Question 1

Annual reports include all,but which of the following?

Accepted Answer

A) A letter from corporate management 
B) Footnotes that explain many elements of the financial statements in more detail 
C) The report of the independent registered public accounting firm (auditors) 
D) Statements by both management and auditors on the company's internal controls 
E) The company's handbook for new employees 
A) A letter from corporate management 
B) Footnotes that explain many elements of the financial statements in more detail 
C) The report of the independent registered public accounting firm (auditors) 
D) Statements by both management and auditors on the company's internal controls 
E) The company's handbook for new employees

Question 2

The auditor's opinion is included with the annual report issued by the corporation.

Accepted Answer

A) True 
 B)False

Question 3

The auditor's opinion includes all except which of the following statements?

Accepted Answer

A) The financial statements are in conformity with generally accepted accounting principles. 
B) The financial statements are the responsibility of the company's management. 
C) The audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements. 
D) The auditor's responsibility is to express an opinion on the financial statements. 
E) The financial statements are free of any and all misstatements. 
A) The financial statements are in conformity with generally accepted accounting principles. 
B) The financial statements are the responsibility of the company's management. 
C) The audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements. 
D) The auditor's responsibility is to express an opinion on the financial statements. 
E) The financial statements are free of any and all misstatements.

Question 4

Inventory is goods held by a company for the purpose of sale to customers,and is considered a liability on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

Manziel Inc.is a sole proprietorship owned by Chris Herold.Chris acquired $9,000 worth of equipment for use in his store.He will pay for the equipment in 30 days.The effect of this transaction on Manziel would be to

Accepted Answer

A) increase the equipment account by $9,000 and increase the accounts payable account by $9,000. 
B) increase the equipment account by $9,000 and decrease the accounts payable account by $9,000. 
C) increase the equipment account by $9,000 and increase the capital account by $9,000. 
D) This would not change any account because the equipment has not been paid for. 
E) This would not change any account because this transaction does not affect Manziel Inc. 
A) increase the equipment account by $9,000 and increase the accounts payable account by $9,000. 
B) increase the equipment account by $9,000 and decrease the accounts payable account by $9,000. 
C) increase the equipment account by $9,000 and increase the capital account by $9,000. 
D) This would not change any account because the equipment has not been paid for. 
E) This would not change any account because this transaction does not affect Manziel Inc.

Question 6

The owners of a corporation have limited liability.

Accepted Answer

A) True 
 B)False

Question 7

What accounts are affected by an initial investment of cash by an owner into his business?

Accepted Answer

A) Cash and Owner payable 
B) Cash and Long-term debt payable 
C) Owner payable and Accounts payable 
D) Cash and Capital 
E) Cash and Retained earnings 
A) Cash and Owner payable 
B) Cash and Long-term debt payable 
C) Owner payable and Accounts payable 
D) Cash and Capital 
E) Cash and Retained earnings

Question 8

Kristine Parsons owns 2,000 shares of $1.00 par value capital stock of Garments 4 You.Kristine sold 100 of these shares to Beverly Plito for $200.The effect of this transaction on the accounts of Garments 4 You would be to

Accepted Answer

A) increase the capital stock account by $1,800 and increase the cash account by $1,800. 
B) increase the capital stock account by $200,increase the paid-in capital in excess of par account by $2,000,and increase the cash account by $1,800. 
C) decrease the capital stock account by $1,800 and increase the paid-in capital in excess of par account by $1,800. 
D) increase the capital stock account by $1,800 and decrease the paid-in capital in excess of par account by $1,800. 
E) There is no effect from this transaction on the accounts of Garments 4 You. 
A) increase the capital stock account by $1,800 and increase the cash account by $1,800. 
B) increase the capital stock account by $200,increase the paid-in capital in excess of par account by $2,000,and increase the cash account by $1,800. 
C) decrease the capital stock account by $1,800 and increase the paid-in capital in excess of par account by $1,800. 
D) increase the capital stock account by $1,800 and decrease the paid-in capital in excess of par account by $1,800. 
E) There is no effect from this transaction on the accounts of Garments 4 You.

Question 9

The accuracy and truthfulness of the financial statements is the responsibility of the

Accepted Answer

A) external auditors. 
B) stockholders. 
C) management. 
D) staff accountants. 
E) external auditors and the staff accountants. 
A) external auditors. 
B) stockholders. 
C) management. 
D) staff accountants. 
E) external auditors and the staff accountants.

Question 10

Which of the following statements is false?

