Exam 1 Study Guide

Topics: Generally Accepted Accounting Principles, Balance sheet, Liability Pages: 5 (934 words) Published: March 24, 2013
Midterm 1 Practice Questions (Acct 201 Fall 2012)

1. Retained earnings at the end of the period is equal to
a.retained earnings at the beginning of the period plus net income minus liabilities.
b.retained earnings at the beginning of the period plus net income minus dividends.
c.net income.
d.assets plus liabilities.

2. Pinson Company began the year with retained earnings of $550,000. During the year, the company recorded revenues of $600,000, expenses of $380,000, and paid dividends of $140,000. What was Pinson’s retained earnings at the end of the year?


3. Patent would appear in which balance sheet section?
a.Intangible assets
c.Property, plant, and equipment
d.Current assets

4. A balance sheet shows
a.revenues, liabilities, and stockholders’ equity.
b.expenses, dividends, and stockholders’ equity.
c.revenues, expenses, and dividends.
d.assets, liabilities, and stockholders’ equity.

5. For 2012 Fielder Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 12,000. There were no preferred stock dividends. What was the 2012 earnings per share? a.$2.33


6. Use the following data to determine the total dollar amount of assets to be classified as current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2012

Cash$ 130,000Accounts Payable$ 140,000
Prepaid Insurance60,000Salaries Payable20,000
Accounts Receivable100,000Mortgage Payable 160,000
Inventory 140,000 Total Liabilities$320,000
Land held for Investment150,000
Buildings$200,000Common Stock$240,000
Less AccumulatedRetained Earnings 500,000
Depreciation(40,000)160,000 Total Stockholders’ Equity$740,000
Trademarks 140,000 Total Liabilities and
Total Assets$1,060,000 Stockholders’ Equity$1,060,000


7. Using the following balance sheet and income statement data, what is the total amount of working capital?

Current assets$ 14,000Net income$ 24,000
Current liabilities8,000Stockholders’ equity42,000
Average assets 80,000Total liabilities18,000
Total assets 60,000
Average common shares outstanding was 10,000

a.$ 2,000
c.$ 4,000
d.$ 6,000

8. Stockholders’ equity is increased by

9. McKinney Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. What was their net income for the year? a.$207,000

b.$ 66,000

10. The purchase of an asset by paying cash
a.increases assets and stockholders’ equity.
b.increases assets and liabilities.
c.decreases assets and increases liabilities.
d.leaves total assets unchanged.

11. Which of the following accounts has a normal debit balance?
a.Accounts Payable
b.Prepaid Rent
c.Retained Earnings
d.Common Stock

12. When a company has performed a service but has not yet received payment, it
a.debits accounts receivable and credits revenue from services.
b.debits revenue from services and credits accounts receivable.
c.debits revenue from services and credits accounts payable.
d.makes no entry until the cash is received.

13. When a company receives a utility bill but will not pay it right away, it should
a.debit Utilities Expense and credit Accounts Receivable.
b.debit Utilities Expense and credit...
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