206 test bank for financial and managerial accounting information for decisions 4th edition

206 Test Bank for Financial and Managerial Accounting
Information for Decisions 4th Edition
True False Questions - Free Text Questions -

Multiple Choice Questions-Page 1
Social responsibility:
1.

A. Is a concern for the impact of one's actions on society as a whole

2.

B. Is a code that helps in dealing with confidential information

3.

C. Is required by the SEC

4.

D. Requires that all businesses conduct social audits

5.

E. Is mandated by the federal government

Which of the following statements best describes the
relationship of U.S. GAAP and IFRS?
1.

A. They are identical

2.

B. They are entirely different conceptual frameworks

3.

C. They are similar but not identical

4.

D. Neither has anything to do with accounting

5.

E. They both relate only to publicly traded companies

The primary objective of financial accounting is:
1.

A. To serve the decision-making needs of internal users

2.

B. To provide financial statements to help external users analyze and interpret an
organization's activities

3.

C. To monitor and control company activities

4.

D. To provide information on both the costs and benefits of managing products and
services

5.

E. To know what, when and how much to produce

Which of the following statements is true of external information
users?


1.

A. They are directly involved in managing the organization

2.

B. Their needs are met by the managerial area of accounting

3.

C. They have limited access to an organization's accounting information

4.

D. They use accounting information to help improve the efficiency and effectiveness of
an organization

5.

E. They are the only users of accounting information who rely on internal controls to
monitor company activities

Internal users of accounting information always include:
1.

A. Shareholders

2.

B. Managers

3.

C. Lenders

4.

D. Suppliers

5.

E. Customers

Which accounting assumption assumes that all accounting
information is reported monthly or yearly?
1.

A. Business entity assumption

2.

B. Monetary unit assumption

3.

C. Value assumption

4.

D. Cost assumption

5.

E. Time period assumption

Identifying business activities requires selecting transactions
and events relevant to an organization. Which of the
following events would be recorded in the accounting
records of Acme Car Wash?
1.

A. Acme washes 500 cars

2.

B. J.B. Smith, a customer, buys lunch at the restaurant next door to Acme while waiting

for her car to be washed

3.

C. Clean Company, a supplier, sells 50 pounds of soap to ABC Company

4.

D. Sudsey Company, a supplier, goes out of business

5.

E. Acme hires Andrea as a receptionist


The objectivity principle:
1.

A. Means that information is supported by independent, unbiased evidence

2.

B. Means that information can be based on what the preparer thinks is true

3.

C. Means that financial statement should contain information that is optimistic

4.

D. Means that a business may not recognize revenue until cash is received

5.

E. Means the assets acquired must be recorded and what the company paid for them

Which of the following elements are found on the Balance
Sheet?
1.

A. Service Revenue

2.

B. Net Income

3.

C. Operating Activities

4.

D. Utilities Expense

5.

E. Retained Earnings

Internal users of accounting information include:
1.

A. Shareholders

2.

B. Customers

3.

C. Creditors

4.

D. Government regulators

5.

E. Line Supervisor

The accounting principle that requires accounting information
to be based on actual cost and requires assets and
services to be recorded initially at the amount of cash or
cash-equivalent given in exchange is the:
1.

A. Accounting equation

2.

B. Cost principle

3.

C. Going-concern principle

4.

D. Realization principle

5.

E. Business entity principle

Which of the following elements are found on the income
statement?


1.

A. Cash

2.

B. Accounts Receivable

3.

C. Common Stock

4.

D. Retained Earnings

5.

E. Salaries Expense

A parcel of land is: offered for sale at $150,000, assessed for tax
purposes at $95,000, recognized by its purchasers as
being worth $140,000 and purchased for $137,000. The
land should be recorded in the purchaser's books at:
1.

A. $95,000

2.

B. $137,000

3.

C. $138,500

4.

D. $140,000

5.

E. $150,000

Businesses can take all of the following forms except:
1.

