Fi504 Exam

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FI504 exam

1. The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at a. $100 million.

b. $600 million.
c. $400 million.
d. $500 million. _____

2. A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the a. stand alone concept.
b. monetary unit assumption.
c. corporate form of ownership.
d. economic entity assumption. _____

3. A net loss will result during a time period when
a. liabilities exceed assets.
b. dividends exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses. _____

4. As of December 31, 2008, Anders Company has assets of $35,000 and stockholders' equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008? a. $15,000
b. $10,000
c. $25,000
d. $20,000 _____
assets 35,000.00
Less: stockholder's equity 20,000.00
15,000.00

5. A credit is not the normal balance for which account listed below? a. Common stock account
b. Revenue account
c. Liability account
d. Dividend account _____

6. An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? a. Nothing further must be done.
b. Debit an stockholders' equity account for $500.
c. Debit another asset account for $500.
d. Credit a different asset account for $500. _____

7. Which of the following is not true of the terms debit and credit? a. They can be abbreviated as Dr. and Cr.
b. They can be interpreted to mean increase and decrease.
c. They can be used to describe the balance of an account.
d. They can be interpreted to mean left and right. _____

8 . In the first month of operations, the total of the debit entries to the cash account amounted to $900 and the total of the credit entries to the cash account amounted to $500. The cash account has a(n) a. $500 credit balance.

b. $800 debit balance.
c. $400 debit balance.
d. $400 credit balance. _____

debit entries 900.00
credit entries (500.00)
debit balance 400.00

9. On January 14, Franco Industries purchased supplies of $500 on account. The entry to record the purchase will include a. a debit to Supplies and a credit to Accounts Payable.
b. a debit to Supplies Expense and a credit to Accounts Receivable. c. a debit to Supplies and a credit to Cash.
d. a debit to Accounts Receivable and a credit to Supplies. _____

10. Management could determine the amounts due from customers by examining which ledger account? a. Service Revenue
b. Accounts Payable
c. Accounts Receivable
d. Supplies _____

11 . A list of accounts and their balances at a given time is called a(n) a. journal.
b. posting.
c. trial balance.
d. income statement. _____

12. Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns. a. annual, annual
b. monthly, annual
c. quarterly, monthly
d. monthly, monthly _____

13. In a service-type business, revenue is considered earned a. at the end of the month.
b. at the end of the year.
c. when the service is performed.
d. when cash is received. _____

14. Ken's Tune-up Shop follows the revenue recognition principle. Ken services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Ken on August 5. Ken receives the check in the mail on August 6. When should Ken show that the revenue was earned? a. July 31

b. August 1
c. August 5
d. August 6 _____

15. A furniture factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received...
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