50Test bank for survey of accounting 6th

50Test Bank for Survey of Accounting 6th
Edition by Warren Multiple Choice Questions
Rights to payments from customers are:
1.

liabilities.

2.

prepaid expenses.

3.

accounts receivable.

4.

accounts payable.

Browning, Inc. had revenues of $234,000, expenses of $175,000,
and dividends of $30,000 during 2012. Which of the following
statements is correct?
1.

Net income for 2012 totaled $29,000.

2.

Net income for 2012 totaled $59,000.

3.

Total retained earnings increased by $59,000 during 2012.

4.

Total retained earnings decreased by $30,000 during 2012.

Costs incurred in operating a business are also known as:
1.

revenues.

2.

expenses.

3.

liabilities.

4.

dividends.

When a business borrows money, it incurs a(n):
1.

tax.

2.

liability.

3.

receivable.

4.

additional equity.

The portion of a corporation's net income retained in the business is
called:
1.

interest earnings.

2.

dividends.

3.

tax expense.

4.

retained earnings.

Which statement is normally prepared first?
1.

Income statement

2.

Balance sheet

3.

Statement of cash flows

4.

Retained earnings statement

Governments have an interest in the economic performance of
business because of:
1.

tax collections.

2.

community involvement from the business.

3.

business incentives.

4.

all of these.


A list of assets, liabilities, and owners' equity as of a specific date is
a(n):
1.

income statement.

2.

balance sheet.

3.

statement of cash flows.

4.

retained earnings statement.

Financing activities involve obtaining _____ to operate a business.
1.

products

2.

customers

3.

business incentives

4.

funds

Reporting the financial condition of a business at a point in time and
the changes in the financial condition of a business over a period of
time are the two major objectives of:
1.

tax accounting.

2.

union contracts.

3.

managerial accounting.

4.

financial accounting.

If there was no beginning retained earnings, net income of $20,000,
and ending retained earnings of $6,000, how much were
dividends?
1.

$10,000


2.

$4,000

3.

$6,000

4.

$14,000

Shares of ownership are evidenced by issuing:
1.

shares payable.

2.

commercial paper.

3.

shares of stock.

4.

notes payable.

The resources a business owns are called:
1.

assets.

2.

liabilities.

3.

earnings.

4.

stockholders' equity.

Given the following list of accounts, calculate Total Assets:
Accounts Receivable $ 5,000; Capital Stock 20,000; Cash 19,300;
Equipment 15,400; Fees Earned 44,400; Miscellaneous 18,200;
Rent Expense 4,150; Retained Earnings 6,550; Wages Expense
13,900
1.

$84,100

2.

$59,700

3.

$46,250

4.

$39,700


The financial statement that presents a summary of the revenues
and expenses of a business for a specific period of time, such as a
month or an year, is called a(n):
1.

prior period statement.

2.

statement of retained earnings.

3.

income statement.

4.

balance sheet.

Which of the following is considered an asset until consumed?
1.

Accounts payable

2.

Prepaid expense

3.

Accounts receivable

4.

Stockholders' equity

The debt created by a business when it makes a purchase on
account is referred to as an:
1.

account payable.

2.

account receivable.

3.

asset.

4.

expense payable.

Which of the following would not be an example of a merchandising
business?
1.

The Walt Disney Company

2.

JCPenney


3.

Amazon.com

4.

Wal-Mart

Managers are evaluated primarily on the business's:

1.

tax collections.

2.

growth.

3.

economic performance.

4.

all of these.

_____ is the increase in assets from selling products and services.
1.

Revenue

2.

Liabilities

3.

Page 5 of14

4.

Products

5.

Stockholders’ Equity

A summary of changes in the earnings retained by the corporation
for a specific period of time is known as a(n):
1.

income statement.

2.

balance sheet.

3.

statement of cash flows.

4.

retained earnings statement.

An entity that is organized according to state or federal statutes and
in which ownership is divided into shares of stock is a:


1.

proprietorship.

2.

corporation.

3.

partnership.

4.

governmental unit.

When a product is sold, the cost of the product sold is often called:
1.

cost of goods sold.

2.

selling cost.

3.

period cost.

4.

retained cost.

During 2012, Smith Corporation had an increase in total assets of
$70,000 and an increase in total liabilities of $90,000. Assuming
that capital stock increased by $5,000 and no dividends were paid,
calculate Smith’s net income or net loss for 2012.
1.

Net loss of $15,000

2.

Net loss of $20,000

3.

Net loss of $25,000

4.

Net income of $15,000

Which of the following is not an example of a capital market
stakeholder?
1.

Banks

2.

Owners

3.

Suppliers


4.

Stockholders

Who has the first preference to assets in case a business fails?
1.

Stockholders

2.

Long-term creditors

3.

