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GB 518 Quiz 1

GB518 Financial Accounting Principles and Analysis

Question : If equity is $300,000 and liabilities are $192,000, then assets equal:

Question 2. Question : If assets are $99,000 and liabilities are $32,000, then equity equals:

Question 3. Question : Reebok had income of $150 million and average assets of $1,800 million. Its return on assets is:

Question 4. Question : Unearned revenues are:

Revenues that have been earned and received in cash

Revenues that have been earned but not yet collected in cash

Liabilities created when a customer pays in advance for products or services before the revenue is earned

Recorded as an asset in the accounting records

Increases to retained earnings

Question 5. Question : Technological advancement

Has replaced accounting

Has not changed the work that accountants do

Has freed accounting professionals to concentrate more on the analysis and interpretation of information

In accounting has replaced the need for decision makers

In accounting is only available to large corporations

Question 6. Question : Of the following accounts, the one that normally has a credit balance is:

Cash

Office Equipment

Sales Salaries Payable

Dividends

Sales Salaries Expense

Question 7. Question : Net Income:

Decreases equity

Represents the amount of assets owners put into a business

Equals assets minus liabilities

Is the excess of revenues over expenses

Represents the owners' claims against assets

Question 8. Question : Internal users of accounting information include:

Shareholders

Customers

Creditors

Government regulators

Line Supervisor

Question 9. Question : A company has twice as much owner's equity as it does liabilities. If total liabilities are $50,000, what amounts of assets are owned by the company?

$50,000

$100,000

$150,000

$200,000

Question 10. Question : A credit is used to record:

An increase in an expense account

An increase in an asset account

An increase in an unearned revenue account

A decrease in a revenue account

A decrease to retained earnings

Question 11. Question : Apatha Company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effects of this transaction include:

Assets increase by $75,000 and expenses increase by $75,000

Assets increase by $75,000 and expenses decrease by $75,000

Liabilities increase by $75,000 and expenses decrease by $75,000

Assets decrease by $75,000 and expenses decrease by $75,000

Assets increase by $75,000 and liabilities increase by $75,000

Question 12. Question : The principle that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash and (3) measures the amount of revenue as the cash plus the cash equivalent value of any non-cash assets received from customers in exchange for goods or services is called the:

Going-concern principle

Cost principle

Revenue recognition principle

Objectivity principle

Business entity principle

Question 13. Question : Which of the following is the primary purpose of accounting?

To establish a business

To identify, record and communicate business transactions

To deceive stockholders

To keep from paying taxes

To establish credit for a company

Question 14. Question : Assets created by selling goods and services on credit are:

Accounts payable

Accounts receivable

Liabilities

Expenses

Question 15. Question : Double-entry accounting is an accounting system:

That records each transaction twice

That records the effects of transactions and other events in at least two accounts with equal debits and credits

In which the impact of each transaction is recorded in two or more accounts but that could include two debits and no credits

That may only be used if T-accounts are used

That insures that errors never occur

Question 16. Question : An example of a financing activity is:

Buying office supplies

Obtaining a long-term loan

Buying office equipment

Selling inventory

Buying land

Question 17. Question : A debit is:

An increase in an account

The right-hand side of a T-account

A decrease in an account

The left-hand side of a T-account

An increase to a liability account

Question 18. Question : Risk is:

Net income divided by average total assets

The reward for investment

The uncertainty about the expected return that will be earned from an investment

Unrelated to expected return

Question 19. Question : Which of the following statements best describes the relationship of U.S. GAAP and IFRS?

They are identical

They are entirely different conceptual frameworks

They are similar but not identical

Neither has anything to do with accounting

They both relate only to publicly traded companies

Question 20. Question : Source documents include all of the following except:

Sales tickets

Ledgers

Checks

Purchase orders

Bank statements

Question 21. Question : Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

38.6%

13.4%

34.9%

25.9%

14.9%

Question 22. Question : An asset created by prepayment of an expense is:

Recorded as a debit to an unearned revenue account

Recorded as a debit to a prepaid expense account

Recorded as a credit to an unearned revenue account

Recorded as a credit to a prepaid expense account

Not recorded in the accounting records until the earnings process is complete

Question 23. Question : Increases in retained earnings from a company's earnings activities are:

Assets

Revenues

Liabilities

Stockholder's Equity

Expenses

Question 24. Question : Which of the following accounting principles dictates when expenses are recognized?

Revenue recognition principle

Monetary unit principle

Business entity principle

Matching principle

Full disclosure principle

Question 25. Question : Prepaid expenses are:

Payments made for products and services that do not ever expire

Classified as liabilities on the balance sheet

Decreases in retained earnings

Assets that represent prepayments of future expenses

Promises of payments by customers