Accepted Answer

A) Most states require stock certificates to have some dollar amount printed on them. 
B) Additional paid-in capital is part of total liabilities on the balance sheet. 
C) The ultimate responsibility for management of a company is delegated by stockholders to professional managers. 
D) Typically,stock is sold for an amount above par value. 
E) An advantage of the corporate form of organization is the separation of ownership and management. 
A) Most states require stock certificates to have some dollar amount printed on them. 
B) Additional paid-in capital is part of total liabilities on the balance sheet. 
C) The ultimate responsibility for management of a company is delegated by stockholders to professional managers. 
D) Typically,stock is sold for an amount above par value. 
E) An advantage of the corporate form of organization is the separation of ownership and management.

Question 11

Jakey Technologies has 1,000 folders in inventory that cost $2.00 each.The company's supplier announced that,effective immediately,all future folders will cost $2.20 each.Jakey Technologies should

Accepted Answer

A) increase the inventory account by $200 and increase the capital account by $200. 
B) increase the inventory account by $200 and decrease the capital account by $200. 
C) increase the inventory account by $200 and increase the accounts payable account by $200. 
D) increase the inventory account by $200 and decrease the accounts payable account by $200. 
E) There is no effect from the price change on the accounts of Jakey Technologies. 
A) increase the inventory account by $200 and increase the capital account by $200. 
B) increase the inventory account by $200 and decrease the capital account by $200. 
C) increase the inventory account by $200 and increase the accounts payable account by $200. 
D) increase the inventory account by $200 and decrease the accounts payable account by $200. 
E) There is no effect from the price change on the accounts of Jakey Technologies.

Question 12

The two equity accounts that Total Paid-in Capital is split between are

Accepted Answer

A) capital stock at par and owners' equity. 
B) capital stock at par and paid-in capital in excess of par. 
C) capital stock at par and stockholders' equity. 
D) paid-in capital in excess of par and owners' equity. 
E) paid-in capital in excess of par and stockholders' equity. 
A) capital stock at par and owners' equity. 
B) capital stock at par and paid-in capital in excess of par. 
C) capital stock at par and stockholders' equity. 
D) paid-in capital in excess of par and owners' equity. 
E) paid-in capital in excess of par and stockholders' equity.

Question 13

Postal Manufacturing began business on July 1,20X5,by selling 1,000 shares of $10 par value capital stock at $30 per share.The effect of this transaction on Postal Manufacturing would be to

Accepted Answer

A) increase the capital stock at par by $10,000,increase the paid-in capital in excess of par account by $20,000,and increase the cash account by $30,000. 
B) decrease the capital stock at par by $30,000 and increase the cash account by $30,000. 
C) increase the capital stock at par by $30,000 and increase the cash account by $30,000. 
D) decrease the capital stock at par by $10,000,decrease the paid-in capital in excess of par account by $20,000,and increase the cash account by $30,000. 
E) increase paid-in capital in excess of par account by $30,000 and increase the cash account by $30,000. 
A) increase the capital stock at par by $10,000,increase the paid-in capital in excess of par account by $20,000,and increase the cash account by $30,000. 
B) decrease the capital stock at par by $30,000 and increase the cash account by $30,000. 
C) increase the capital stock at par by $30,000 and increase the cash account by $30,000. 
D) decrease the capital stock at par by $10,000,decrease the paid-in capital in excess of par account by $20,000,and increase the cash account by $30,000. 
E) increase paid-in capital in excess of par account by $30,000 and increase the cash account by $30,000.

Question 14

Firelog Company began business on July 1,20X8,by selling 1,000 shares of $1 par value capital stock at $20 per share.The effect of this transaction on Firelog Company would be to

Accepted Answer

A) increase the capital stock at par account by $20,000 and increase the cash account by $20,000. 
B) increase the capital stock at par by $20,000 and decrease the cash account by $20,000. 
C) decrease the capital stock at par by $20,000 and increase the cash account by $20,000. 
D) increase the capital stock at par by $1,000,increase the paid-in capital in excess of par account by $19,000,and increase the cash account by $20,000. 
E) decrease the capital stock at par by $1,000,decrease the paid-in capital in excess of par account by $19,000,and increase the cash account by $20,000. 
A) increase the capital stock at par account by $20,000 and increase the cash account by $20,000. 
B) increase the capital stock at par by $20,000 and decrease the cash account by $20,000. 
C) decrease the capital stock at par by $20,000 and increase the cash account by $20,000. 
D) increase the capital stock at par by $1,000,increase the paid-in capital in excess of par account by $19,000,and increase the cash account by $20,000. 
E) decrease the capital stock at par by $1,000,decrease the paid-in capital in excess of par account by $19,000,and increase the cash account by $20,000.

