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Exam 1: Introducing Accounting in Business

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Question 51

True/False

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The internal operating functions of businesses include research and development, distribution and human resources.

A) True
B) False

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Question 52

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The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called a(n) :

A) Balance sheet
B) Statement of retained earnings
C) Statement of cash flows
D) Income statement
E) Statement of financial position

F) B) and D)
G) A) and E)

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Question 53

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Identify the risk and the return in each of the following examples. A. Investing $500 in a CD at 4.5% interest B. Placing a $100 bet on an NBA game C. Investing $10,000 in Microsoft stock D. Borrowing $20,000 in student loans

Expenses decrease retained earnings and are the costs acquired to earn revenues.

If Beginning Retained Earnings was $184,300, the company distributed $46,000 in dividends and Ending Retained Earnings was $345,000, what was the net income for the period?

Prepare a December 31 balance sheet in proper form for Surety Insurance from the following items and amounts:

Describe the three types of activities reported on the statement of cash flows.

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n) :

The financing functions of a business include:

The income statement reports all of the following except:

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the amount of cash or cash-equivalent given in exchange is the:

Chuck Taylor invested $175,000 in cash in Fast-Forward. This amount would be reported in the statement of cash flows under financing activities.

__________________________ is the recording of transactions or events and is just one part of accounting.

Accounting is a ______________________ that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

Fast-Forward has net income of $18,955 and assets at the beginning of the year of $200,000. Its assets at the end of the year total $246,000. Compute its return on assets.

Beginning Assets were $437,600, Beginning Liabilities were $262,560, Common Stock sold during the year totaled $45,000, Revenue for the year was $414,250, Expenses for the year were $280,000, Dividends declared was $22,700, and Ending Liabilities is $$350,000. What are the Ending Assets for the year?

Which of the following statements is true of external information users?

An Asset is:

Operating activities include long-term borrowing and repaying cash from lenders and cash investments by owners or dividends to the owner.