MBA560 Financial and Managerial Accounting: Module 1 Quiz (Version 2)

MBA560 Financial and Managerial Accounting Module 1 Quiz (Version 2) 1.Hardin Company began operations in 2010. During the year, the following cash transactions occurred: · Issued stock for $40,000 · Borrowed $24,000 from bank · Provided services to customers for $53,000 cash · Paid back $8,000 of the loan from the bank · Paid rent expense, $9,000 · Paid operating expenses, $29,000 Assuming that Hardin engaged in no transactions during the year other than those listed above, what was the amount of net income or loss for the year? (Points : 2) $19,000 net income $15,000 net income $12,000 net income $11,000 net loss 2.Dale Company purchased land costing $2,400 by paying cash. The company earned $2,000 revenue on account and incurred $1,100 of operating expenses on account. As a result of these transactions: (Points : 2) Total assets increased by $2,400. Liabilities increased by $1,100. Total assets increased by $5,400. Both A and B. 3.Liabilities are: (Points : 2) claims of creditors. the owner’s interest in the company. claims of investors. both A and B. 4.Parrot Company paid a $300 cash dividend. Which of the following choices accurately reflects how this event would affect the company's financial statements? Row Balance Sheet Income Statement Statement of Cash Flows Assets = Liab. + Equity Rev. - Exp. = Net Inc. One NA = 300 + (300) NA - 300 = (300) NA Two (300) = NA + (300) NA - 300 = (300) (300) FA Three (300) = NA + (300) NA - NA = NA (300) FA Four (300) = NA + (300) NA - NA = NA (300) OA (Points : 2) Row One Row Two Row Three Row Four 5.At the end of the accounting period, Sefcik Company made an adjusting entry for supplies consumed. Which of the following choices reflects how this event would affect the company's financial statements? Row Balance Sheet Income Statement Statement of Cash Flows Assets = Liab. + Equity Rev. - Exp. = Net Inc. One + - = NA + NA NA - + = - NA Two - = NA + - NA - + = - NA Three - = - + NA NA - NA = NA NA Four + - = NA + NA NA - NA = NA + IA (Points : 2) Row One Row Two Row Three Row Four 6.As of December 31, 2009, Bueno Company had $1,000 in liabilities, $8,000 in common stock, and $2,500 in retained earnings. The total amount of assets on that date is: (Points : 2) $10,000 $12,000 $11,500 $7,500 7.The Redding Company recorded salaries earned by employees but not yet paid. Which of the following represents the effect of this transaction on the financial statements? Row Balance Sheet Income Statement Statement of Cash Flows Assets = Liab. + Equity Rev. - Exp. = Net Inc. One + = + + NA + - NA = + - OA Two NA = + + - NA - + = - - OA Three - = NA + - NA - + = - NA Four NA = + + - NA - + = - NA Row One Row Two Row Three Row Four 8.The accounting equation may be written: (Points : 2) Revenues – Expenses = Net Income Assets = Liabilities Liabilities = Equity Assets = Claims on Assets 9.An element that is often present when fraud occurs is: (Points : 2) the availability of an opportunity the existence of some form of pressure the ability to rationalize all of the above 10.Which of the following would be included in the "cash flows from investing activities" section of the statement of cash flows? (Points : 2) Borrowed $10,000 from a local bank Paid $1,000 of expenses with cash Sold land for cash Issued common stock for cash 11.Expenses are shown on the: (Points : 2) income statement statement of changes in stockholders’ equity balance sheet all of the above 12.The claims of a business’s creditors are called: (Points : 2) assets liabilities equity revenue 13.Which of the following would be included in the "cash flows from financing activities" section of the statement of cash flows? (Points : 2) Collected cash from accounts receivable Finance Company loaned cash to another company Paid cash dividend to stockholders Purchased business insurance 14.Expenses that are matched with the period in which they are incurred are frequently called: (Points : 2) period costs frequency expenses market expenses working costs. 15.Accounting information is said to be reliable if: (Points : 2) it is based on recent (not longer than 6 months) information it was prepared by someone with good credentials in accounting, such as a certified public accountant. it can be independently verified it complies with rules and standards of the Internal Revenue Service 16.Which of the following groups has primary responsibility for establishing generally accepted accounting principles for businesses in the United States? (Points : 2) The U.S. Supreme Court Each state’s Secretary of the Treasury The Financial Accounting Standards Board The Internal Revenue Service 17.The purpose of the accrual basis of accounting is to: (Points : 2) report revenue when cash is received improve the matching of revenue and expense in the proper period report expenses when cash disbursements are made improve the company's earnings per share 18.An asset use transaction: (Points : 2) increases one asset and decreases another. decreases an asset and decreases a liability or equity. increases an asset and decreases a liability or equity. increases an asset and increases a liability or equity. 19.Which of the following accounts is a permanent account (an account that is not closed)? (Points : 2) Prepaid Insurance Service Revenue Salaries Expense Rent Expense 20.Which of the following lists represents the correct sequence of stages in an accounting cycle? (Points : 2) Record transactions, prepare statements, adjust accounts, and close temporary accounts Prepare statements, close temporary accounts, record transactions, and adjust accounts Close temporary accounts, record transactions, prepare statements, and adjust accounts Record transactions, adjust accounts, prepare statements, and close temporary accounts