(Test Bank) Survey Of Accounting

Edmonds,Edmonds,Olds,Mcnair,Tsay, 6

Business

Test Bank

6th Edition

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Test Bank for Survey Of Accounting, The downloadable file consists of 762 pages, and the total size of the file is 3.13 MB. Purchase now only for highly discounted price.

Author(s): Edmonds, Edmonds, Olds, Mcnair, Tsay

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Version 1 1 Test Bank for Survey of Accounting, 6e Thomas Edmonds, Christopher Edmonds, Olds, McNair, Tsay (All Chapters Answers at the end of each chapter) Chapter 1 1) Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States? A) Securities and Exchange Commission B) U.S. Congress C) International Accountin g Standards Board D) Financial Accounting Standards Board 2) The Heritage Company is a manufacturer of office furniture. Which term best describes Heritage's role in society? A) Business B) Regulatory agency C) Consumer D) Reso urce owner 3) Which resource providers lend financial resources to a business with the expectation of repayment with interest? A) Consumers B) Creditors C) Investors D) Owners 4) Which type of accounting information is intended to satisfy the needs of external users of accounting information? Version 1 2 A) Cost accounting B) Managerial accounting C) Tax accounting D) Financial accounting 5) Which of the following is false regarding managerial accounting information? A) It is often used by investors. B) It is more detailed than financial accounting information. C) It can include nonfinancial information. D) It focuses on divisiona l rather than overall profitability. 6) Financial accounting standards are known collectively as GAAP. What does that acronym stand for? A) Generally Accepted Accounting Principles B) Generally Applied Accounting Procedures C) Go vernmentally Approved Accounting Practices D) Generally Authorized Auditing Principles 7) International accounting standards are formulated by the IASB. What does that acronym stand for? A) Internationally Accepted Standards Board B) International Accounting Standards Board C) International Accountability Standards Bureau D) International Accounting and Sustainability Board Version 1 3 8) Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden Wheel s. Jack transferred $650,000 of the cash that he borrowed to the store on the first day of the year. How many reporting entities exist in this scenario? A) One reporting entity B) Two reporting entities C) Three reporting entities D) Four reporting entities 9) Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden Wheels. Jack transferred $650,000 of the cash he borrowed to Wooden Wheels on the first day of the year. Which of the following appropri ately reflects the cash transactions between these reporting entities? Option Jack Henry Wooden Wheels Walt Bank A. $ 150,000 increase $ 650,000 increase $ 800,000 decrease B. $ 800,000 increase $ 650,000 increase $ 150,000 decrease C. $ 800,000 decrease $ 800,000 increase $ 650,000 decrease D. $ 650,000 increase $ 150,000 increase $ 800,000 decrease A) Option A B) Option B C) Option C D) Option D 10) Ellen Gatsby and her siblings, Ben and Sarah, started Gatsby Company when they each invested $100,000 in the company. After the investments there will be Version 1 4 A) One reporting entity B) Two reporting entities C) Three reporting entities D) Four reporting entities 11) Which of the following is an accurate definition of the term “asset?” A) An obligation to creditors B) A resource that will be used to produce revenue C) A transfer of wealth from the business to its stockholders D) A sacrifice incurred from o perating the business 12) Which of the following is (are) source(s) of assets to a business? A) Creditors B) Investors C) Operations D) All the answers represent sources of assets. 13) If total assets decrease, th en which of the following statements is true? A) Liabilities must increase and retained earnings must decrease. B) Common stock must decrease and retained earnings must increase. C) Liabilities, common stock, or retained earnings must decrease. D) Liabilities, common stock, or retained earnings must increase. 14) Which of the following statements about liabilities is true? Version 1 5 A) They represent obligations to repay debts. B) They may increase when assets increase. C) They are found on the claims side of the accounting equation. D) All of the answers are characteristics of liabilities. 