ACC 303 TEST #1

1. 1All of the following are advantages for choosing a proprietorship for a business except:

   1. Aa) Proprietorship receive more favorable tax treatment.
   2. Bb) A proprietorship is a simple form of business to set up.
   3. Cc) A proprietorship gives the owner control of the business.
   4. Dd) Transfer of ownership is easily achieved through stock sales.
2. 2An advantage of the corporate form of business is that

   1. Ait has limited life
   2. Bits owners personal resources are at stake
   3. Cits ownership is easily transferable via the sale of shares of stock.
   4. Dit is simple to establish
3. 3Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt?

   1. AOnly Jack is personally liable for the debt, since he has been the managing partner during that time.
   2. BOnly Jill is personally liable for the debt of the business, since Jack has been working and she has not.
   3. CBoth Jack and Jill are personally liable for the business debt.
   4. DNeither Jack nor Jill is personally liable for the business debt, since the partnership is a separate legal entity.
4. 4A small neighborhood barber shop that is operated by its owner would likely be organized as a

   1. Ajoint venture
   2. Bpartnership
   3. Ccorporation
   4. Dproprietorship
5. 5Issuing shares of stock in exchange for cash is an example of a(n)

   1. Adelivering activity
   2. Binvesting activity
   3. Cfinancing activity
   4. Doperating activity
6. 6The right to receive money in the future is called a(n)
   

   1. Aaccounts payable
   2. Baccount receivable
   3. Cliability
   4. Drevenue
7. 7Buying assets needed to operate a business is an example of a(n)

   1. Aa. delivering activity.
   2. Bb. financing activity.
   3. Cc. investing activity.
   4. Dd. operating activity.
8. 8Debt and obligations of a business are referred to as

   1. Aassets
   2. Bequities
   3. Cliabilities
   4. Dexpenses
9. 9An income statement shows

   1. Arevenues, liabilities, and stockholders equity
   2. Bexpenses, dividends, and stockholders equity
   3. Crevenues, expenses, and net income
   4. Dassets, liabilities, and stockholders equity
10. 10Which of the following is not a liability

    1. AUnearned service revenue
    2. BAccounts payable
    3. CAccounts receivable
    4. DInterest payable

11. 11The balance sheet

    1. Asummarizes the changes in retained earnings for a specific period of time
    2. Breports the changes in assets, liabilities, and stockholders equity over a period of time
    3. Crepots the assets, and liabilities, and stockholders equity at a specific date
    4. Dpresents the revenues and expenses for a specific period of time
12. 12Finney Company began the year by issuing $80000 of common stock for cash. The company recorded revenues of $740000, expenses of $640000, and paid dividends of $40000. What was Finney's net income for the year?

    1. A$60,000
    2. B$140,000
    3. C$100,000
    4. D$180,000
13. 13Elston Company compiled the following financial information as of December 31, 2017:
    Service revenue $840,000
    Common stock 180,000
    Equipment 240,000
    Operating expenses 750,000
    Cash 210,000
    Dividends 60,000
    Supplies 30,000
    Accounts payable 120,000
    Accounts receivable 90,000
    Retained earnings, 1/1/17 450,000
    Elston's assets on December 31, 2017 are?

    1. A$1,410,000
    2. B$1,020,000
    3. C$480,000
    4. D$570,000
14. 14Which of the following is not considered an asset?

    1. Aa. Equipment
    2. Bb. Dividends
    3. Cc. Accounts receivable
    4. Dd. Inventory
15. 15Cash $ 195,000 Accounts payable $ 210,000
    Accounts receivable 150,000 Salaries and wages payable 30,000
    Inventory 165,000 Mortgage payable 240,000
    Prepaid insurance 90,000 Total liabilities $480,000
    Stock investments (Short-Term) 255,000
    Land 270,000
    Buildings $315,000 Common stock $360,000
    Less: Accumulated Retained earnings 750,000
    depreciation (60,000) 255,000 Total stockholders’ equity $1,110,000
    Trademarks 210,000 Total liabilities and
    Total assets $1,590,000 stockholders’ equity $1,590,000
    
    What is the total dollar amount of assets to be classified as current assets?

    1. Aa. $855,000
    2. Bb. $600,000
    3. Cc. $510,000
    4. Dd. $435,000
16. 16In 2017 Grider corporation had cash receipts of $35,000 and cash disbursements of $20,000. grider's ending cash balance at December 31, 2017 was $65,000. what was Grider's beginning cash balance?

    1. A$50,000
    2. B$60,000
    3. C$85,000
    4. D$80,000
17. 17Using the following balance sheet and income statement data, what is the current ratio?
    Current Assets: $21,000
    Current Liabilities: $12,000
    Average assets: $132,000
    Total assets: $90,000
    Average common shares outstanding was: $15,000
    Net Income: $45,000
    Stockholders' Equity: $63,000
    Total Liabilities: $27,000
    Average common shares outstanding was $15,000

    1. A$3.00
    2. B$4.20
    3. C$0.33
    4. D$0.50
18. 18Generally accepted accounting principles

    1. Aare accounting rules formulated by the internal revenue service
    2. Bare sound in theory but rarely used in real life
    3. Care accounting rules that are recognized as a general guide for financial reporting
    4. Dhave eliminated all errors in accounting
19. 19An item is considered material if
    

    1. AA) it doesn't cost a lot of money
    2. BB) it is a tangible good
    3. CC) its size is likely to influence the decision of an investor or creditor
    4. DD) the cost of reporting the item is greater than its benefits
20. 20what organization issues U.S. accounting standards

    1. ASecurity exchange commission
    2. BInternational accounting standards committee
    3. CInternational auditing standards committee
    4. DFinancial accounting standards board
21. 21The TNT Company has five plants nationwide that cost $300 million. The current fair value of the plants is $500 million. The plants will be reported as assets at?

    1. A$200 million.
    2. B$800 million.
    3. C$300 million.
    4. D$500 million.
22. 22the historical cost principle requires that when assets are acquired they be recorded at

    1. Abook value
    2. Bthe amount paid to acquire them
    3. Cappraised value
    4. Dlist price
23. 23Collection of a $600 Accounts Receivable

    1. Aa. increases an asset $600; decreases an asset $600.
    2. Bb. increases an asset $600; decreases a liability $600.
    3. Cc. decreases a liability $600; increases stockholders' equity $600.
    4. Dd. decreases an asset $600; decreases a liability $600.
24. 24are prepaid amounts received from customers treated as revenue at the time of receipt why or why not

    1. AYes, they are treated as revenue at the time of receipt because the company has access to the cash
    2. BNo, the amount of revenue cannot be adequately determined until the company completes the work
    3. CYes, the intent of the company is to perform the work and the customer is confident that the services will be completed
    4. DNo, revenue cannot be recognized until the work is performed
25. 25The payment of a liability
    

    1. Aa. decreases assets and stockholders' equity.
    2. Bb. increases assets and decreases liabilities.
    3. Cc. decreases assets and increases liabilities.
    4. Dd. decreases assets and liabilities.
26. 26At December 1, 2017, Orear Company's A/R balance was $16,800. During December, Orear had credit sales of $45,000 and collected accounts receivable of $36,000. At December 1, 2017, the accounts receivable balance is

    1. A$16,800
    2. B$25,800
    3. C$61,800
    4. D$9,000
27. 27February 1, 2017 balance in Goebel Inc's supplies account was $3,500. During February, Goebel purchased supplies of $3,000 and used supplies of $4,000. At the end of February, the balance in the supplies account should be?

