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Exam 1: Accounting Information and Decision Making

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Question 81

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Aikman Company has paid dividends of $2,410,$0,$1,570 and $1,060 over the first four years of the company's existence.If Retained Earnings after year four has an ending balance of $9,700,what is the average annual amount of net income (loss) over the past four years for Aikman?

A) $3,685.
B) $14,740.
C) $840.
D) $1,260.

E) A) and D)
F) A) and C)

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Question 82

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Net income can best be described as:

A) Net cash received by a company during the year.
B) Revenues minus expenses.
C) The amount of profits retained in a company for the year.
D) Resources owned by a company.

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

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Question 83

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Investing activities include the purchase and sale of (1)long-term resources and (2)any resources not directly related to a company's normal operations.

The account type that represents payments to stockholders is called:

Amounts owed to suppliers,workers,governments,and utility companies are examples of liabilities.

The equation best describing the income statement is:

The accounts that represent resources owed to creditors are called:

List and describe the four financial statements most frequently provided to external users.

Consider the following account balances of the Shattuck Law Firm as of December 31,2012: How many of these accounts would appear in Shattuck's 2012 income statement? $\begin{array} { l r } \text { Accounts Payable } & \$ 4,400 \\\text { Salaries Expense } & 12,800 \\\text { Cash } & 1,700 \\\text { Common Stock } & 2,400 \\\text { Service Revenue } & 8,300 \\\text { Supplies } & 4,300 \\\text { Retained Earnings } & 1,100 \\\text { Utilities Expense } & 5,000\end{array}$

Which of the following items would not appear in an income statement?

Generally Accepted Accounting Principles (GAAP) are best defined as:

Below are the account balances for Huffman Corporation at the end of December.Use only the appropriate accounts to prepare an income statement. $\begin{array} { l r } { \text { Accounts } } & \text { Balances } \\\hline \text { Cash } & \$ 5,200 \\\text { Salaries expense } & 2,300 \\\text { Retained earnings } & 2,500 \\\text { Advertising expense } & 1,200 \\\text { Equipment } & 12,400 \\\text { Service revenue } & 9,400 \\\text { Common stock } & 8,000 \\\text { Accounts payable } & 2,200\end{array}$

The qualitative characteristic that says accounting information can influence users' decisions by allowing them to assess past performance is:

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income earned during the year?

Which of the following is not a balance sheet item?

The financial statement that represents activity over the entire life of the company is the:

Accounting information that does not provide measurement bias in favor of a particular set of companies has the characteristic of:

One disadvantage of the corporate form of business is:

Primary qualitative characteristics of accounting information are:

Financing cash flows include cash transactions with lenders,such as borrowing money and repaying debt,and with stockholders,such as issuing stock and paying dividends.