15) Which term describes assets generated through operations that have been reinvested into the business? A) Liabil ity B) Dividend C) Common stock D) Retained earnings 16) Which of the following is an accurate depiction of the accounting equation? A) Assets = Liabilities + Common Stock + Retained Earnings B) Assets = Liabilities + Common Stock − Expenses C) Assets = Liabilities + Retained Earnings − Dividends D) Assets = Liabilities + Common Stock + Dividends 17) Which term describes a distribution of the business ’s assets back to the owners of the business? A) Liability B) Dividend C) Retained earnings D) Common stock Version 1 6 18) Finn Company reported assets of $1,000 and stockholders ’ equity of $600. What amount will Finn report for liabilities? A) $400 B) $600 C) $1 ,600 D) Cannot be determined 19) Which of the following items is an example of revenue? A) Cash received from a bank loan B) Cash received from investors from the sale of common stock C) Cash received from customers at the time services were provided D) Cash received from the sale of land for its original selling price 20) Which of the following is not an element of the financial statements? A) Net income B) Revenue C) Assets D) Cash 21) The balance sheet of the Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, what is the amount of retained earnings? A) $7,000. B) $57,000. C) $13,000. D) $87,0 00. Version 1 7 22) Stosch Company's balance sheet reported assets of $82,000, liabilities of $23,000 and common stock of $20,000 as of December 31, Year 1. If Retained Earnings on the balance sheet as of December 31, Year 2, amount to $50,000 and Stosc h paid a $22,000 dividend during Year 2, then the amount of net income for Year 2 was which of the following? A) $11,000 B) $33,000 C) $39,000 D) $22,000 23) Stosch Company's balance sheet reported assets of $40,000, liabilities of $15,000 and common stock of $12,000 as of December 31, Year 1. If Retained Earnings on the balance sheet as of December 31, Year 2, amount to $18,000 and Stosch paid a $14,000 dividend during Year 2, then the amount of net income for Year 2 was which o f the following? A) $17,000 B) $19,000 C) $13,000 D) $21,000 24) Hazeltine Company issued common stock for $200,000 cash. As a result of this event, which of the following statements is true? A) Assets increased. B) St ockholders ’ equity increased. C) Claims increased. D) Assets, claims, and stockholders ’ equity all increased. 25) If Ballard Company reported assets of $500 and liabilities of $200, Ballard's stockholders' equity equals: Version 1 8 A) $300. B) $500. C) $700. D) Cannot be determined. 26) If a company's total assets increased while liabilities and common stock were unchanged, then which of the following statements is true? A) Revenues were greater than expenses. B) Retained earnings were less than net income during the period. C) No dividends were paid during the period. D) The company must have purchased assets with cash. 27) Li Company paid cash to purchase land. As a result of this accounting event, which of the following statements is true? A) Total assets decreased. B) Total assets were unaffected. C) Total stockholders ’ equity decreased. D) Both assets and total stockholders ’ equity decreased. 28) Wyatt Company was formed on January 1, Year 1, when it acquired $50,000 cash from issuing common stock. Which of the following shows the impact of this transaction on Wyatt ’s accounting equation? Assets = Liabilities + Stockholders’ Equity A. +/− n/a n/a B. + n/a + Version 1 9 C. − n/a − D. + + n/a A) Option A B) Option B C) Option C D) Option D 29) Wing Company borrowed $70,000 cash from Metropolitan Bank. Which of the following shows the impact of this transaction on Wing ’s accounting equation? Assets = Liabilities + Stockholders’ Equity A. +/− n/a n/a B. + n/a + C. − n/a − D. + + n/a A) Option A B) Option B C) Option C D) Option D 30) Wing Company provided services for $30,000 cash. Which of the following shows the impact of this transaction on Wing ’s accounting equation? Assets = Liabilities + Stockholders’ Equity A. +/− n/a n/a B. + n/a + Version 1 10 C. − n/a − D. + + n/a A) Option A B) Option B C) Option C D) Option D 31) Wing Company paid $20,000 cash in salaries to its employees. Which of the following shows the impact of this transaction on Wing ’s accounting equation? Assets = Liabilities + Stockholders’ Equity A. +/− n/a n/a B. + n/a + C. − n/a − D. + + n/a A) Option B B) Option A C) Option C D) Option D 32) Wing Company paid $5,000 cash to purchase land. Which of the following shows the impact of this transaction on Wing ’s accounting equation? Assets = Liabilities + Stockholders’ Equity A. +/− n/a n/a B. + n/a + Version 1 11 C. − n/a − D. + + n/a A) Option A B) Option B C) Option C D) Option D 33) Turner Company reported assets of $20,000 (including cash of $9,000), liabilities of $8,000, common stock of $7,000, and retained earnings of $5,000. Based on this information, what can be concluded? A) 25% of Turner's assets are the result of prior earnings. B) $5,000 is the maximum dividend that can be paid to shareholders. C) 40% of Turner's assets are the result of borrowing from creditors. D) 25% of Turner's assets are from prior earnings, $5,000 is the maximum possible dividend, and 40% of assets are the result of borrowed resources. 