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University of Alabama ACC 506 Chapter 1 Quiz 1)Which of the following items are an example of revenue? a

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University of Alabama

ACC 506

Chapter 1 Quiz

1)Which of the following items are an example of revenue?

a.            Cash received from investors from the sale of common stock

b.            Cash received from the sale of land for its original selling price

c.             Cash received from a bank loan

d.            Cash received from customers at the time services were provided

2.            Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

a.            Financial Accounting Standards Board

b.            Securities and Exchange Commission

c.             International Accounting Standards Board

d.            U.S. Congress

3.            International accounting standards are formulated by the IASB. What does that acronym stand for?

a.            International Accounting and Sustainability Board

b.            International Accountability Standards Bureau c. International Accepted Standards Board

d. Internationally Accepted Standards Board

4.            Dividends are reported on which financial statement?

a.            Income Statement

b.            Both the income statement and statement of changes in stockholders’ equity

c.             Balance Sheet

d.            Statement of Changes in Stockholders’ Equity

5.            Which of the following would appear in the investing activities section of the statement of cash flows?

a.            Cash outflow for the purchase of supplies

b.            Cash inflow from issuance of common stock

c.             Cash inflow from interest revenue

d.            Cash outflow for the purchase of land

6.            Which of the following is false regarding managerial accounting information?

a.            It is more detailed than financial accounting information

b.            It can include nonfinancial information

c.             It focuses on divisional rather than overall profitability d. It is often used by investors

7.            The amount of retained earnings is shown on the:

a.            Statement of changes in stockholders’ equity

b.            Income statement

c.             Balance sheet

d.            Statement of cash flows

e.            Balance sheet and statement of changes in stockholders’ equity

8.            Financial accounting standards are known collectively as GAAP. What does that acronym stand for?

a.            Generally Authorized Auditing Principles b. Generally Accepted Accounting Principles

c.             Generally Applied Accounting Procedures

d.            Governmentally Approved Accounting Practices

 

9.            Which term describes assets generated through operations that have been reinvested into the business?

a.            Dividend

b.            Retained earnings

c.             Common stock

d.            Liability

10.          Which of the following items appears in the investing activities section of the statement of cash flows?

a.            Cash inflow from the issuance of common stock

b.            Cash inflow from interest revenue

c.             Cash outflow for the payment of dividends d. Cash outflow for the purchase of land

11.          At the beginning of Year 2, X Company had assets of $300, liabilities of $150, and common stock of $50. During Year 2, the company earned revenue of $500, incurred expenses of $200, and paid dividends of $50. All transactions were cash transactions. The amount of total assets reported on X Company’s December 31, Year 2 balance sheet would be:

a. $250

b. $550

c. None of these answers are correct

d. $330

12.          On January 1, Year 2, Chavez Company had beginning balances as follows:

Assets   = $12,500

Liabilities              = $ 4,500

Common Stock = $ 3,000

During Year 2, Chavez paid dividends to its stockholders of $2,000. Given that ending retained earnings was $6,000, what was Chavez's net income for the Year 2?

a. $5,000

b. $3,000

c. $2,000

d. $7,000

13.          Lexington Company engaged in the following transactions during Year 1, its first year of operations (Assume all transactions are cash transactions).

1)            Acquired $4,200 cash from issuing common stock.

2)            Borrowed $2,800 from a bank.

3)            Earned $3,700 of revenues.

 

4)            Incurred $2,520 in expenses.

5)            Paid dividends of $520.

Lexington Company engaged in the following transactions during Year 2:

1)            Acquired an additional $1,100 cash from the issue of common stock.

2)            Repaid $1,720 of its debt to the bank.

3)            Earned revenues, $5,100.

4)            Incurred expenses of $2,990.

5)            Paid dividends of $1,360.

Total liabilities on Lexington's balance sheet at the end of Year 1 equal:

a. $1,100

b. $2,800

c. $840

d. ($1,720)

14.          As of December 31, Year 1, Mason Company had $500 cash. During Year 2, Mason earned $1,200 of cash revenue and paid $800 of cash expenses. What is the amount of cash that would be reported on the balance sheet at the end of Year 2?

a. $2,500

b. $400

c. $1,700

d. $900

 

15.          Robertson Company paid $1,850 cash for rent expense. As a result of this business event:

a.            Both total stockholder’s equity and net cash flow for operating activities

decreased

b.            The net cash flow from operating activities decreased

c.             Total stockholders’ equity decreased

d.            Liabilities decreased

16.          Li Company paid cash to purchase land. As a result of this accounting event, which of the following statements is true?

a.            Total stockholders’ equity decreased

b.            Total assets decreased

c.             Total assets were unaffected

d.            Both assets and total stockholders’ equity decreased

17.          Northern Corporation invested $800 cash in South Company stock. As a result of this transaction:

a.            Northern Company would have cash outflow from financing activities

b.            The balance in the Cash account on Northern Corporation’s books would decrease, while the balance sheet in the Cash account on South Company’s books would increase.

c.             South Company would have a cash inflow from investing activities

d.            All of these statements are true

18.          Kelly Company experienced the following events during its first                accounting period.

(1)          Issued common stock for $10,000 cash.

(2)          Earned $8,000 of cash revenue.

(3)          Paid $1,000 cash to purchase land.

(4)          Paid cash dividends amounting to $500.

 

(5)          Paid $4,400 of cash expenses.

Based on this information, what is the amount of net income? a. $3,600

b. $2,100

c. $5,600

d. $2,600

 

19.          Which of the following would not describe the effects of an asset source transaction on a company's financial statements?

 

                Balance Sheet   Income Statement         

Stateme nt of Cash Flows

               

Asset s 

 

=            

Liabilitie s            

 

+            

Stockholder s' Equity     

Revenu e            

 

−            

Expens e             

 

=             Net Incom e      

A

.               +                             +                             n/a         n/a                         n/a                         n/a         +FA

B

.               +                             n/a                         +             n/a                         n/a                         n/a         +FA

C

.               +                             n/a                         +             +                             n/a                         +             +OA

D

.               n/a                         n/a                         n/a         n/a                         n/a                         n/a         −IA

a.

b.            Option D

c.             Option B

d.            Option A

 

20.          During Year 2, Chico Company earned $2,600 of cash revenue, paid $1,150 of cash expenses, and paid a $650 cash dividend to its stockholders. Based on this information alone, which of the following statements is not true?

a.            Cash outflow from financing activities was $800

b.            Cash inflow from operation activities was $1,450

 

c.             Total assets increased by $800

d.            Net income amounted to $1,450