    1. A$3,500
    2. B$4,500
    3. C$10,500
    4. D$2,500
28. 28The revenue recognition principle dictates that revenue should be recognized in the account records

    1. Awhen cash is received
    2. Bwhen the performance obligation is satisfied
    3. Cat the end of the month
    4. Din the period that income taxes are paid
29. 29the expense recognition principle matches

    1. Acustomers with businesses
    2. Bexpenses with revenues
    3. Cassets with liabilities
    4. Dcreditors with businesses
30. 30The Unearned Service Revenue account is classified as a(n)

    1. AA) asset.
    2. BB) revenue.
    3. CC) expense.
    4. DD) liability.
31. 31Which of the following is an asset?
    

    1. Aservice revenue
    2. Bnotes payable
    3. Csupplies expense
    4. Dprepaid rent
32. 32Otto's Tune-Up Shop follows the revenue recognition principle. Otto services a car on August 31. The customer picks up the vehicle on September 1 and mails the payment to Otto on September 5. Otto receives the check in the mail on September 6. When should Otto show that the revenue was recognized?

    1. AAugust 31
    2. BAugust 1
    3. CSeptember 5
    4. DSeptember 6
33. 33Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting.
    
    
    Revenue recognized $19000
    Accounts receivable $3000
    Expenses incurred $7250
    Accounts payable (related to expenses) $750
    Supplies purchased with cash $1800

    1. A$11,750
    2. B$14,000
    3. C$9,500
    4. D$12,200
34. 34Accrued expenses are:

    1. Apaid and recorded in an asset account before they are used or consumed
    2. Bpaid and recorded in an asset account after they are used or consumed
    3. Cincurred but not yet paid or recorded
    4. Dincurred and already paid or recorded
35. 35Prepaid expenses are:

    1. Apaid and recorded in an asset account before they are used or consumed
    2. Bpaid and recorded in an asset account after they are used or consumed
    3. Cincurred but yet paid or recorded
    4. Dincurred and paid or recorded
36. 36Accrued revenues are:

    1. Areceived and recorded as liabilities before they are recognized
    2. Brecognized and recorded as liabilities before they are received
    3. Crecognized but yet not received or recorded
    4. Drecognized and already received and recorded
37. 37which of the following is not a justification for the adjustments

    1. AAdjustments are necessary to ensure that the revenue recognition principle is followed
    2. BAdjustments are necessary to ensure that the expense recognition principle is followed
    3. CAdjustments are necessary to ensure financial statements to be in conformity with GAAP
    4. DAdjustments are necessary to bring the accounts in line with the budget
38. 38if service for $175 had been performed but not billed, the adjustment to record this would include an

    1. Adecrease to service revenue for $175
    2. Bincrease to unearned service revenue for $175
    3. Cincrease to service revenue for $175
    4. Ddecrease to unearned revenue for $175
39. 39The difference between the balance of a plant asset account and the related accumulated depreciation account is termed?

    1. Amarket value
    2. Bcontra asset
    3. Cbook value
    4. Dliability
40. 40On January 1, 2016, Leardon Inc. purchased equipment for $25,000. The company is depreciating the equipment at the rate of $1,000 per month. At January 31, 2017, the balance in Accumulated Depreciation is:

    1. A$1,000
    2. B$12,000
    3. C$13,000
    4. D$62,000
41. 41At December 31, 2017, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $4,200. It was determined that $1,800 of the Prepaid Insurance had expired. The adjusted balance for Prepaid Insurance for the year would be:

    1. A$1,800
    2. B$2,400
    3. C$5,700
    4. D$4,200
42. 42De Meaning Corporation issued a one-year 6% $400,000 note on April 30, 2017. Interest expense for the year ended December 31, 2017, was:
    

    1. A$24,000
    2. B$18,000
    3. C$16,000
    4. D$14,000
43. 43snelling tables paid employee wages on and through Friday, Jan 26 and the next payroll will be paid in February. there are three more working days in January (29-31). employees work 5 days a week and the company pays 1,200 a day in wages. what will be the adjusting entry to accrue wages expense at the end of January?

    1. Aincrease salaries and wages expense $1,200
       increase salaries and wages payable $1,200
    2. Bincrease salaries and wages expense $6,000
       increase salaries and wages payable $6,000
    3. Cincrease salaries and wages expense $3,600
       increase salaries and wages payable $3,600
    4. DNo adjustment is required

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ACCOUNTING Quiz on ACC 303 TEST #1, created by Ahmad Rahimyar on 26/09/2019.

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