34) At the time of liquidation, Fairchild Company reported assets of $200,000, liabilities of $120,000 , common stock of $90,000 and retained earnings of ($10,000). What amount of Fairchild's assets are the shareholders entitled to receive? A) $200,000 B) $80,000 C) $90,000 D) $100,000 35) As of December 31, Year 2, Bristol Compan y had $100,000 of assets, $40,000 of liabilities and $25,000 of retained earnings. What percentage of Bristol's assets were obtained from investors? Version 1 12 A) 60% B) 25% C) 40% D) 35% 36) On January 1, Year 2, Chavez Company had beginn ing balances as follows: Assets = $12,500 Liabilities = $ 4,500 Common Stock = $ 3,000 During Year 2, Chavez paid dividends to its stockholders of $2,000. Given that ending retained earnings was $6,000, what was Chavez's net income for the Year 2? A) $3,000 B) $5,000 C) $7,000 D) $2,000 37) The trans action, "provided services for cash," affects which two accounts? A) Revenue and Expense B) Cash and Revenue C) Cash and Expense D) Cash and Dividends 38) During the year, Millstone Company earned $6,500 of cash revenue, paid ca sh dividends of $1,000 to stockholders and paid $4,000 for cash expenses. Liabilities were unchanged. Which of the following accurately describes the effect of these events on the elements of the company's financial statements? Version 1 13 A) Assets increased by $6,500. B) Assets increased by $1,500. C) Stockholders ’ equity increased by $2,500. D) Assets increased by $5,500. 39) At the end of Year 2, retained earnings for the Baker Company was $3,550. Revenue earned by the company in Year 2 was $3,800, expenses paid during the period were $2,000, and dividends paid during the period were $1,400. Based on this information alone, what was the amount of retained earnings at the beginning of Year 2? A) $7,600 B) $3,150 C) $1,750 D) $3,950 40) At the end of Year 2, retained earnings for the Baker Company was $3,500. Revenue earned by the company in Year 2 was $1,500, expenses paid during the period were $800, and dividends paid during the period were $500. Based on this information alone, what was the amount of retained earnings at the beginning of Year 2? A) $3,300 B) $3,700 C) $2,800 D) $3,800 41) Which of the following is not an asset use transaction? A) Paying cash dividends B) Paying cash expenses C) Paying off the principal of a loan D) Paying cash to purchase land Version 1 14 42) Borrowing cash from the bank is an example of which type of transaction? A) Asset source B) Claims exchange C) Asset use D) Asset exchange 43) Which of the following could describe the effects of an asset exchange transaction on the accounting equation? Assets = Liabilities + Stockholders’ Equity A. +/− n/a n/a B. + n/a + C. − n/a − D. + + n/a A) Option A B) Option B C) Option C D) Option D 44) Which of the following does not describe the effects of an asset use transaction on the accounting equation? Balance Sheet Income Statement Statement of Cash Flow Assets = Liabilities + Equity Revenue − Expense = Net Income A. − = − + NA NA − NA = NA −OA B. − = − + NA NA − NA = NA −FA Version 1 15 C. − = NA + − NA − + = − −OA D. NA = + + NA + − + = − NA A) Option A B) Option B C) Option C D) Option D 45) Which of the following cash transactions results in an increase to one asset account and a decrease to another asset account? A) Borrowing cash from a bank B) Issuing common stock for cash C) Purchasing land for cash D) Providing ser vices for cash 46) Which of the following items appears in the investing activities section of the statement of cash flows? A) Cash inflow from interest revenue. B) Cash inflow from the issuance of common stock. C) Cash outflow f or the payment of dividends. D) Cash outflow for the purchase of land. 47) Jackson Company had a net increase in cash from operating activities of $10,500 and a net decrease in cash from financing activities of $3,850. If the beginning and ending cash balances for the company were $4,900 and $10,500, respectively, what is the net cash change from investing activities?