Question 1

The purchase of supplies must appear on the statement of cash flows as an investing activity because it involves the purchase of assets.

Accepted Answer

A) True 
 B)False

Question 2

Operating activities:

Accepted Answer

A)  Are the means organizations must use to pay for resources like land, buildings and equipment 
B)  Involve using resources to research, develop, purchase, produce, distribute and market products and services 
C)  Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services 
D)  Are also called asset management 
E)  Are also called strategic management

Question 3

From the information given, prepare a November income statement.
On November 1 of the current year, Lois Bell began Lois Bell, Interior Design as a corporation with an initial investment of $50,000 cash. On November 30 her records showed the following (alphabetically arranged) selected accounts and amounts:

Accepted Answer

The answer of From the information given, prepare a November...

Question 4

Planning activities:

Accepted Answer

A)  Are the means organizations must use to pay for resources 
B)  Involve the acquiring and disposing of resources that an organization uses to acquire and sell its products or services 
C)  Involve defining the ideas, goals and actions of an organization 
D)  Are the carrying out of an organization's plans 
E)  Involve using resources to research, develop, purchase, produce and market products and services

Question 5

Fast-Forward has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and investments by owners in exchange for stock of $6,000. Its ending equity is:

Accepted Answer

A)  $223,000 
B)  $240,000 
C)  $268,000 
D)  $274,000 
E)  $208,000

Question 6

Identify the users and uses of accounting information.

Accepted Answer

The answer of Identify the users and uses of accounting...

Question 7

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Accepted Answer

A)  Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase 
B)  Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect 
C)  Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect 
D)  Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase 
E)  Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease

Question 8

Fast-Forward reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets. By the end of the year, assets had increased to $300,000. Calculate the return on assets.

Accepted Answer

The answer of Fast-Forward reported net income of $17,500 for...

Question 9

If net income for the period was $134,250, dividends distributed were $76,530 and Ending Retained Earnings was $862,520, what was the Beginning Retained Earnings for the period?

Accepted Answer

A)  $1,073,300 
B)  $651,740 
C)  $804,800 
D)  $920,240 
E)  $728,270

Question 10

Maslow's Consulting Inc. had retained earnings of $172,500 at December 31, 2010. Net income for 2011 amounted to $56,400. Dividends during 2009 were $48,000. Prepare the statement of retained earnings for 2011.

Accepted Answer

The answer of Maslow's Consulting Inc. had retained earnings of...

Question 11

Generally accepted accounting principles are the basic assumptions, concepts and guidelines for preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 12

Decreases in retained earnings that represent costs of assets or services that are used to earn revenues are called:

Accepted Answer

A)  Liabilities 
B)  Equity 
C)  Withdrawals 
D)  Expenses 
E)  Contributed Capital

Question 13

What distinguishes liabilities from equity?

Accepted Answer

The answer of What distinguishes liabilities from equity?...

Question 14

An example of an operating activity is:

Accepted Answer

A)  Paying wages 
B)  Purchasing office equipment 
C)  Borrowing money from a bank 
D)  Selling stock 
E)  Paying off a loan

Question 15

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Accepted Answer

A) True 
 B)False

Question 16

Fast-Forward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

Accepted Answer

The answer of Fast-Forward has the following beginning cash balance...

Question 17

A company has assets of $500,000 and equity of $350,000. What is the amount of liabilities?

Accepted Answer

The answer of A company has assets of $500,000 and...

Question 18

The International Accounting Standards Board (IASB)

Accepted Answer

A)  Hopes to create harmony among accounting practices of different countries 
B)  Is the government group that establishes reporting requirements for companies that issue stock to the public 
C)  Has the authority to impose its standards on companies 
D)  Is the only source of U.S. generally accepted accounting principles (GAAP) 
E)  Applies only to companies that are members of the European Union

Question 19

Fast-Forward paid $6,000 in dividends. This amount should be included as an expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements regarding account classification is true?

Accepted Answer

A)  Assets and revenues are the same thing 
B)  If employees have not yet been paid for their work, the company has wages payable 
C)  Retained earnings equal cash which the company has earned and kept 
D)  Revenue is another term for profit 
E)  Revenue minus expense equals retained earnings

Exam 1: Introducing Accounting in Business

The purchase of supplies must appear on the statement of cash flows as an investing activity because it involves the purchase of assets.

Operating activities:

Planning activities:

Fast-Forward has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and investments by owners in exchange for stock of $6,000. Its ending equity is:

Identify the users and uses of accounting information.

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Fast-Forward reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets. By the end of the year, assets had increased to $300,000. Calculate the return on assets.

If net income for the period was $134,250, dividends distributed were $76,530 and Ending Retained Earnings was $862,520, what was the Beginning Retained Earnings for the period?

Maslow's Consulting Inc. had retained earnings of $172,500 at December 31, 2010. Net income for 2011 amounted to $56,400. Dividends during 2009 were $48,000. Prepare the statement of retained earnings for 2011.

Generally accepted accounting principles are the basic assumptions, concepts and guidelines for preparing financial statements.

Decreases in retained earnings that represent costs of assets or services that are used to earn revenues are called:

What distinguishes liabilities from equity?

An example of an operating activity is:

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Fast-Forward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

A company has assets of $500,000 and equity of $350,000. What is the amount of liabilities?

The International Accounting Standards Board (IASB)

Fast-Forward paid $6,000 in dividends. This amount should be included as an expense on the income statement.

Which of the following statements regarding account classification is true?