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
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