1. An examination of the financial statements of a business to ensure that they conform with generally accepted accounting principles is called?
A certification
An audit
A verification
A validation

2. An examination of the financial statements of a business to ensure that they conform with generally accepted accounting principles is called?
A certification
An audit
A verification
A validation

3. 2. Morrow Corp. makes a credit sales (i. e
2. Morrow Corp. makes a credit sales (i.e., sale on account) to a customer. The effect of this transaction on the accounting equation is that?
Assets increase and liabilities increase
Assets increase and stockholder’s equity increases
Liabilities increase and stockholder’s equity decreases
Liabilities decrease and stockholder’s equity increases

4. 2. Morrow Corp. makes a credit sales (i. e
2. Morrow Corp. makes a credit sales (i.e., sale on account) to a customer. The effect of this transaction on the accounting equation is that?
Assets increase and liabilities increase
Assets increase and stockholder’s equity increases
Liabilities increase and stockholder’s equity decreases
Liabilities decrease and stockholder’s equity increases

5. 3.On January 1, 2005, Thomas Company paid $1000 for a two-year insurance policy on the building. The accounting period ends December 31. At the end of 2005, the financial statement should report?
Prepaid Insurance $500; Insurance Expense $500
Prepaid Insurance $0; Insurance Expense $1000
Prepaid Insurance $1000; Insurance Expense $0
Prepaid Insurance $250; Insurance Expense $250

6. 3.On January 1, 2005, Thomas Company paid $1000 for a two-year insurance policy on the building. The accounting period ends December 31. At the end of 2005, the financial statement should report?
Prepaid Insurance $500; Insurance Expense $500
Prepaid Insurance $0; Insurance Expense $1000
Prepaid Insurance $1000; Insurance Expense $0
Prepaid Insurance $250; Insurance Expense $250

7. 4.Retained earnings refers to?
The amount reported as “the bottom line” on the income statement
The accumulated amount of past earnings of a corporation that has not been distributed to shareholders as dividends
The total amount of stockholder’s equity for a corporation
The amount that shareholders have invested by purchasing a corporation’s stock

8. 4.Retained earnings refers to?
The amount reported as “the bottom line” on the income statement
The accumulated amount of past earnings of a corporation that has not been distributed to shareholders as dividends
The total amount of stockholder’s equity for a corporation
The amount that shareholders have invested by purchasing a corporation’s stock

9. 5.The amount of rent expense reported on the income statement is?
The amount of cash paid for rent in the current period
The amount of cash paid for rent in the current period less any unpaid rent at the end of the period
The amount of rent used up (incurred) in the current period to help generate revenue
An increase in net income

10. 5.The amount of rent expense reported on the income statement is?
The amount of cash paid for rent in the current period
The amount of cash paid for rent in the current period less any unpaid rent at the end of the period
The amount of rent used up (incurred) in the current period to help generate revenue
An increase in net income

11. 6.The advantages of incorporation include all of the following except?
Ability to raise capital
Tax deductibility of dividends
Ease of transfer of ownership
Limited liability of owners

12. 6.The advantages of incorporation include all of the following except?
Ability to raise capital
Tax deductibility of dividends
Ease of transfer of ownership
Limited liability of owners

13. 7. A cash inflow from financing activities includes?
Proceeds from selling investments in equity securities of another company
Proceeds from selling equipment
Proceeds from issuance of bonds payable
Receipt of interest payments

14. 7. A cash inflow from financing activities includes?
Proceeds from selling investments in equity securities of another company
Proceeds from selling equipment
Proceeds from issuance of bonds payable
Receipt of interest payments

15. 8.Under accrual basis accounting, revenues are?
Recognized when they are earned
Recognized when cash is received
Recognized when they are incurred
Recognized when cash is paid

16. 8.Under accrual basis accounting, revenues are?
Recognized when they are earned
Recognized when cash is received
Recognized when they are incurred
Recognized when cash is paid

