Auburn University - ACCT 2110

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Name       Chapter 1--Financial Accounting

Description

 

Question Which of the following underlying assumptions for the conceptual framework is the reason the dollar is used in the preparation of financial statements?

 

Question Which of the following is an assumption made in the preparation of the financial statements?

 

Question The time period assumption is necessary because:

Question The going concern assumption is concerned with:

Question Which of the following concepts relates to separating the reporting of business and personal economic transactions?

Question "Revenues" are best described as:

Question Which of the following best describes the term "expenses"?

Question Which statement demonstrates the financial success or failure of the company over that specific period of time?

Question The resources used to generate revenues during a period are called:

Question Which of the following is the correct date format for the financial statement heading?

Question Which financial statement would you analyze to determine its operating performance for the past year?

Question Doughtry's Pet Shop reported a net loss of $1,500,000 and total expenses of $2,900,000. How much were the total sales?

Question The income statement shows:

Question Expenses can be matched against revenues:

Question What does the phrase, "Revenue is recognized when earned" mean?

Question "Matching principle" is best described as:

Question Monaco Lawn Service Company used $250 of fuel to mow customer lawns in June. The fuel was purchased on account and due in July.  Fuel Expense should be recorded in:

 

Question Monaco Lawn Service Company creates revenue each time:

Question IPOD CORPORATION IPOD Corporations' end-of-year Balance Sheet consisted of the following amounts.

Question IPOD CORPORATION

Question Peck Company

Question Peck Company The Peck Company reported the following items on its financial statements for the year ending December 31, 2012.

Question Ponzi Corporation

Ponzi Corporation reported the following information for the year ended December 31, 2012.

Question Ponzi Corporation

Ponzi Corporation reported the following information for the year ended December 31, 2012.

Question Which of the following terms best describes a distribution of the net income of a corporation to its owners?

Question You are a potential creditor and are concerned that a particular company you are ready to give a loan to might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?

Question Which financial statement would you refer to in order to determine how many resources (assets) the company owns?

Question Which one of the following events creates a liability for a business?

Question Which of the following is a correct fundamental accounting equation?

Question On January 1, 2012, Blackstone Company reported assets of $1,000,000 and liabilities of $600,000. During 2012 assets decreased by $200,000 and Equity decreased $250,000. What is the amount of Equity on December 31, 2012.

Question Which one of the following items appears on a balance sheet?

Question Who among the following generally lends funds to a business entity and expects repayment of the funds?

Question Who among the following invest funds into a business and are considered owners?

Question Which one of the following financial statements reports an entity's financial position at a specific date?

Question Ranger Company has assets of $5,000,000, liabilities of $3,000,000, and retained earnings of $1,200,000. How much is total equity?

Question "Economic resources" are known as:

Question The assets and liabilities of the company are $175,000 and $40,000, respectively.  Equity should equal:

Question Liabilities are reported on the:

Question Which of the following is not an asset?

Question How is the balance sheet linked to the other financial statements?

Question Which of the following best describes the term "retained earnings" of a company?

Question Which one of the following equations represents the statement of retained earnings activity?

Question Four financial statements are usually prepared for a business.  The statement of cash flows is usually prepared last.  The retained earnings statement (RE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement.  In what order are these three statements prepared?

Question Bailout Corporation

Bailout Corporation reported the following information for the year ended December 31, 2012.

Revenues      $2,500,000

Expenses      2,000,000 Retained earnings at December 31, 2011         100,000

Retained earnings at December 31, 2012         450,000

Refer to the selected information provided for Bailout Corporation. How much was paid out in dividends in 2012?

Question Jetson Corporation

Question On January 1, 2012, Money Company's balance in retained earnings was $10,000,000. At the end of the year, December 31, 2012, the balance in retained earnings was $9,400,000. During 2012, the company earned net income of $440,000. How much were dividends?

Question The statement of cash flows has which of the following economic activity categories?

Question Which one of the following is not one of the three business activities as shown in statement of cash flows?

Question Which one of the following is not one of the activities on the statement of cash flows?

Question Which of the following best describes a company's operating activities?

Question If stockholders want to know how money flowed into and out of the company, what financial statement would they use?

Question Cash investments made by stockholders in exchange for capital stock in a business are reported on the statement of cash flows in the:

Question Which one of the following is a correct basic structure of the cash flow statement?

Question Cash received from customers for mowing their lawns is reported on the statement of cash flows in the:

Question Cash used to purchase a truck to transport lawn mowers and other tools to customer locations is reported on the statement of cash flows in the:

Question Which one of the following financial statements shows the end of the year cash balance for a business entity?