A. Sole proprietorship

2.

B. Common stock

3.

C. Partnership

4.

D. Corporation

5.

E. Limited Liability Corporation

Ethical behavior requires:
1.

A. That an auditors' pay not depend on the figures in the client's reports

2.

B. Auditors to invest in businesses they audit

3.

C. Analysts to report information favorable to their companies

4.

D. Managers to use accounting information to benefit themselves

5.

E. That an auditor provides a favorable opinion

An Asset is:
1.

A. only acquired with cash

2.

B. something the company owns


3.

C. only contributed by stockholders

4.

D. a company's obligation to pay

5.

E. is also called contributed capital

Which of the following is the correct sequence for the heading
for ABC Company's 2010 Balance Sheet?
1.

A. ABC Company, For the year ended 12/31/10, Balance Sheet

2.

B. For the year ended 12/31/10, Balance Sheet, ABC Company

3.

C. Balance Sheet, 12/31/10, ABC Company

4.

D. 12/31/10, ABC Company, Balance Sheet

5.

E. ABC Company, Balance Sheet, 12/31/10

The principle that (1) requires revenue to be recognized at the
time it is earned, (2) allows the inflow of assets associated
with revenue to be in a form other than cash and (3)

measures the amount of revenue as the cash plus the
cash equivalent value of any non-cash assets received
from customers in exchange for goods or services is
called the:
1.

A. Going-concern principle

2.

B. Cost principle

3.

C. Revenue recognition principle

4.

D. Objectivity principle

5.

E. Business entity principle

The area of accounting aimed at serving the decision making
needs of internal users is:
1.

A. Financial accounting

2.

B. Managerial accounting

3.

C. External auditing

4.

D. SEC reporting

5.

E. Governmental accounting

Generally Accepted Accounting Principles:


1.

A. Focus on the review of a situation

2.

B. Does not require financial statements

3.

C. Never change

4.

D. Intend to make information on the financial statements relevant, reliable and
comparable

5.

E. Oversees Security and Exchange Commission

Recording the items on the financial statements in dollars is:
1.

A. Objectivity principle

2.

B. Monetary unit principle

3.

C. Revenue recognition principle

4.

D. Going-concern principle

5.

E. Cost principle

Technological advancement
1.

A. Has replaced accounting

2.

B. Has not changed the work that accountants do

3.

C. Has freed accounting professionals to concentrate more on the analysis and
interpretation of information

4.

D. In accounting has replaced the need for decision makers

5.

E. In accounting is only available to large corporations

To include the personal assets and transactions of a business's
owner in the records and reports of the business would
be in conflict with the:
1.

A. Objectivity principle

2.

B. Realization principle

3.

C. Business entity principle

4.

D. Going-concern principle

5.

E. Revenue recognition principle

Which of the following is the primary purpose of accounting?
1.

A. To establish a business


2.

B. To identify, record and communicate business transactions

3.

C. To deceive stockholders

4.

D. To keep from paying taxes

5.

E. To establish credit for a company

The organization that attempts to create more harmony among
the accounting practices of different countries by
identifying preferred practices and encouraging their
worldwide acceptance is the:
1.

A. AICPA

2.

B. FASB

3.

C. CAP

4.

D. SEC

5.

E. IASB

The financing functions of a business include:
1.

A. Research and development

2.

B. Purchasing

3.

C. Marketing

4.

D. Distribution

5.

E. Selling common stock

A corporation:
1.

A. Is a legal entity separate and distinct from its owners

2.

B. Must have many owners

3.

C. Has shareholders who have unlimited liability for the acts of the corporation

4.

D. Is the same as a limited liability partnership

5.

E. Does not have to pay taxes

Which of the following accounting principles dictates when
expenses are recognized?
1.

A. Revenue recognition principle

2.

B. Monetary unit principle

3.

C. Business entity principle


4.

D. Matching principle

5.

