Taxes Quiz

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d1.Financial reports are used by
a.|management|
b.|creditors|
c.|investors|
d.|all are correct|

C2.Which of the following is not a characteristic of a corporation? a.|Corporations are organized as a separate legal taxable entity.| b.|Ownership is divided into shares of stock.|
c.|Corporations experience an ease in obtaining large amounts of resources by issuing stock.| d.|A corporation’s resources are limited to their individual stockholders’ resources.|

D3.Which of the following are guidelines for behaving ethically? |I.|Identify the consequences of a decision and its effect on others.| |II.|Consider your obligations and responsibilities to those affected by the decision.| |III.|Identify your decision based on personal standards of honesty and fairness.|

a.|I and II.|
b.|II and III.|
c.|I and III.|
d.|I, II, and III.|

B or C4.Which of the following is not true of accounting principles? a.|Financial accountants follow generally accepted accounting principles (GAAP).| b.|Following GAAP allows accounting information users to compare one company to another.| c.|A new accounting principle can be adopted with stockholders approval.| d.|The Financial Accounting Standards Board (FASB) has primary responsibility for developing accounting principles.|

B5.Earning revenue
a.|increases assets, increases stockholders’ equity.|
b.|increases assets, decreases stockholders’ equity|
c.|increases one asset, decreases another asset|
d.|decreases assets, increases liabilities|

a6.At of the end of its accounting period, December 31, 2009, Great Marks Company has assets of $940,000 and liabilities of $300,000. During 2010, Great Marks sold $65,000 of capital stock and declared and paid $45,000 in dividends. What is the amount of net income during 2010, assuming that as of December 31, 2010, assets were $995,000, and liabilities were $270,000? a.|$ 65,000|

b.|$ 50,000|
c.|$105,000|
d.|$370,000|

B7.There are four transactions that affect Stockholders’ Equity. Which are the two transactions that increase Stockholders’ Equity? a.|Recording revenues and expenses|
b.|Recording expenses and payment of dividends DEBIT|
c.|Recording revenues and the issuance of capital stock CREDIT| d.|Recording the issuance of capital stock and expenses CREDIT|

C8.There are four transactions that directly affect Stockholders’ Equity. Which are the two transactions that decrease Stockholders’ Equity? a.|Expenses and dividends declared and paid to stockholders DEBIT CREDIT| b.|Revenues and expenses CREDIT DEBUT|

c.|Revenues and capital stock issued to stockholders DEBIT DEBIT| d.|Expenses and capital stock issued to stockholders |

D9.Which of the following is not a business transaction?
a.|Erin receives stock in exchange for depositing $15,000 in a bank account in the name of Erin’s Lawn Service. | b.|Erin’s Lawn Service provided landscaping services to customers earning fees of $600.| c.|Erin’s Lawn Service purchased hedge trimmers and agreed to pay the supplier next month.| d.|The major stockholder for Erin’s Lawn Service pays her monthly personal credit card bill.|

B10.If stockholders want to know how money flowed into and out of the company, what financial statement would they use? a.|Income Statement|
b.|Statement of Cash Flows|
c.|Balance Sheet|
d.|None are correct.|

B11.Which of the following is not a principle financial statement? a.|Income Statement|
b.|Statement of Resources Owned |
c.|Statement of Cash Flows|
d.|Balance Sheet|

D12.Which of the following accounts is a stockholders' equity account? a.|Cash|
b.|Accounts Payable|
c.|Prepaid Insurance|
d.|Capital Stock|

A13.An account is said to have a debit balance if
a.|the amount of the debits exceeds the amount of the credits| b.|there are more entries on the debit side than on the credit side| c.|its normal balance is debit without regard to the amounts or number of entries on the debit side|...
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