Question Tarp Corporation

Beginning retained earnings	$550,000
Ending retained earnings	700,000
Dividends paid	100,000
Revenue	525,000

Refer to the selected information provided for Tarp Corporation. What is the net income for Tarp Corporation?

Question Tarp Corporation

Beginning retained earnings    $550,000 Ending retained earnings         700,000

Dividends paid          100,000

Revenue        525,000

Refer to the selected information provided for Tarp Corporation. The company's expenses are:

Question If a company has $10,500,000 of revenues, declares and pays $550,000 in dividends, and has net income of $1,600,000, how much were expenses for the year?

Question Davis Construction Inc.

Davis Construction began operation on January 1, 2012, with an initial investment of $100,000 from each of its three stockholders. During the year ending 2012 Davis Construction had net income of $125,000 and paid dividends of $50,000.

Refer to the information provided for Davis Construction, Inc. and calculate its retained earnings balance at December 31, 2012.

Question Davis Construction Inc.

Davis Construction began operation on January 1, 2012, with an initial investment of $100,000 from each of its three stockholders. During the year ending 2012 Davis Construction had net income of $125,000 and paid dividends of $50,000.

Refer to the information provided for Davis Construction, Inc. The dividends for the year:

Question Davis Construction Inc.

Davis Construction began operation on January 1, 2012, with an initial investment of $100,000 from each of its three stockholders. During the year ending 2012 Davis Construction had net income of $125,000 and paid dividends of $50,000.

Refer to Davis Construction. If Davis Construction's revenues were $500,000 for the year ended December 31, 2012, how much were total expenses?

Question In order for accounting information to be useful in making informed decisions, it must be:

Question Which of the following qualitative characteristic of useful accounting information implies that only items that meet or exceed certain thresholds will affect decisions?

Question The principle of conservatism is concerned with:

Question Mullins, Inc. manufactures furniture. Mullins has given you its most recent annual report in an effort to obtain a sizeable loan. The company is very profitable and appears to have a strong financial position. However, based on a news report you saw on television last night, you are aware that Mullins is a defendant in a class action lawsuit related to defective products. Serious injuries were allegedly caused by Mullins' infant high chairs overturning. The television news report is an example of financial information that is:

Question If an investor can use accounting information for two different companies to evaluate the types and amounts of expenses, the information is said to have the quality of:

Question PTG Enterprises purchases many small pieces of office furniture, such as trash cans, that cost less than $100 each. PTG accounts for these items as expenses when acquired rather than reporting them as property, plant, and equipment on its balance sheet. The company's accountant states that no accounting principle has been violated. Justification for PTG's policy of expensing these furniture items is based on cost vs. benefit considerations as well as qualitative characteristic of accounting information of:

Question Scott Brothers, Inc. follows the qualitative characteristic of consistency. This means that:

Question Information that is material means that an error in recording the dollar amount of a transaction would:

Question An accountant is uncertain about the best estimate of an amount for a business transaction. If there are two possible amounts that could be recorded, the amount least likely to overstate assets and earnings is selected. Which of the following qualities is

Question One of the qualitative characteristics of accounting information include:

Question Times Corporation

The accountant for the Times Corporation prepared the following list from the company's accounting records for the year ended December 31, 2012.

Retained earnings ?Prepaid expenses $    70,000 Cash $     97,000Common stock 500,000

Accounts payable 70,000Accounts receivable 260,000 Sales revenue 1,075,000Interest income 70,000

Cost of sales 780,000Salary expense 220,000 Land 810,000Income tax expense 60,000

Notes payable 520,000Selling expense 75,000 Inventory 280,000Salaries payable 55,000

Determine the following amounts for Times Corporation. A)          Total assets at the end of 2012.

2. Total liabilities at the end of 2012.
3. Total equity at the end of 2012.

Question Times Corporation

The accountant for the Times Corporation prepared the following list from the company's accounting records for the year ended December 31, 2012.

Retained earnings ?Prepaid expenses $    70,000 Cash $     97,000Common stock 500,000

Accounts payable 70,000Accounts receivable 260,000 Sales revenue 1,075,000Interest income 70,000

Cost of sales 780,000Salary expense 220,000 Land 810,000Income tax expense 60,000

Notes payable 520,000Selling expense 75,000 Inventory 280,000Salaries payable 55,000

Determine the following amounts for Times Corporation:

1. Total revenues for 2012.
2. Total expenses for 2012.
3. Net income for 2012.

 

Question Times Corporation The accountant for the Times Corporation prepared the following list from the company's accounting records for the year ended
December 31, 2012.
Retained earnings	?Prepaid expenses	$    70,000
Cash	$     97,000Common stock	500,000
Accounts payable	70,000Accounts receivable	260,000
Sales revenue	1,075,000Interest income	70,000
Cost of sales	780,000Salary expense	220,000
Land	810,000Income tax expense	60,000
Notes payable	520,000Selling expense	75,000
Inventory	280,000Salaries payable	55,000

Page 12

Prepare an income statement for Times Corporation in a proper format.