E. Full disclosure principle

The accounting guideline prescribing that financial statement
information be supported by independent, unbiased
evidence other than someone's belief or opinion is the:
1.

A. Business entity principle

2.

B. Monetary unit principle

3.

C. Going-concern principle

4.

D. Cost principle

5.

E. Objectivity principle

The principle prescribing that financial statements reflect the
assumption that the business will continue operating
instead of being closed or sold, unless evidence shows
that it will not continue is the:
1.

A. Going-concern principle

2.

B. Business entity principle

3.

C. Objectivity principle

4.

D. Cost Principle

5.

E. Monetary unit principle

126 Free Test Bank for Financial and Managerial
Accounting Information for Decisions 4th Edition by
Wild Multiple Choice Questions-Page 2
Operating activities:
1.

A. Are the means organizations must use to pay for resources like land, buildings and
equipment

2.

B. Involve using resources to research, develop, purchase, produce, distribute and
market products and services

3.

C. Involve acquiring and disposing of resources that a business uses to acquire and
sell its products or services

4.

D. Are also called asset management


5.

E. Are also called strategic management

Resources owned or controlled by a company that are expected
to yield benefits are:
1.

A. Assets

2.

B. Revenues

3.

C. Liabilities

4.

D. Stockholder's Equity

5.

E. Expenses

Revenues are:
1.

A. The same as net income

2.

B. The excess of expenses over assets

3.

C. Resources owned or controlled by a company

4.

D. Increases in retained earnings from a company's earning activities

5.

E. The costs of assets or services used

Increases in retained earnings from a company's earnings
activities are:
1.

A. Assets

2.

B. Revenues

3.

C. Liabilities

4.

D. Stockholder's Equity

5.

E. Expenses

Which of the following accounting principles would prescribe
that all goods and services purchased is recorded at
cost?

1.

A. Going-concern principle

2.

B. Continuing-concern principle

3.

C. Cost principle

4.

D. Business entity principle

5.

E. Consideration principle


On December 15, 2008, Myers Legal Services signed a $50,000
contract with a client to provide legal services to the
client in 2009. Which accounting principle would require
Myers Legal Services to record the legal fees revenue in
2009 and not 2008?
1.

A. Monetary unit principle

2.

B. Going-concern principle

3.

C. Cost principle

4.

D. Business entity principle

5.

E. Revenue recognition principle

The International Accounting Standards Board (IASB)
1.

A. Hopes to create harmony among accounting practices of different countries

2.

B. Is the government group that establishes reporting requirements for companies that
issue stock to the public

3.

C. Has the authority to impose its standards on companies

4.

D. Is the only source of U.S. generally accepted accounting principles (GAAP)

5.

E. Applies only to companies that are members of the European Union

According to generally accepted accounting principles, a
company's balance sheet should show the company's
assets at:
1.

A. The cash equivalent value of what was given up

2.

B. The current market value of the assets at the balance sheet date

3.

C. The cash paid to acquire them, even if something other than cash was given in the
exchange

4.

D. The best estimate from a certified internal auditor

5.

E. The objective value to external users

An example of an operating activity is:
1.

A. Paying wages

2.

B. Purchasing office equipment

3.

C. Borrowing money from a bank


4.

D. Selling stock

5.

E. Paying off a loan

Expenses:
1.

A. Increase retained earnings

2.

B. Are increases in retained earnings from a company's earning activity

3.

C. Are the costs of assets or services used to earn revenues

4.

D. Occur when retained earnings exceed revenue

5.

E. Are creditor's claims on assets

If liabilities are $51,500 and assets are $173,425, then equity
equals:
1.

A. $224,925

2.

B. $51,500

3.

C. $173,425

4.

D. $121,925

5.

E. $103,000

The difference between a company's assets and its liabilities or
its net assets is:
1.

A. Net income

2.

B. Expense

3.

C. Equity

4.

D. Revenue

5.

E. Net loss

Planning activities:

1.

