Acctg 211 Sample Exam 1

Topics: Balance sheet, Asset, Generally Accepted Accounting Principles Pages: 15 (4085 words) Published: January 27, 2015

SAMPLE EXAM 1: Questions from Chapters 1 – 3, and Appendix B, of the Reimers portion of the textbook MULTIPLE CHOICE (2 POINTS EACH)
1. If total liabilities increased by $20,000 during a period of time and owners' (stockholders') equity increased by $5,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is: a. $20,000 increase

b. $20,000 decrease
c. $25,000 increase
d. $25,000 decrease

2. The matching concept requires:
a. Assets be matched with liabilities and owners' equity
b. The income statement be matched with the balance sheet for the same period c. All financial statements for the same period be matched before any are presented d. Expenses for the period be matched with the revenues for the same period to determine net income or net loss

3. A business enterprise paid $6,000 to a creditor in payment of an amount owed that was previously accrued. The effect of the transaction on the accounting equation was to a. Increase one asset, decrease another asset

b. Increase an asset, increase a liability
c. Decrease an asset, decrease a liability
d. Increase an asset, increase owner's equity

4. Which of the following financial statements reports information as of a point in time? a. Balance sheet
b. Retained earnings statement
c. Income statement

5. The balance in the prepaid rent account before adjustment at the end of the year is $12,000, which represents three months' rent paid on November 1. The adjusting entry required on December 31 is a. Debit Rent Expense, $8,000; Credit Prepaid Rent, $8,000

b. Debit Rent Expense, $4,000; Credit Prepaid Rent, $4,000
c. Debit Prepaid Rent, $8,000; Credit Rent Expense, $8,000
d. Debit Prepaid Rent, $4,000; Credit Rent Expense, $4,000

6. Which of the following accounts would be found in the stockholders' equity section of a corporation's balance sheet? a. Accounts Payable
b. Common Stock
c. Retained Earnings
d. All of the above
e. Only B and C

7. Accrual accounting
a. Is a process used to measure the firm's capital stock
b. Is the identification of revenues and expenses with corresponding time periods c. May associate revenues and expenses with different accounting periods than would cash-basis accounting d. All of the above are correct

e. Only (b) and (c) are correct

8. Brown Co. reported the following amounts at the end of the first year of operations: capital stock $40,000; sales revenue $95,000; total assets $80,000; no dividends; and total liabilities $30,000. Owners' equity and total expenses would be a. Owners' equity $40,000 and total expenses $45,000

b. Owners' equity $80,000 and total expenses $40,000
c. Owners' equity $50,000 and total expenses $65,000
d. Owners' equity $50,000 and total expenses $85,000
e. None of the above is correct

9. Revenues are
a. Increases in net assets due to the principal selling activities of the firm b. The increases in capital stock
c. Cash inflows less cash outflows including loan proceeds and payments. d. The reduction of retained earnings

10. A hot-dog vendor sells hot dogs for $.90 each on the corner of Court and Union streets. On Monday, three regular customers forgot to bring their wallets with them and did not pay for their hot dogs (one per customer) until Tuesday. On Tuesday the hot-dog vendor sold a total of 300 hot dogs including 40 hot dogs purchased by a regular customer who promised to bring a check for the hot dogs on Wednesday. a. If the vendor uses the cash-basis of accounting, revenue for Tuesday is $270. b. If the vendor uses accrual-basis accounting, revenue is $300 for Tuesday. c. If the vendor uses accrual-basis accounting, revenue for Tuesday is $270. d. If the vendor uses cash-basis accounting, revenue for Tuesday is $234. e. Both (c) and (d) are correct.

11. The balance in retained earnings on 12/31/96 was $75,000. The firm commenced operations on...
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