17. 9. Which financial statement shows the financial position of a business as of a given date?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings

18. 9. Which financial statement shows the financial position of a business as of a given date?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings

19. 10.The accounts payable account has a beginning balance of $1000 and we purchased $3000 of inventory on credit during the month. The ending balance was $800. How much did we pay our creditors during the month?
$2800
$3000
$3200
$3800

20. 10.The accounts payable account has a beginning balance of $1000 and we purchased $3000 of inventory on credit during the month. The ending balance was $800. How much did we pay our creditors during the month?
$2800
$3000
$3200
$3800

21. 11.Adjusting entries never include?
Prepaid expenses
Interest payable
Unearned revenue
Cash

22. 11.Adjusting entries never include?
Prepaid expenses
Interest payable
Unearned revenue
Cash

23. 12. If you wanted to know what accounting rules a company follows related to its inventory, where would you look?
The notes to the financial statements
The income statement
The balance sheet
The headings to the financial statements

24. 12. If you wanted to know what accounting rules a company follows related to its inventory, where would you look?
The notes to the financial statements
The income statement
The balance sheet
The headings to the financial statements

25. 13. At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants amounting to $500. On December 31, the owner would show which of the following on its financial statements?
Unearned rent revenue of $500
Rent Receivable of $500
Rent Payable of $500
Rent Expense of $500

26. 13. At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants amounting to $500. On December 31, the owner would show which of the following on its financial statements?
Unearned rent revenue of $500
Rent Receivable of $500
Rent Payable of $500
Rent Expense of $500

27. 14. Which of the following accounts is increased by credit entries and decreased by debit entries?
Cash
Advertising Expense
Equipment
Accounts payable

28. 14. Which of the following accounts is increased by credit entries and decreased by debit entries?
Cash
Advertising Expense
Equipment
Accounts payable

29. 15. The primary objective of financial information is to?
Provide information to detect fraud in the preparation of financial statements
Provide information about the taxable income of the company
Provide managers with information about the efficiency and effectiveness of the production process
Provide useful economic information about a business to help external parties make sound financial decisions

30. 15. The primary objective of financial information is to?
Provide information to detect fraud in the preparation of financial statements
Provide information about the taxable income of the company
Provide managers with information about the efficiency and effectiveness of the production process
Provide useful economic information about a business to help external parties make sound financial decisions

31. 16. Which of the following is the private body responsible for establishing generally accepted accounting principles (GAAP)?
PCAOB
SEC
FASB
APB

32. 16. Which of the following is the private body responsible for establishing generally accepted accounting principles (GAAP)?
PCAOB
SEC
FASB
APB

33. 17.Failure to make an adjusting entry to recognize accrued utilities payable would cause an?
Understatement of expenses and liabilities and an overstatement of stockholder’s equity
Overstatement of expenses and liabilities and an understatement of stockholder’s equity
Understatement of expenses, liabilities, and stockholder’s equity
Overstatement of assets, expenses, and stockholder’s equity

34. 17.Failure to make an adjusting entry to recognize accrued utilities payable would cause an?
Understatement of expenses and liabilities and an overstatement of stockholder’s equity
Overstatement of expenses and liabilities and an understatement of stockholder’s equity
Understatement of expenses, liabilities, and stockholder’s equity
Overstatement of assets, expenses, and stockholder’s equity

35. 18.Which of the following accounts would not be closed at the end of the accounting period?
Dividends
Sales revenue
Cost of goods sold
Inventory

36. 18.Which of the following accounts would not be closed at the end of the accounting period?
Dividends
Sales revenue
Cost of goods sold
Inventory

37. 19. Which accounting principle states that expenses incurred in generating revenue should be recorded in the same period in which the revenue is recognized?
Historical cost principle
Going concern principle
Matching principle
Revenue recognition principle