A. Are the means organizations must use to pay for resources

2.

B. Involve the acquiring and disposing of resources that an organization uses to
acquire and sell its products or services

3.

C. Involve defining the ideas, goals and actions of an organization

4.

D. Are the carrying out of an organization's plans


5.

E. Involve using resources to research, develop, purchase, produce and market
products and services

Creditors' claims on the assets of a company are called:
1.

A. Net losses

2.

B. Expenses

3.

C. Revenues

4.

D. Equity

5.

E. Liabilities

The major activities of a business include:
1.

A. Operating, Investing, Making a Profit

2.

B. Investing, Making a Profit, Operating

3.

C. Making a Profit, Operating, Borrowing

4.

D. Operating, Investing, Financing

5.

E. Investing, Making a Profit, Financing

Net income:
1.

A. Occurs when revenues exceed expenses

2.

B. Is the same as revenue

3.

C. Equals resources owned or controlled by a company

4.

D. Occurs when expenses exceed assets

5.

E. Represents assets taken from a company for an owner's personal use

A limited partnership:
1.

A. Includes a general partner with unlimited liability

2.

B. Is subject to double taxation

3.

C. Has owners called stockholders

4.

D. Is the same as a corporation

5.

E. Must only have two partners

Revenue is properly recognized:
1.

A. When the customer's order is received

2.

B. Only if the transaction creates an account receivable


3.

C. At the end of the accounting period

4.

D. Upon completion of the sale or when services have been performed and the
business obtains the right to collect the sale price

5.

E. When cash from a sale is received

Net Income:
1.

A. Decreases equity

2.

B. Represents the amount of assets owners put into a business

3.

C. Equals assets minus liabilities

4.

D. Is the excess of revenues over expenses

5.

E. Represents the owners' claims against assets

Marian Mosely is the owner of Mosely Accounting Services.
Which accounting principle requires Marian to keep her
personal financial information separate from the financial
information of Mosely Accounting Services?
1.

A. Monetary unit principle

2.

B. Going-concern principle

3.

C. Cost principle

4.

D. Business entity principle

5.

E. None of these. Since Marian is a sole proprietor, she is not required to separate her
personal financial information from the financial information of Mosely Accounting
Services

Congress passed the Sarbanes-Oxley Act to
1.

A. Provide jobs to U.S. accountants and limit the number of jobs sent outside the
country

2.

B. Impose penalties on CEO's and CFO's who knowingly sign off on bogus accounting
reports, although at this time the penalties are token amounts

3.

C. Help curb financial abuses at companies that issue their stock to the public

4.

D. Force auditors to attest to the absolute accuracy of the financial statements

5.

E. Require that all companies publicly disclose their internal control plans


The question of when revenue should be recognized on the
income statement (according to GAAP) is addressed by
the:
1.

A. Revenue recognition principle

2.

B. Going-concern principle

3.

C. Objectivity principle

4.

D. Business entity principle

5.

E. Cost principle

The Maximum Experience Company acquired a building for
$500,000. Maximum Experience had an appraisal done
and found that the building was worth $575,000. The seller
had paid $300,000 for the building 6 years ago. Which
accounting principle would prescribe that Maximum
Experience record the building on its records at
$500,000?
1.

A. Monetary unit principle

2.

B. Going-concern principle

3.

C. Cost principle

4.

D. Business entity principle

5.

E. Revenue recognition principle

Assets = Liabilities + Equity is known as the:
1.

A. Income statement equation

2.

B. Cost principle

3.

C. Objectivity principle

4.

D. Accounting equation

5.

E. Transaction principle

The amounts reported in the accounts for assets used in
operations are based on their costs. This practice is best
justified by the:
1.

A. Cost principle

2.

B. Going-concern principle


3.

C. Objectivity principle

4.

D. Business entity principle

5.

E. Revenue recognition principle

An example of an investing activity is:
1.

A. Paying wages of employees

2.

B. Paying dividends

3.

