Final Review Part 1 Flashcards
At the beginning of January, 2014, Wise Company had a balance in its Retained Earnings account totaling $42,000. At the end of the year, the balance totaled $47,000. If $11,000 of dividends were declared and paid during the year, how much was net income during 2014? A. $5,000 B. $16,000 C. $53,000 D. $6,000
47,000-42,000 = 5000
11,000 + 5000 = 16000
B. $16,000
For what purpose is the current ratio used?
A.To assess profitability
B.To determine the composition of a company’s assets
C.To measure the short-term ability of a company to pay its obligations
D.To measure the profitability of operations
C. To measure the short-term ability of a company to pay its obligations
Tatum Enterprises' total assets decreased by $11,000 during the year. Its stockholders' equity increased by $12,000 during the same period. Net income totaled $8,000 during the year. What occurred to the company's total liabilities during the year? A. $23,000 decrease B. $1,000 increase C. $15,000 decrease D. $31,000 decrease
Assets (-11,000) = total labilites (-12,000) + stockholders’ equity (+12,000)
A. $23,000 decrease
To be relevant, what characteristic must accounting information exhibit?
A. It must be capable of making a difference in a decision.
B. It must be compared with other companies.
C. It must be verifiable.
D. It must be based on the U.S. monetary unit.
A. It must be capable of making a difference in a decision.
What is the role of the FASB?
A. To regulate U.S. financial markets and accounting standard-setting bodies
B. To determine auditing standards in the U.S.
C. To establish accounting standards in the U.S.
D. To regulate foreign companies that do business in the U.S.
C. To establish accounting standards in the U.S.
Which of the following has the advantage of enabling a business to raise funds most easily? A. Entity B. Sole proprietorship C.Corporation D.Partnership
C.Corporation
Which of the following is meaningful comparison to assess a company’s profitability?
A. An intracompany comparison of net income for a two-year period
B.Industry-average comparison of total assets
C. Year-to-year comparisons of liabilities with a competitor in the same industry
Incorrect
D. Intercompany comparisons of earnings per share for a two-year period
A. An intracompany comparison of net income for a two-year period
Which of the following is not considered an external user of accounting information? A. Finance directors B. Regulatory agencies C. Creditors D. Stockholders
A. Finance directors
Which of the following items will be reported on the statement of retained earnings?
A. Cash received from customers
B. Amounts received from issuing stock
C. Amounts owed to creditors
D. Income earned by a company but not distributed as dividends
D. Income earned by a company but not distributed as dividends
Which one of the following is not the correct date format for the respective financial statement?
A. A balance sheet as of May 31, 2014
B. A statement of retained earnings as of May 31, 2014
C. An income statement for the month ended May 31, 2014
D. A statement of cash flows for the month ended May 31, 2014
B. A statement of retained earnings as of May 31, 2014
Which one of the following is true?
A. Intangible assets are current assets that do not have physical substance.
B. Obligations expected to be paid after one year are classified as expenses.
C. Current assets are assets that a company expect to convert to cash or use up within the longer of one year or its operating cycle.
D.Property, plant, and equipment are assets with relatively long useful lives that are held for resale purposes.
C. Current assets are assets that a company expect to convert to cash or use up within the longer of one year or its operating cycle.
Which one of the following represents the correct order of the three business activities for a new company? A. Financing, investing, operating B. Investing, financing, operating C. Operating, investing, financing D.Financing, operating, investing
A. Financing, investing, operating
Which one of the following statements is true concerning the interrelationships of financial statements?
A. Net income on the income statement equals the cash balance at the end of the period on the balance sheet.
B. The ending balance of retained earnings on the statement of retained earnings is equal to net income on the income statement.
C.The amount of net income on the income statement is added to the beginning retained earnings balance on the statement of retained earnings.
D. The amount of cash used during the period on the statement of cash flows is equal to total expenses on the income statement.
C.The amount of net income on the income statement is added to the beginning retained earnings balance on the statement of retained earnings.
Which statement describes the periodicity assumption?
A. The life of a business can be divided into artificial times periods for which useful reports can be prepared.
B. The business will remain in operation for the foreseeable future.
C. Every economic unit can be separately identified and accounted for.
D. Financial reports are issued on a timely basis for decision-making.
A. The life of a business can be divided into artificial times periods for which useful reports can be prepared.
Costs of Goods Sold is what?
Not separately presented on the balance sheet.
Accounts Payable is what?
Current Liabilities
Patents are what?
Intangible Assets
Common Stock is what?
Stockholders’ Equity
Supplies are considered what?
Current Assets
Service Revenue is considered what?
Not separately presented on the balance sheet.
Advertising Expense is considered what?
Not separately presented on the balance sheet.
Salaries payable is considered what?
Current Liabilities
Income Taxes Payable is considered what?
Current Liabilities
Invenotries are considered what?
Current Assets
Accounts Receivable is considered what?
Current Assests
Prepaid rent is considered what?
Current Assests
