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Exam 1: A Framework for Financial Accounting

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Question 71

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Liabilities can be best described as:

A) The amount of expenses over the past year.
B) The amount expected to be distributed to stockholders.
C) The amount owed to creditors.

D) A) and B)
E) None of the above

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Question 72

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The balance sheet depicts which of the following equations?

A) Net income = revenue - expenses.
B) Ending retained earnings = beginning retained earnings + net income - dividends.
C) Assets = liabilities + stockholders' equity.

D) All of the above
E) B) and C)

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Question 73

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Which statement below best describes the objectives of financial accounting?

The assumption that the assets and liabilities of the business are accounted for on the books of the company but not included in the records of the owner is the:

The assumption that a business will continue to operate into the future is the:

Which of the following has the single greatest impact on stock prices?

Net income (loss) appears in which two financial statements?

One advantage of the corporate form of business is double taxation.Double taxation is a disadvantage of the corporate form of business.

How many of the following transactions would affect operating cash flows reported in the statement of cash flows (all transaction involve cash) ? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750 Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock

Sooner Company had a net income of $8,000,$5,000,$12,000,and $10,000 over the first four years of the company's existence.If the average annual amount of dividends paid over the last four years is $3,000,what is the ending retained earnings balance?

The primary objective of financial accounting is to provide useful information to managers in making decisions.Financial accounting is intended primarily to provide information to investors and creditors.

Which financial accounting number impacts stock prices more than any other single piece of information?

If total liabilities of a company equal $16,000 and total stockholders' equity equals $9,000,then total assets equal $7,000.Total assets = Total liabilities ($16,000)+ Total stockholders' equity ($9,000)= $25,000.

Cash received from bank borrowing would be reported in the statement of cash flows as what type of activity?

Which of the following accounts represents a resource of the company?

Financial accounting objectives do not include providing information:

One of the differences between a partnership and a corporation is that owners of a partnership have limited liability.Stockholders of a corporation have limited liability.

Consider the following account balances of the Shattuck Law Firm at the end of the year: How many of these accounts would appear in Shattuck's year-end income statement? $\begin{array} { | l | r | } \hline \text { Accounts Payable } & \$ 4,400 \\\hline \text { Salaries Expense } & 12,800 \\\hline \text { Cash } & 1,700 \\\hline \text { Common Stock } & 2,400 \\\hline \text { Service Revenue } & 8,300 \\\hline \text { Supplies } & 4,300 \\\hline \text { Retained Earnings } & 1,100 \\\hline \text { Utilities Expense } & 5,000 \\\hline\end{array}$

Amounts owed to suppliers,employees,the government in the form of taxes,and utility companies are examples of liabilities.

Retained earnings at the end of the year is calculated using: