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Exam 1: An Introduction to Accounting

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Question 51

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Which of the following is not an element of the financial statements?

A) Net income
B) Revenue
C) Assets
D) Cash

E) C) and D)
F) B) and D)

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Question 52

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What does negative retained earnings indicate?

A) The company has lost some or all of the owners' investment
B) The company experienced a large cash outflow during the year
C) The company's liabilities are greater than its assets
D) The company's common stock is negative

E) B) and C)
F) All of the above

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Question 53

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Indicate whether each of the following statements about accounting information is true or false. ________ a)Financial accounting is primarily intended to satisfy the information needs of internal stakeholders. ________ b)Managerial accounting information includes financial and nonfinancial information. ________ c)The accounting information intended to satisfy the needs of a company's employees is managerial accounting information. ________ d)GAAP requires that companies adhere to financial accounting standards. ________ e)Managerial accounting information is usually less detailed than financial accounting information.

Which type of accounting information is intended to satisfy the needs of external users of accounting information?

Glavine Company repaid a bank loan with cash.The cash flow from this event should be reported as:

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues. 4) Paid expenses of $250. "5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) " 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. -The amount of assets on Packard's Year 2 balance sheet is

[The following information applies to the questions displayed below.] Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) 1) Acquired $6,000 cash from issuing common stock. 2) Borrowed $4,400 from a bank. 3) Earned $6,200 of revenues. 4) Incurred $4,800 in expenses. "5) Paid dividends of $800. Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.) " 1) Acquired an additional $1,000 cash from the issue of common stock. 2) Repaid $2,600 of its debt to the bank. 3) Earned revenues, $9,000. 4) Incurred expenses of $5,500. 5) Paid dividends of $1,280. -What was the amount of retained earnings that will be reported on Lexington's balance sheet at the end of Year 1?

Which of the financial statements are required by the Generally Accepted Accounting Principles (GAAP) ?

Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

Dividends paid by a company are reported on which of the following financial statement(s) ?

[The following information applies to the questions displayed below.] The financial statements of Calloway Company prepared at the end of the current year contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?; Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500. -Based on this information,what was the amount of expenses reported on Calloway's income statement for the current year?

Li Company paid cash to purchase land.What happened as a result of this business event?

Which of the following could describe the effects of an asset exchange transaction on a company's total assets,total liabilities and total equity? $\begin{array}{|c|c|c|c|c|c|}\hline & \text { Assets } & = & \text { Liab. } & + & \text { Equity } \\\hline \mathrm{A} & \mathrm{NA} & = & \mathrm{NA} & + & \mathrm{NA} \\\hline \mathrm{B} . & + & = & \mathrm{NA} & + & + \\\hline \mathrm{C} . & - & = & \mathrm{NA} & + & - \\\hline \mathrm{D} . & \mathrm{NA} & = & \mathrm{NA} & + & +- \\\hline\end{array}$

Robertson Company paid $1,850 cash for rent expense.What happened as a result of this business event?

Liabilities are not a source of assets for a business.

As of December 31,Year 1,Mason Company had $500 cash.During Year 2,Mason earned $1,200 of cash revenue and paid $800 of cash expenses.What is the amount of cash that will be reported on the balance sheet at the end of Year 2?

Which of the following is an example of revenue?

Indicate whether each of the following statements about retained earnings is true or false. ________ a)A dividend paid to stockholders decreases retained earnings. ________ b)Issuing common stock for cash increases retained earnings. ________ c)The amount of net income for a period must equal retained earnings. ________ d)The purchase of a truck decreases retained earnings. ________ e)Net income increases retained earnings.

Perez Company paid a $300 cash dividend.Which of the following accurately reflects how this event affects the company's financial statements? $\begin{array} { | l | c | l | c | c | c | c | c | } \hline & \text { Assets } & = & \text { Liabilities } & + & \begin{array} { c } \text { Common } \\\text { Stack }\end{array} & + & \begin{array} { c } \text { Retained } \\\text { Earnings }\end{array} \\\hline \text { A } & 300 & = & 300 & + & \text { NA } & + & \text { NA } \\\hline \text { B. } & ( 300 ) & = & \text { NA } & + & ( 300 ) & + & \text { NA } \\\hline \text { C } & ( 300 ) & = & \text { NA } & + & \text { NA } & + & ( 300 ) \\\hline \text { D. } & 300 & = & \text { NA } & + & \text { NA } & + & 300 \\\hline\end{array}$