Acc 207 quiz 1

Which of the following is not a satisfactory statement of the accounting equation?
A.
assets = shareholders' equity - liabilities
B.
assets - liabilities = shareholders' equity
C.
assets - shareholders' equity = liabilties
D.
assets = liabilities + shareh

A.assets = shareholders' equity - liabilities

If total liabilities decreased by $75,000 and shareholders' equity increased by $15,000 during the same period of time, then total assets must change by what amount and direction during the same period?
A. $60,000 increase
B. $90,000 increase
C. $60,000 d

C. $60,000 decrease

The best definition of assets is:
A. cash owned by the company
B. collections of resources belonging to the company net of the claims to those resources
C. the owners' investment in the business
D. resources owned by the company that have future benefit t

D. resources owned by the company that have future benefit to the company

Martin Corporation has assets of $4,000,000, common stock of $1,500,000, and retained earnings of $600,000. What are the creditors' claim on the the company's assets?
A. $2,100,000
B. $2,000,000
C. $6,100,000
D. $1,900,000

D. $1,900,000

Benedict Company compiled the following accounts as of December 31: Service revenue $1,200,000; Common stock $450,000; Equipment $500,000; Operating expenses $650,000; Dividends $100,000; Accounts receivable $400,000; Accounts payable $400,000; Retained e

B. $1,050,000

Ending retained earnings for a period is equal to beginning
A. retained earnings - net income - dividends
B. retained earnings + net income - dividends
C. retained earnings - net income + dividends
D. retained earnings + net income + dividends

B. retained earnings + net income - dividends

Which of the following statements is true?
A. amounts received from issued stock are reported on the income statement
B. amounts paid out as dividends are not expenses
C. amounts paid out as dividends are reported on the income statement
D. amounts receiv

B. amounts paid out as dividends are not expenses

An income statement shows:
A. revenues, liabilities and stockholders' equity at a specific point of time
B. expenses and dividends paid by a company over a period of time
C. assets, liabilities and stockholders' equity at a specific point in time
D. reven

D. revenues, expenses and net income resulting from operations over a period of time

The account called "supplies" is an asset account that represents the supplies that have been purchased by a company but not yet consumed in the operation of the business.
The account called supplies expense is used for (shows) what?
A.
Supplies used in o

A.
Supplies used in operations during the period reported on the income statement

On a classified balance sheet, companies usually list current assets:
A. in alphabetical order
B. with the largest dollar amounts first
C. in the order of acquisition
D. in the order in which they are expected to be converted to cash

D. in the order in which they are expected to be converted to cash

Accounts receivable are current assets which represent:
A. amounts due to a company's vendors
B. amounts due to a company's customers
C. amounts due from a company's customers
D. amounts due from a company's vendors

C. amounts due from a company's customers

Accounts payable, accrued salaries and wages, current maturities of long-term debt, unearned revenue, and income taxes payable are examples of:
A. current assets
B. current liabilities
C. intangible assets
D. long-term liabilities

B. current liabilities

For 2019 Kuhlman Corporation reported sales of $400,000 and net income of $36,000 and average common shares outstanding of 10,000. There were no preferred dividends. What was the 2019 earnings per share (EPS)?
A. $43.60 per share
B. $36 per share
C. $3.60

C. $3.60 per share

The relationship between current assets and current liabilities is important in evaluating a company's:
A. profitability
B. solvency
C. market value
D. liquidity

D. liquidity

Amce Company's debt to assets ratio has increased from 40% at December 31, 2018 to 80% at December 31, 2019. How do you interpret this change?
A. The increase in the debt to asset ratio suggests the company is more solvent and less risky.
B. Liquidity has

C. Solvency as measured by the debt to asset ratio shows increasing debt relative to assets and this implies more risk.

Generally accepted accounting principles (GAAP) are:
A. guidelines used to resolve ethical dilemmas.
B. a set of standards and rules that are recognized as a general guide for financial reporting.
C. fundamental truths derived from the laws of nature.
D.

B. a set of standards and rules that are recognized as a general guide for financial reporting.

What is the primary criterion by which accounting information can be judged?
A.
consistency
B.
predictive value
C.
usefulness for decision-making by users of the information
D.
comparability

C.
usefulness for decision-making by users of the information

What organization studies and issues U.S. financial accounting and reporting standards?
A. the Internal Revenue Service (IRS)
B. the Financial Accounting Standards Board (FASB)
C. the Accounting Standards Board (ASB)
D. none of the above.

B. the Financial Accounting Standards Board (FASB)

To satisfy __________________, a company should report all information that would make a difference to financial statement users.
A. the full disclosure principle
B. the working capital formula
C. the cost constraint
D. the historic cost principle

A. the full disclosure principle

Information that is complete, neutral, and free from error is characterized as:
A. faithful representation
B. materiality
C. the operating cycle
D. historic cost

A. faithful representation