Quiz 1

Question 1 0.13 out of 0.
13 points
Carter Company compiled the following financial information as of December 31,
2007:
Carter's retained earnings on December 31, 2007 are:
Selected Answer: $80,000

Correct Answer: $80,000
Question 0.13 out of 0.13 points
2
Resources owned by a business are referred to as
Selected Answer: assets.

Correct Answer: assets.
Question 0 out of 0.13 points
3
Net income is another term for revenue.
Selected Answer: True

Correct Answer: False
4
An income statement
Selected presents the revenues and expenses for a specific period

Answer: of time.
Correct presents the revenues and expenses for a specific period
Answer: of time.
5
Which of the following is an advantage of corporations relative to partnerships and
sole proprietorships?
Selected Answer: Lower taxes.
Correct Answer: Reduced legal liability for investors.
6
The balance sheet reports assets and claims to those assets at a specific point in
time.
Correct Answer: True
7
Examples of notes are descriptions of the significant accounting policies and
methods used in preparing the statements, explanations of contingencies, and
various statistics.
8
The basic accounting equation states that Assets = Liabilities.
Selected Answer: False

9
Which of the following would not be considered an internal user of accounting
data for the XYZ Company?
Selected Answer: President of the employees' labor union
Correct Answer: President of the employees' labor union
10
The economic resources that are owned by a business are called stockholders'
equity.
Question 11 0.13 out of 0.13 points
The cost of assets consumed or services used is also known as
Selected Answer: an expense.

Correct Answer: an expense.
12
A business organized as a separate legal entity owned by stockholders is a
partnership.
13
An advantage of the corporate form of business is that
Selected its ownership is easily transferable via the sale of

Answer: shares of stock.
Correct its ownership is easily transferable via the sale of
Answer: shares of stock.
14
The group of users of accounting information charged with achieving the goals of
the business is its
Selected Answer: managers.
Correct Answer: managers.
15
A small neighborhood barber shop that is operated by its owner would likely be
organized as a
Selected Answer: proprietorship.
Correct Answer: proprietorship.
16
Owners of business firms are the only people who need accounting information.

17
The purchase of equipment is an example of a financing activity.

18
The right to receive money in the future is called a(n)
Selected Answer: account receivable.

Correct Answer: account receivable.
19
A business is usually involved in two types of activity—financing and investing.

20
The common characteristic possessed by all assets is
Selected Answer: future economic benefit.

Correct Answer: future economic benefit.
21
Creditor's rights to assets supersede owners' rights to the assets.

22
Expenses are incurred
Selected Answer: to produce assets.

Correct Answer: to generate revenues.
23
If the retained earnings account decreases from the beginning of the year to the
end of the year, then
Selected Answer: net income is less than dividends.
Correct Answer: net income is less than dividends.
24
Bluestone Company compiled the following financial information as of December
31, 2007:
Bluestone's retained earnings on December 31, 2007 are:

25
The company's policy toward dividends and growth could best be determined by
examining the
Selected Answer: Retained earnings statement.
Correct Answer: Retained earnings statement.
26
The information needs and questions of external users vary considerably.

27
Net income results when
Selected Answer: Revenues > Expenses.

Correct Answer: Revenues > Expenses.
28
Retained earnings is
Selected the amount of net income kept in the corporation for

Answer: future use.
Correct Answer: the amount of net income kept in the corporation for
future use.
29
Finley Company recorded the following cash transactions for the year:
Paid $90,000 for salaries.

Paid $40,000 to purchase office equipment.
Paid $10,000 for utilities.
Paid $4,000 in dividends.
Collected $150,000 from customers.
What was Finley's net cash provided by operating activities?

30
The accounting equation can be expressed as Assets - Liabilities =
Stockholders' Equity.
31
Which of the following statements concerning users of accounting information is
incorrect?
Selected Answer: Regulatory authorities are considered internal users.
Correct Answer: Regulatory authorities are considered internal users.
32
Which of the following groups uses accounting information to determine whether
the company can pay its obligations?
Selected Answer: Creditors
Correct Answer: Creditors
33
Which of the following is not an advantage of the corporate form of business
organization?
Selected Answer: Favorable tax treatment
Correct Answer: Favorable tax treatment
34
The statement of cash flows would disclose the payment of a dividend
Selected Answer: in the financing activities section.

Correct Answer: in the financing activities section.
35
In a study session, a classmate makes this statement "Dividends are listed as
expenses on the income statement." What is your best response to this
statement?
Selected Dividends are deducted from retained earnings on the
Answer: balance sheet.
Correct Dividends represent a portion of corporate profits that are
Answer: paid to the shareholders. They belong on the retained earnings
statement.
36
Bluestone Company compiled the following financial information as of December
31, 2007:
Bluestone's assets on December 31, 2007 are:

37
If total liabilities decreased by $25,000 and stockholders' equity increased by
$5,000 during a period of time, then total assets must change by what amount
and direction during that same period?
Selected Answer: $20,000 decrease
Correct Answer: $20,000 decrease
38
Information in the notes to the financial statements have to be quantifiable
(numeric).
39
Which type of corporate information is not available to investors?
Selected Answer: forecast of cash needs for the upcoming year

Correct Answer: forecast of cash needs for the upcoming year
40
Which of the following would not be considered an external user of accounting
data for the XYZ Company?
Selected Answer: Management
Correct Answer: Management

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Question 1 0.13 out of 0.

Carter's retained earnings on December 31, 2007 are:

Selected Answer: $80,000

Selected Answer: assets.

Selected Answer: True

Selected presents the revenues and expenses for a specific period

Selected Answer: False

Selected Answer: an expense.

Selected its ownership is easily transferable via the sale of

Selected Answer: False

Selected Answer: True

Selected Answer: account receivable.

Selected Answer: False

Selected Answer: future economic benefit.

Selected Answer: False

Selected Answer: to produce assets.

Bluestone's retained earnings on December 31, 2007 are:

Selected Answer: $160,000

Selected Answer: True

Selected Answer: Revenues > Expenses.

Selected the amount of net income kept in the corporation for

Paid $90,000 for salaries.

What was Finley's net cash provided by operating activities?

Selected Answer: $50,000

Selected Answer: in the financing activities section.

Bluestone's assets on December 31, 2007 are:

Selected Answer: $190,000

Selected Answer: forecast of cash needs for the upcoming year

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