C. Purchasing land

4.

D. Selling inventory

5.

E. Contribution from owner

Decreases in retained earnings that represent costs of assets or
services that are used to earn revenues are called:
1.

A. Liabilities

2.

B. Equity

3.

C. Withdrawals

4.

D. Expenses

5.

E. Contributed Capital

If equity is $300,000 and liabilities are $192,000, then assets
equal:
1.

A. $108,000

2.

B. $192,000

3.

C. $300,000

4.

D. $492,000

5.

E. $792,000

The description of the relation between a company's assets,
liabilities and equity, which is expressed as Assets =
Liabilities + Equity are known as the:
1.

A. Income statement equation

2.

B. Accounting equation

3.

C. Business equation

4.

D. Return on equity ratio


5.

E. Net income

An example of a financing activity is:
1.

A. Buying office supplies

2.

B. Obtaining a long-term loan

3.

C. Buying office equipment

4.

D. Selling inventory

5.

E. Buying land

126 Free Test Bank for Financial and Managerial
Accounting Information for Decisions 4th Edition by
Wild Multiple Choice Questions-Page 3
Which of the following statements regarding account
classification is true?
1.

A. Assets and revenues are the same thing

2.

B. If employees have not yet been paid for their work, the company has wages payable

3.

C. Retained earnings equal cash which the company has earned and kept

4.

D. Revenue is another term for profit

5.

E. Revenue minus expense equals retained earnings

A company has twice as much owner's equity as it does
liabilities. If total liabilities are $50,000, what amounts of
assets are owned by the company?
1.

A. $50,000

2.

B. $100,000

3.

C. $150,000

4.

D. $200,000

5.

E. Cannot be determined from the given 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?
1.

A. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase

2.

B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect


3.

C. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect

4.

D. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase

5.

E. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease

If assets are $365,000 and equity is $120,000, then liabilities are:
1.

A. $120,000

2.

B. $245,000

3.

C. $365,000

4.

D. $485,000

5.

E. $610,000

An exchange of value between two entities is called:
1.

A. The accounting equation

2.

B. Recordkeeping or bookkeeping

3.

C. A business transaction

4.

D. An asset

5.

E. Net Income

If the assets of a business increased $15,000 during a period of
time and its equity decreased $46,000 during the same
period, liabilities in the business must have:
1.

A. Increased $11,000

2.

B. Decreased $11,000

3.

C. Increased $19,000

4.

D. Decreased $19,000

5.

E. Increased $61,000

Assets created by selling goods and services on credit are:
1.

A. Accounts payable

2.

B. Accounts receivable

3.

C. Liabilities

4.

D. Expenses

5.

E. Equity


The assets of a company total $700,000; the liabilities, $200,000.
What are the total claims of the owners?
1.

A. $900,000

2.

B. $700,000

3.

C. $500,000

4.

D. $200,000

5.

E. It is impossible to determine unless the amount of owners' investment is known

Apatha Company has assets of $600,000, liabilities of $250,000
and equity of $350,000. It buys office equipment on credit
for $75,000. The effects of this transaction include:
1.

A. Assets increase by $75,000 and expenses increase by $75,000

2.

B. Assets increase by $75,000 and expenses decrease by $75,000

3.

C. Liabilities increase by $75,000 and expenses decrease by $75,000

4.

D. Assets decrease by $75,000 and expenses decrease by $75,000

5.

E. Assets increase by $75,000 and liabilities increase by $75,000

Fast-Forward has net income of $18,955 and assets at the
beginning of the year of $200,000. Its assets at the end of
the year total $246,000. Compute its return on assets.
1.

A. 7.7%

2.

B. 8.5%

3.

C. 9.5%

4.

D. 11.8%

5.

E. 13.0%

If the assets of a business increased $89,000 during a period of
time and its liabilities increased $67,000 during the same
period, equity in the business must have:
1.

A. Increased $22,000

2.