Question 15

A transaction affects the financial position of an entity and can be reliably recorded in terms of money.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is false?

Accepted Answer

A) Corporations are business organizations created under federal law. 
B) One of the most notable characteristics of a corporation is the limited liability of the owners. 
C) An advantage of corporations over other business entities is the ease of transfer of ownership. 
D) The laws governing corporations vary from state to state. 
E) Individuals can sell stock to each other without corporate involvement. 
A) Corporations are business organizations created under federal law. 
B) One of the most notable characteristics of a corporation is the limited liability of the owners. 
C) An advantage of corporations over other business entities is the ease of transfer of ownership. 
D) The laws governing corporations vary from state to state. 
E) Individuals can sell stock to each other without corporate involvement.

Question 17

Given below are the daily balances in the accounts of Travel Tips,Inc..Assuming only one transaction occurred each day,explain the nature of each transaction from June 1 to June 10.
 \(\begin{array}{l}
\begin{array} {llll} 
&\text { Cash  } &\text { Receivable } \
\text { Bal.  } & \$6,000 & \$3,000 \
\text { June 1 } & 6,000 & 3,000 \
\text { June 2 } & 6,600 & 2,400 \
\text { June 3 } & 5,800 & 2,400 \
\text { June 4 } & 6,900 & 2,400 \
\text { June 5 } & 5,600 & 2,400 \
\text { June 6 } & 5,600 & 2,400 \
\text { June 7 } & 6,100 & 3,700 \
\text { June 8 } & 4,000 & 3,700 \
\text { June 9 } & 3,200 & 3,700 \
\text { Iune 10 } & 3,200 & 3,700
\end{array}

\begin{array} { llll } 
\text { Inventory } & \text { Equipment } \
\$ \$ 8,000 & \$ 7,000 \
8,700 & 7,000 \
8,700 & 7,000 \
8,700 & 7,000 \
8,700 & 7,000 \
8,700 & 9,600 \
8,200 & 9,600 \
8,200 & 7,800 \
8,200 & 7,800 \
9,000 & 7,800 \
9,000 & 9,500
\end{array}

\begin{array} { llll } 
\text { Accounts  Payable } & \text { Owner Capital } \
\$ 4,000 & \$ 20,000 \
4,700 & 20,000 \
4,700 & 20,000 \
3,900 & 20,000 \
3,900 & 21,100 \
5,200 & 21,100 \
4,700 & 21,100 \
4,700 & 21,100 \
4,700 & 19,000 \
4,700 & 19,000 \
4,700 & 20,700
\end{array}

\end{array}\)

Accepted Answer

June 1: Acquired $700 of inventory on cr

Question 18

Mailers Manufacturing,acquired equipment for $19,000.Mailers Manufacturing,paid $6,000 in cash,with the balance due on a note.The effect of this transaction on Mailers Manufacturing,would be to

Accepted Answer

A) increase the equipment account by $19,000,decrease the cash account by $6,000 and increase the notes payable account by $13,000. 
B) increase the equipment account by $19,000,decrease the cash account by $6,000,and decrease the notes receivable by $13,000. 
C) increase the equipment account by $6,000,and decrease the cash account by $6,000. 
D) increase the equipment account by $6,000,decrease the cash account by $6,000,and increase the notes payable account by $13,000. 
E) increase the equipment account by $19,000,and increase the notes payable account by $6,000. 
A) increase the equipment account by $19,000,decrease the cash account by $6,000 and increase the notes payable account by $13,000. 
B) increase the equipment account by $19,000,decrease the cash account by $6,000,and decrease the notes receivable by $13,000. 
C) increase the equipment account by $6,000,and decrease the cash account by $6,000. 
D) increase the equipment account by $6,000,decrease the cash account by $6,000,and increase the notes payable account by $13,000. 
E) increase the equipment account by $19,000,and increase the notes payable account by $6,000.

Question 19

Footnotes are

Accepted Answer

A) included in the audit report. 
B) an integral part of financial statement information. 
C) an appendix to the letter from corporate management. 
D) at the bottom of the report of the independent auditors. 
E) explanatory information in the statement of management's responsibility for preparation of financial statements. 
A) included in the audit report. 
B) an integral part of financial statement information. 
C) an appendix to the letter from corporate management. 
D) at the bottom of the report of the independent auditors. 
E) explanatory information in the statement of management's responsibility for preparation of financial statements.

