1. Question : | (TCO A, B, C) Which of the following statements concerning users of accounting information is incorrect? |
| | Student Answer: | | Management is considered an internal user. | | | | Present and prospective creditors are considered external users. | | | | Regulatory authorities such as the SEC are considered internal users. | | | | |
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2. | Question : | (TCO C) Issuing shares of stock in exchange for cash is an example of a(n): |
| | Student Answer: | | delivering activity. | | | | investing activity. | | | | financing activity. | | | | operating activity. | | |
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3. | Question : | (TCO C) Which activities involve putting the resources of the business into action to generate a profit? |
| | Student Answer: | | Delivering | | | | Financing | | | | Investing | | | | Operating | | |
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4. | Question : | (TCO A) The cost of assets consumed or services used is also known as: |
| | Student Answer: | | a revenue. | | | | an expense. | | | | a liability. | | | | an asset. | | | |
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5. | Question : | (TCO C) Edwards Company recorded the following cash transactions for the year: Paid $45,000 for salaries. Paid $20,000 to purchase office equipment. Paid $5,000 for utilities. Paid $2,000 in dividends. Collected $75,000 from customers. What was Edwards’ net cash provided by operating activities? |
| | Student Answer: | | $25,000 | | | | $5,000 | | | | $30,000 | | | | $23,000 | | | |
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6. | Question : | (TCO A) On a classified balance sheet, prepaid insurance is classified as: |
| | Student Answer: | | an intangible asset. | | | | property, plant, and equipment. | | | | a current asset. | | | | a long-term investment. | | | |
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7. | Question : | (TCO A) An intangible asset: |
| | Student Answer: | | may have the capacity to earn revenue for its owner. | | | | is worthless because it has no physical substance. | | | | is converted into a tangible asset during the operating cycle. | | | | cannot be reported on the balance sheet because it lacks physical substance. | | | |
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8. | Question : | (TCO A) These are selected account balances on December 31, 2007. -Land (location of the corporation’s office building) $200,000 -Land (held for future use) 300,000 -Corporate Office Building 1,200,000 -Inventory 400,000 -Equipment 900,000 -Office Furniture 200,000 -Accumulated Depreciation 600,000 What is the total NET amount of property, plant, and equipment that will appear on the balance sheet? |
| | Student Answer: | | $1,900,000 | | | | $2,600,000 | | | | $2,200,000 | | | | |
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9. | Question : | (TCO B) For 2010, Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share? |
| | Student Answer: | | $4.66 | | | | $0.20 | | | | $66.67 | | | | $5.00 | | | |
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10. | Question : | (TCO B) Liondale Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year, they issued common stock totaling $141,000. There were no dividends issued. What was their net income for the year? |
| | Student Answer: | | $207,000 | | | | $ 66,000 | | | | $348,000 | | | | $273,000 | | | |
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11. | Question : | (TCO D) On March 1, 2010, Dillon Company hires a new employee who will start the work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not? |
| | Student Answer: | | Yes, the company is now obligated to pay the employee, thus that event must be recorded on March 6. | | | | No, hiring an employee is an important event; however, it is not an economic event that should be recorded on March 6. | | | | Yes, failure to record the event on March 6 would cause the financial statements to be misleading. | | | | No, the journal entry should be made on March 1 which is the date of hiring. | | | |
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12. | Question : | (TCO D) Which one of the following is not a part of an account? |
| | Student Answer: | | Credit side | | | | Trial balance | | | | Debit side | | | | Title | | | |
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13. | Question : | (TCO D) Which of the following describes the classification and normal balance of the retained earnings account? |
| | Student Answer: | | Asset, debit | | | | Stockholders’ equity, credit | | | | Revenues, credit | | | | Expense, debit | | | |
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14. | Question : | (TCO D) A debit is the normal balance for which account listed below? |
| | Student Answer: | | Furniture | | | | Accounts payable | | | | Rent revenue | | | | Capital stock issued | | | |
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