B. Decreased $22,000

3.

C. Increased $89,000

4.

D. Decreased $156,000


5.

E. Increased $156,000

If assets are $99,000 and liabilities are $32,000, then equity
equals:
1.

A. $32,000

2.

B. $67,000

3.

C. $99,000

4.

D. $131,000

5.

E. $198,000

Distributions of assets by a business to its stockholders are
called:
1.

A. Dividends

2.

B. Expenses

3.

C. Assets

4.

D. Retained earnings

5.

E. Net Income

Compute return on assets given net income of $13,764,
beginning assets of $120,000 and ending assets of
$176,000.
1.

A. 4.65%

2.

B. 7.82%

3.

C. 9.3%

4.

D. 11.47%

5.

E. 21.51%

The balance sheet equation is:
1.

A. Revenues minus expenses equal net income

2.

B. Debits equal credits

3.

C. The bookkeeping phase of accounting

4.

D. Another name for the accounting equation

5.

E. Assets minus liabilities and equity


Consider the risk of the following investments. Choose the
answer that lists the investments in order from highest
expected return to lowest expected return.
1.

A. Drilling exploration to discover oil, stock in a secure "blue chip" corporation,
government bonds

2.

B. Stock in a secure "blue chip" corporation, government bonds, drilling exploration to
discover oil

3.

C. Government bonds, drilling exploration to discover oil, stock in a secure "blue chip"
corporation

4.

D. Drilling exploration to discover oil, government bonds, stock in a secure "blue chip"
corporation

5.

E. Government bonds, stock in a secure "blue chip" corporation, drilling exploration to
discover oil

Which of the following statements is not true about assets?
1.

A. They are economic resources owned or controlled by the business

2.

B. They are expected to provide future benefits to the business

3.

C. They appear on the balance sheet

4.

D. They appear on the statement of retained earnings

5.

E. Claims on them are shared between creditors and owners

A corporation purchased a $40,000 delivery truck by paying
4,000 cash and signing a $36,000 note payable.
Immediately prior to this transaction the corporation had
assets, liabilities and owners' equity in the amounts of
$75,000; $52,000; and $23,000 respectively. What is the
total amount of the corporation's assets after this
transaction has been recorded?
1.

A. $115,000

2.

B. $111,000

3.

C. $79,000

4.

D. $71,000

5.

E. $75,000


The distribution of assets to stockholders is called a(n):
1.

A. Liability

2.

B. Dividend

3.

C. Expense

4.

D. Contribution

5.

E. Investment

Nike had income of $350 million and average assets of $2,000
million. Its return on assets is:
1.

A. 1.8%

2.

B. 35%

3.

C. 17.5%

4.

D. 5.7%

5.

E. 3.5%

U.S. government bonds are:
1.

A. High-risk and high-return investments

2.

B. Low-risk and low-return investments

3.

C. High-risk and low-return investments

4.

D. Low-risk and high-return investments

5.

E. High risk and no-return investments

Return on assets is:
1.

A. Also called rate of return

2.

B. Computed by dividing net income by beginning assets plus ending assets divided by
two

3.

C. Computed by multiplying net income by total assets

4.

D. Used in helping evaluate expenses

5.

E. Found on the balance sheet


Viscount Company collected $42,000 cash on its accounts
receivable. How does this transaction affect the
company's accounting equation?
1.

A. Assets decrease and equity increases

2.

B. Both assets and liabilities decrease

3.

C. Assets, liabilities and equity are unchanged

4.

D. Both assets and equity are unchanged and liabilities increase

5.

E. Assets increase and equity decreases

Our company has three times as many assets as it does
liabilities. If total liabilities are $55,000, what is the amount
of owners' equity?
1.

A. $55,000

2.

B. $110,000

3.

C. $165,000

4.

D. $220,000

5.

E. Cannot be determined from the given information

The excess of expenses over revenues for a period is:
1.

A. Net assets

2.

