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Exam 1: Accounting Information and Decision Making

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Question 61

Multiple Choice

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Creditors' claims to a corporation's resources are referred to as:

A) Dividends.
B) Assets.
C) Liabilities.
D) Stockholders' equity.

E) None of the above
F) A) and B)

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Question 62

Multiple Choice

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If a company has gone bankrupt,its financial statements likely violate the:

A) Periodicity assumption.
B) Monetary unit assumption.
C) Going concern assumption.
D) Economic entity assumption.

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

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Question 63

Multiple Choice

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Which of the following groups is not among the external users for whom financial statements are prepared?

The role of auditors is to help ensure that management has in fact appropriately applied Generally Accepted Accounting Principles (GAAP)in preparing the company's financial statements.

A corporation is an entity that is legally separate from its owners.

One of the differences between a partnership and a corporation is that owners of a partnership have limited liability.

For the past five years,Mookie Consulting Services reported the following annual net income and dividend amounts: $\begin{array} { c c c } \text { Year } & \text { Net Income } & \text { Dividends } \\1 & \$ 22,000 & \$ 2,000 \\2 & 17,000 & 2,000 \\3 & 9,000 & 1,000 \\4 & 14,000 & 3,000 \\5 & 25,000 & 4,000\end{array}$ If Mookie had Retained Earnings of $88,000 at the end of year 5,what was the company's Retained Earnings at the beginning of Year 1?

Which of the following is not a balance sheet item?

Below are incomplete financial statements for Beasley,Incorporated.Calculate the missing amounts.

One advantage of the corporate form of business is double taxation.

At the beginning of the year (January 1),Maurice and Sons has $12,000 of common stock outstanding and retained earnings of $4,200.During the year,the company reports net income of $3,200 and pays dividends of $1,200.In addition,the company issues additional common stock for $5,000.Prepare the statement of stockholders' equity at the end of the year (December 31).

Which business form has the advantage of limited liability?

The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity over an interval of time.

Which accounting number has the single greatest impact on stock prices?

The costs of providing goods and services to customers are referred to as:

The equation best describing the balance sheet is:

The primary purpose(s) of financial accounting is (are) to:

The accounting equation is defined as:

Transactions of a company involving external sources of funding are referred to as:

Each of the following independent situations represents amounts shown on the four basic financial statements.Fill in the missing blanks using your knowledge of amounts that appear on the financial statements. 1.Revenues = $27,000; Expenses = $18,000; Net income = ____. 2.Increase in stockholders' equity = $20,000; Issuance of common stock = $12,000; Dividends = $5,000; Net income = ____. 3.Assets = $25,000; Liabilities = $13,000; Stockholders' equity = ____. 4.Total change in cash = +$28,000; Net operating cash flows = +$30,000; Net financing cash flows = +$18,000; Net investing cash flows = ____.