Customers

4.

Employees

The purchase of factory equipment would be an example of which
type of business activity?

1.

Financing

2.

Investing

3.

Operating

4.

All of these

Which of the following are business stakeholders?
1.

Stockholders

2.

Suppliers

3.

Customers

4.

All of these

The role of accounting in business is best defined as:
1.

an information system that provides reports to stakeholders about the
economic activities and condition of a business.

2.

a method of forecasting the future profitability of a company.


3.

the policies, procedures, and strategies used in a business.

4.

transaction analysis.

Which of the following is true in regards to a limited liability
company?
1.

It is organized as a corporation.

2.

It can elect to be taxed as a partnership.

3.

It provides tax and liability advantages to the owners.

4.

All are correct.

A summary of the cash receipts and cash payments for a specific
period of time is a(n):
1.

income statement.

2.

balance sheet.

3.

statement of cash flows.

4.

retained earnings statement.

A note payable requires payment of the amount borrowed plus:
1.

interest.

2.

tax.

3.

overhead.

4.

dividend.

Which of the following is an appropriate representation of the
accounting equation?


1.

Assets + Liabilities = Stockholders’ equity

2.

Assets = Liabilities + Stockholders’ equity

3.

Assets = Liabilities

4.

Assets = Liabilities + Retained earnings

Which of the items below is not a business organization form?
1.

Venture entrepreneurship

2.

Proprietorship

3.

Partnership

4.

Corporation

Under a premium-price emphasis, a business designs products that
possess _____ for which customers are willing to pay a premium
price.
1.

unique attributes

2.

high costs

3.

high demand

4.

longer warranties

Which of the following types of business is popular for its ease and
low cost of organizing?
1.

Not-for-profit

2.

Corporation

3.

Partnership


4.

Proprietorship

Use the following information to determine Total Stockholders’
Equity: Total Assets $ 50,000; Total Liabilities 15,000; Total
Stockholders’ Equity x; Total Retained Earnings13,000
1.

$52,000

2.

$50,000

3.

$35,000

4.

$22,000

Capital market stakeholders have an interest in the company
because:
1.

they provide incentives for the company to market their products.

2.

they are part of the Marketing Department that is responsible for promoting
the products or services to increase the business profits.

3.

they help market their products to customers or find vendors to supply needed
inputs.

4.

they provide major financing for the business.

Which of the following businesses use a premium-price emphasis?
1.

Value City Furniture selling furniture at affordable prices

2.

Tommy Hilfiger selling products that have a unique image

3.

Wal-Mart reselling standardized products

4.

Southwest Airlines providing standardized services


Cash collected from sales during the normal course of business
would be an example of which type of business activity?
1.

Operating

2.

Investing

3.

Financing

4.

None of these

Debts owed by a business are referred to as:
1.

accounts receivable.

2.

equities.

3.

stockholders’ equity.

4.

liabilities.

________ is an example of internal stakeholders.
1.

Managers

2.

Creditors

3.

Stockholders

4.

Suppliers

A summary of revenue and expenses for a specific period of time is
a(n):
1.

income statement.

2.

balance sheet.

3.

statement of cash flows.


4.

retained earnings statement.

Which of the following is not a characteristic of a corporation?
1.

Corporations are organized as a separate legal taxable entity.

2.

Ownership is divided into shares of stock.

3.

Corporations experience an ease in obtaining large amounts of resources by
issuing stock.

4.

A corporation can elect to be taxed as a partnership.

What is the primary objective of most businesses?
1.

To maximize profits

2.

To pay dividends to stockholders

3.

To provide a benefit to society

4.

To manufacture a quality product

Gilbert, Inc. had the following account balances at September 30,
2010. What is Gilbert’s net income for the month of September?
Accounts Payable $ 5,000; Capital Stock 10,000; Cash 14,300;
Equipment 15,400; Fees Earned 54,400; Miscellaneous Expense
18,200; Rent Expense 4,150; Retained Earnings 6,550; Wages
Expense 13,900
1.

$32,450

2.

$27,450

3.

$6,550

4.

$18,150


Which of the following is an intangible asset?
1.

Patent

2.

Cash

3.

Land

4.

Equipment

Cash investments made by the stockholders of the business are
reported on the statement of cash flows in the:
1.

financing activities section.

2.

investing activities section.

3.

operating activities section.

4.

supplemental statement.

A low-cost emphasis strives to provide:
1.

no-frills, standardized products and services.

2.

products and services that provide unique market needs.

3.

products and services that provide prestige and image for customers.

4.

products and services that compete on features other than price.

Motel 6, a company that helps customers find budget motels across
the nation, is an example of a business using which of the

following?
1.

Low-cost emphasis

2.

Outreach emphasis


3.

Customer emphasis

4.

Premium-price emphasis