cash?

Back 35

liquidity

Front 36

Gross Margin Formula?

Back 36

S-CGS=GM

Front 37

Profit Margin Formula?

Back 37

GM-SE=PM

Front 38

Includes purchase and sale of long-term assets?

Back 38

Investing Activities

Front 39

Includes raising money to do business, also includes notes, bonds, and long-term liabilities?

Back 39

Financing Activities

Front 40

Includes revenues, expenses, and short-term assets?

Back 40

Operating Activities

Front 41

4 Possible Journal Entries?

Back 41

1. Inventory Credit
2. Sales Credit
3. Cash Debit
4. Accounts Payable Credit

Front 42

A list of all accounts that just proves that debits equal credits?

Back 42

trial balance