| 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.|
|2.||Question :||(TCO C) Issuing shares of stock in exchange for cash is an example of a(n):|
|Student Answer:||delivering activity.|
|3.||Question :||(TCO C) Which activities involve putting the resources of the business into action to generate a profit?|
|4.||Question :||(TCO A) The cost of assets consumed or services used is also known as:|
|Student Answer:||a revenue.|
|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?
|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.|
|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.|
|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
-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?
|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?|
|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?|
|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.|
|12.||Question :||(TCO D) Which one of the following is not a part of an account?|
|Student Answer:||Credit side|
|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|
|14.||Question :||(TCO D) A debit is the normal balance for which account listed below?|
|Capital stock issued|