Question 20

Common stockholders

Accepted Answer

A) upon dissolution are paid the same amount as all creditors. 
B) must purchase all shares directly from the issuing organization. 
C) purchase stock certificates at par value. 
D) have a claim on whatever is left over after all other claimants have been paid upon liquidation. 
E) are also members of the New York Stock Exchange after the purchase of the stock. 
A) upon dissolution are paid the same amount as all creditors. 
B) must purchase all shares directly from the issuing organization. 
C) purchase stock certificates at par value. 
D) have a claim on whatever is left over after all other claimants have been paid upon liquidation. 
E) are also members of the New York Stock Exchange after the purchase of the stock.

Annual reports include all,but which of the following?

The auditor's opinion is included with the annual report issued by the corporation.

The auditor's opinion includes all except which of the following statements?

Inventory is goods held by a company for the purpose of sale to customers,and is considered a liability on the balance sheet.

Manziel Inc.is a sole proprietorship owned by Chris Herold.Chris acquired $9,000 worth of equipment for use in his store.He will pay for the equipment in 30 days.The effect of this transaction on Manziel would be to

The owners of a corporation have limited liability.

What accounts are affected by an initial investment of cash by an owner into his business?

Kristine Parsons owns 2,000 shares of $1.00 par value capital stock of Garments 4 You.Kristine sold 100 of these shares to Beverly Plito for $200.The effect of this transaction on the accounts of Garments 4 You would be to

The accuracy and truthfulness of the financial statements is the responsibility of the

Which of the following statements is false?

Jakey Technologies has 1,000 folders in inventory that cost $2.00 each.The company's supplier announced that,effective immediately,all future folders will cost $2.20 each.Jakey Technologies should

The two equity accounts that Total Paid-in Capital is split between are

Postal Manufacturing began business on July 1,20X5,by selling 1,000 shares of $10 par value capital stock at $30 per share.The effect of this transaction on Postal Manufacturing would be to

Firelog Company began business on July 1,20X8,by selling 1,000 shares of $1 par value capital stock at $20 per share.The effect of this transaction on Firelog Company would be to

A transaction affects the financial position of an entity and can be reliably recorded in terms of money.

Which of the following statements is false?

Mailers Manufacturing,acquired equipment for $19,000.Mailers Manufacturing,paid $6,000 in cash,with the balance due on a note.The effect of this transaction on Mailers Manufacturing,would be to

Footnotes are

Common stockholders

Measuring Income to Assess Performance

Recording Transactions

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Inventories and Cost of Goods Sold

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

Filters

Exam 1: Accounting: the Language of Business

Annual reports include all,but which of the following?

The auditor's opinion is included with the annual report issued by the corporation.

The auditor's opinion includes all except which of the following statements?

Inventory is goods held by a company for the purpose of sale to customers,and is considered a liability on the balance sheet.

Manziel Inc.is a sole proprietorship owned by Chris Herold.Chris acquired $9,000 worth of equipment for use in his store.He will pay for the equipment in 30 days.The effect of this transaction on Manziel would be to

The owners of a corporation have limited liability.

What accounts are affected by an initial investment of cash by an owner into his business?

Kristine Parsons owns 2,000 shares of $1.00 par value capital stock of Garments 4 You.Kristine sold 100 of these shares to Beverly Plito for $200.The effect of this transaction on the accounts of Garments 4 You would be to

The accuracy and truthfulness of the financial statements is the responsibility of the

Which of the following statements is false?

Jakey Technologies has 1,000 folders in inventory that cost $2.00 each.The company's supplier announced that,effective immediately,all future folders will cost $2.20 each.Jakey Technologies should

The two equity accounts that Total Paid-in Capital is split between are

Postal Manufacturing began business on July 1,20X5,by selling 1,000 shares of $10 par value capital stock at $30 per share.The effect of this transaction on Postal Manufacturing would be to

Firelog Company began business on July 1,20X8,by selling 1,000 shares of $1 par value capital stock at $20 per share.The effect of this transaction on Firelog Company would be to

A transaction affects the financial position of an entity and can be reliably recorded in terms of money.

Which of the following statements is false?

Mailers Manufacturing,acquired equipment for $19,000.Mailers Manufacturing,paid $6,000 in cash,with the balance due on a note.The effect of this transaction on Mailers Manufacturing,would be to

Footnotes are

Common stockholders

Measuring Income to Assess Performance

Recording Transactions

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Inventories and Cost of Goods Sold

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

Filters