 

Question Times Corporation The accountant for the Times Corporation prepared the following list from the company's accounting records for the year ended December 31, 2012.

Retained earnings          ?Prepaid expenses Cash     $     97,000Common stock Accounts payable         70,000Accounts receivable Sales revenue   1,075,000Interest income Cost of sales    780,000Salary expense Land     810,000Income tax expense Notes payable   520,000Selling expense Inventory           280,000Salaries payable Prepare a Balance Sheet for the Times Corporation in a proper format.   Question Several amounts from GM Company at December 31, 2012, are listed below. Answer the questions.

Service revenue $817,500Salaries expense $343,500 Dividends paid 75,000Rent expense 129,000

Buildings         165,000Land     150,000

Accounts payable 60,000Accounts receivable 42,000 Capital stock 90,000Retained earnings, Jan. 1, 2012 600,000

Utilities expense          28,500Notes payable     45,000

Income tax payable     6,000Income tax expense          165,000

1. Calculate net income for 2012.
2. How much is GM Company's retained earnings at the end of 2012?

Question The following information comes from the records of America Corporation:

Assets Liabilities         Equity

January 1, 2012           $750,000           $270,000           $________

December 31, 2012      905,000 _______            700,000

1. What is the amount of equity at January 1, 2012?
2. What is the amount of liabilities at December 31, 2012?
3. Assume that the company paid dividends of $310,000 during the year. How much net income did it earn during the year?
4. Assume that the company paid no dividends during the year. Without looking at the income statement, how can you tell if the company is profitable or not?

Question Cardinal Corporation reported the following information at December 31, 2012:

Accounts payable         $400,000Dividends paid	$100,000
Cash     $100,000Expenses	$600,000
Inventories        $700,000Revenue Calculate Cardinal Corporation's total assets. Calculate Cardinal Corporations' net income for 2012. Calculate Cardinal Corporation's total equity at the end of 2012.   Question Newton Corporation began operations on January 2, 2010, with a total investment of $150,000 by its stockholders. Net loss for its first year of business was $20,000. During 2011 and 2012, net income increased to $120,000 and $150,000, respectively. Newton paid $50,000 per year in dividends to its shareholders in 2011 and 2012.

1. Prepare a statement of retained earnings for the year ended December 31, 2011.
2. How much is total retained earnings at December 31, 2012?

Question The beginning balance of retained earnings was $2,400,000, and the ending balance was $1,500,000. The company paid dividends of $150,000.

1. Determine the amount of net income (loss) for the year.
2. What information would one find on the income statement in addition to net income?

Question President Corporation started business at the beginning of the year, with assets of $2,000,000 and equity of $1,130,000. By the end of the year, assets increased by $200,000 and liabilities decreased by $300,000. Other than net income or loss, the only change in equity was dividends of $100,000.

1. What was the amount of President Corporation’s equity at the end of the year?
2. What was the amount of President Corporation’s net income or net loss for the year?

 

Question The financial statement in which you list revenues, starting with sales revenue (service revenue), is called the ____________________.

Question The fundamental accounting equation is ____________________ = ____________________ + ____________________.

Question Both net income and dividends can be found on the financial statement called the ____________________.

Question Net income from the income statement increases ____________________.

Question The statement of cash flows classifies cash flow into  ____________________, ____________________ and ____________________ activities.

Question The type of business activity that relates to obtaining funds from either issuing stock or borrowing money is called ____________________.

Question The names of the four basic financial statements are the ____________________, the ____________________, the ____________________, and the ____________________

Question The three financial statements in which net income can be found are the ____________________, the ____________________ and the ____________________.

Question Each of the situations in A through C below applies to one of the assumptions or principles included in the conceptual framework of accounting. Identify which assumption or principles applies and explain why that assumption or principle applies.

1. Globall Inc. is a U.S. company that has divisions in several countries around the world. Each country has a currency different than the U.S. dollar. Globall must include the financial data of its worldwide divisions in its financial statements.
2. Cheetum & Howell operate a security business as a partnership. The partners are considering a change to the corporate form of business organization.
3. Yum Shops, Inc. is a locally owned and operated confectionary. The owners have decided to expand into nearby cities. Expansion will require more capital, but management does not expect it will stay in business for more than one year or so regardless of its expansion plans.

Question What is the purpose of an income statement?

Question List the four financial statements. Explain the connection between these four statements.