38. 19. Which accounting principle states that expenses incurred in generating revenue should be recorded in the same period in which the revenue is recognized?
Historical cost principle
Going concern principle
Matching principle
Revenue recognition principle

39. 20. Abrahams Corporation reported the following amounts at the end of the first year of operations, December 31, 2009: contributed capital $100,000; sales revenue $400,000; total assets $300,000; $5,000 dividends; and total liabilities $180,000. Retained earnings would be?
$20,000
$30,000
$70,000
$80,000

40. 20. Abrahams Corporation reported the following amounts at the end of the first year of operations, December 31, 2009: contributed capital $100,000; sales revenue $400,000; total assets $300,000; $5,000 dividends; and total liabilities $180,000. Retained earnings would be?
$20,000
$30,000
$70,000
$80,000

41. 21. Which of the following direct effects on the fundamental accounting model is not possible as a result of transaction analysis?
Increase a liability and increase an asset
Decrease stockholder’s equity and increase an asset
Increase an asset and decrease an asset
Decrease stockholder’s equity and decrease an asset

42. 21. Which of the following direct effects on the fundamental accounting model is not possible as a result of transaction analysis?
Increase a liability and increase an asset
Decrease stockholder’s equity and increase an asset
Increase an asset and decrease an asset
Decrease stockholder’s equity and decrease an asset

43. 22. On January 1, 2009, the ledger of Global Corporation correctly showed supplies inventory of $500. During 2009, supplies purchases amounted to $ A count (inventory) of supplies on hand at December 31, 2009, showed $600. The 2009 income statement should report supplies expense amounting to?
$1200
$1100
$800
$600

44. 22. On January 1, 2009, the ledger of Global Corporation correctly showed supplies inventory of $500. During 2009, supplies purchases amounted to $ A count (inventory) of supplies on hand at December 31, 2009, showed $600. The 2009 income statement should report supplies expense amounting to?
$1200
$1100
$800
$600

45. 23. Assets are?
Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services
Stockholders’ equity minus liabilities
Probable future economic benefits owned by an entity as a result of past transactions
The financing provided by the owners and the operations of a business

46. 23. Assets are?
Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services
Stockholders’ equity minus liabilities
Probable future economic benefits owned by an entity as a result of past transactions
The financing provided by the owners and the operations of a business

47. 24. Which of the following is most often included in current assets?
Prepaid expenses
Property, plant, and equipment
Intangible assets
Unearned revenue

48. 24. Which of the following is most often included in current assets?
Prepaid expenses
Property, plant, and equipment
Intangible assets
Unearned revenue

49. 25. Which characteristic states that accounting information is unbiased and verifiable?
Consistency
Comparability
Relevance
Reliability

50. 25. Which characteristic states that accounting information is unbiased and verifiable?
Consistency
Comparability
Relevance
Reliability

51. 26. On January 1, 2009, the balance in Retained Earnings for Conlon Company was $125,000. During 2009, the company declared and paid cash dividends of $20,000, reported net income of $65,000, sold additional common stock for $10,000. What was the balance of Retained Earnings on December 31, 2009?
$210,000
$190,000
$180,000
$170,000

52. 26. On January 1, 2009, the balance in Retained Earnings for Conlon Company was $125,000. During 2009, the company declared and paid cash dividends of $20,000, reported net income of $65,000, sold additional common stock for $10,000. What was the balance of Retained Earnings on December 31, 2009?
$210,000
$190,000
$180,000
$170,000

53. 27. When a company pays back an amount due to a supplier for a prior purchase?
Assets decrease and liabilities decrease
Assets increase and stockholder’s equity increases
Liabilities increase and stockholder’s equity decreases
Assets increase and liabilities decrease

54. 27. When a company pays back an amount due to a supplier for a prior purchase?
Assets decrease and liabilities decrease
Assets increase and stockholder’s equity increases
Liabilities increase and stockholder’s equity decreases
Assets increase and liabilities decrease