B. Equity

3.

C. Net loss

4.

D. Net income

5.

E. A liability

Beta Corporation purchased $100,000 worth of land by paying
10,000 cash and signing a $90,000 mortgage. Immediately
prior to this transaction the corporation had assets,
liabilities and owners' equity in the amounts of $150,000;
$30,000; and $120,000 respectively. What is the total
amount of Beta Corporation's assets after this transaction
has been recorded?
1.

A. $240,000

2.

B. $250,000


3.

C. $160,000

4.

D. $40,000

5.

E. $260,000

Another name for equity is:
1.

A. Net income

2.

B. Expenses

3.

C. Net assets

4.

D. Revenue

5.

E. Net loss

How would the accounting equation of Boston Company be
affected by the billing of a client for $10,000 of consulting
work completed?
1.

A. + $10,000 accounts receivable, -$10,000 accounts payable

2.

B. + $10,000 accounts receivable, + $10,000 accounts payable

3.

C. + $10,000 accounts receivable, + $10,000 cash

4.

D. + $10,000 accounts receivable, + $10,000 consulting revenue

5.

E. + $10,000 accounts receivable, -$10,000 consulting revenue

If the liabilities of a business increased $75,000 during a period

of time and the equity in the business decreased $30,000
during the same period, the assets of the business must
have:
1.

A. Decreased $105,000

2.

B. Decreased $45,000

3.

C. Increased $30,000

4.

D. Increased $45,000

5.

E. Increased $105,000

Risk is:
1.

A. Net income divided by average total assets

2.

B. The reward for investment

3.

C. The uncertainty about the expected return that will be earned from an investment


4.

D. Unrelated to expected return

5.

E. Derived from the idea of getting something back from an investment

126 Free Test Bank for Financial and Managerial
Accounting Information for Decisions 4th Edition by
Wild Multiple Choice Questions-Page 4
Beginning Assets were $700,000, Beginning Equity was
$225,000, Revenue for the year was $523,000, Common
Stock sold during the year totaled $320,000, Expenses for
the year were $392,000, Ending Equity is $751,000, and
Ending Assets are $963,000. What is Net Income for the
year?
1.

A. $475,000

2.

B. $998,000

3.

C. $131,000

4.

D. $203,000

5.

E. $308,000

Beginning Assets were $437,600, Beginning Liabilities were
$262,560, Common Stock sold during the year totaled
$45,000, Revenue for the year was $414,250, Expenses for
the year were $280,000, Dividends declared was $22,700,
and Ending Liabilities is $350,000. What was the
Beginning Equity for the year?
1.

A. $700,160

2.

B. $787,600

3.

C. $187,600

4.

D. $612,560

5.

E. $175,040

The financial statement that shows: beginning and ending
retained earnings balances and the effects of net income
(loss) and a dividend for the period is the:
1.

A. Statement of financial position


2.

B. Statement of cash flows

3.

C. Balance sheet

4.

D. Income statement

5.

E. Statement of retained earnings

Accounts payable appear on which of the following
statements?
1.

A. Balance sheet

2.

B. Income statement

3.

C. Statement of retained earnings

4.

D. Statement of cash flows

5.

E. Transaction statement

The income statement reports all of the following except:
1.

A. Revenues earned by a business

2.

B. Expenses incurred by a business

3.

C. Assets owned by a business

4.

D. Net income or loss earned by a business

5.

E. The time period over which the earnings occurred

The statement of retained earnings:
1.

A. Reports how retained earnings changes at a point in time

2.

B. Reports how retained earnings changes over a period of time

3.

C. Reports on cash flows for operating, financing and investing activities over a period
of time

4.

D. Reports on cash flows for operating, financing and investing activities at a point in
time

5.

E. Reports on amounts for assets, liabilities and equity at a point in time

The statement of cash flows reports on cash flows for:
1.

A. Operating activities

2.

B. Revenue activities

3.

C. Expense activities