55. 28. The two categories of stockholder’s equity usually found on the balance sheet of a corporation are?
Contributed capital and long-term liabilities
Contributed capital and property, plant, and equipment
Retained earnings and notes payable
Contributed capital and retained earnings

56. 28. The two categories of stockholder’s equity usually found on the balance sheet of a corporation are?
Contributed capital and long-term liabilities
Contributed capital and property, plant, and equipment
Retained earnings and notes payable
Contributed capital and retained earnings

57. 29. Anna Inc. had the following items reported on its most recent financial statements:
Total revenues……………..$500,000
Dividends………………$10,000
Total Assets……………..$425,000
Total Liabilities…………$125,000
Total contributed capital….$100,000
Beginning Retained Earnings…$140,000
What total expenses were reported by Anna for the year?
$155,000
$275,000
$310,000
$430,000

58. 29. Anna Inc. had the following items reported on its most recent financial statements:
Total revenues……………..$500,000
Dividends………………$10,000
Total Assets……………..$425,000
Total Liabilities…………$125,000
Total contributed capital….$100,000
Beginning Retained Earnings….$140,000
What total expenses were reported by Anna for the year?
$155,000
$275,000
$310,000
$430,000

59. 30. Surfing Magazine receives $50,000 from customers on April 1, 2009, for one-year magazine subscriptions. On December 31, 2009, Surfing Magazine should?
Report unearned revenue of $55,000
Report sales revenue of $50,000
Report sales revenue of $37,500
Report unearned revenue of $37,500

60. 30. Surfing Magazine receives $50,000 from customers on April 1, 2009, for one-year magazine subscriptions. On December 31, 2009, Surfing Magazine should?
Report unearned revenue of $55,000
Report sales revenue of $50,000
Report sales revenue of $37,500
Report unearned revenue of $37,500

61. 31. Investing activities?
Involve day to day events like selling goods and services, which occur when running a business
Involve the buying or selling of land, buildings, equipment, and other long-term investments
Only involve financial exchanges
All of these

62. 31. Investing activities?
Involve day to day events like selling goods and services, which occur when running a business
Involve the buying or selling of land, buildings, equipment, and other long-term investments
Only involve financial exchanges
All of these

63. 32. Accumulated depreciation?
Is an expense account
Is a liability account
Is a regular asset account
Is an asset contra-account

64. 32. Accumulated depreciation?
Is an expense account
Is a liability account
Is a regular asset account
Is an asset contra-account

65. 33. Cy’s Bar and Grill has $10,000 in utilities expense during the year. At the beginning of the year, Cy’s had utilities payable amounting to $520. At the end of the year, utilities payable totaled $470. What amount of cash did Cy’s pay for utilities during the year?
$9950
$10,000
$10,050
$10,990

66. 33. Cy’s Bar and Grill has $10,000 in utilities expense during the year. At the beginning of the year, Cy’s had utilities payable amounting to $520. At the end of the year, utilities payable totaled $470. What amount of cash did Cy’s pay for utilities during the year?
$9950
$10,000
$10,050
$10,990

67. 34. At the end of the month, the adjusting journal entry to record the use of supplies would include?
An increase to supplies and an increase to expenses
A decrease to supplies and an increase to expense
An increase to supplies and an increase to revenue
A decrease to supplies and a decrease to cash

68. 34. At the end of the month, the adjusting journal entry to record the use of supplies would include?
An increase to supplies and an increase to expenses
A decrease to supplies and an increase to expense
An increase to supplies and an increase to revenue
A decrease to supplies and a decrease to cash

69. 35. Primary responsibility for the information in a corporation’s financial statements rests with?
The shareholders of the corporation
The managers of the corporation
The Securities and Exchange Commission
The certified public accountant who audited the financial statements

70. 35. Primary responsibility for the information in a corporation’s financial statements rests with?
The shareholders of the corporation
The managers of the corporation
The Securities and Exchange Commission
The certified public accountant who audited the financial statements