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Exam 1: Introduction to Accounting and Business

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Question 21

Multiple Choice

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Which of the items below is not a business entity?

A) entrepreneurship
B) proprietorship
C) partnership
D) corporation

E) A) and B)
F) A) and C)

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Question 22

Multiple Choice

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As of the end of its accounting period,December 31,Year 1,Great Plains Company has assets of $940,000 and liabilities of $300,000.During Year 2,stockholders invested an additional $73,000 and received $33,000 in dividends from the business.What is the amount of net income during Year 2,assuming that as of December 31,Year 2,assets were $995,000 and liabilities were $270,000?

A) $45,000
B) $50,000
C) $106,000
D) $370,000

E) A) and C)
F) B) and C)

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Question 23

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Which of the following is not a characteristic of a corporation?

The assets and liabilities of Rocky's Day Spa at December 31 and expenses for the year are listed below.The stockholders' equity was $68,000 ($48,000 in Common Stock and $20,000 in Retained Earnings)at January 1.The shareholders invested in an additional $10,000 of common stock during the year.Net income for the year is $45,625. ​ Prepare an income statement for Rocky's Day Spa for the current year ended December 31.

Paying an account payable increases liabilities and decreases assets.

If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period,the period's change in total liabilities was a $65,000 increase.

For accounting purposes,the business entity should be considered separate from its owners if the entity is

On July 1 of the current year,the assets and liabilities of John Wong,DVM,are as follows: Cash,$27,000; Accounts Receivable,$12,300; Supplies,$3,100; Land,$35,000; Accounts Payable,$13,900.What is the amount of stockholders' equity as of July 1 of the current year?

Ramos Repair Company is paying a cash dividend.How does this transaction affect Ramos Repair Company's accounting equation?

Which of the following items relates to separating the reporting of business and personal economic transactions?

If a shareholder wanted to know how money flowed into and out of the company,which financial statement would the shareholder use?

Which of the following is not a certification for accountants?

What is the major difference between the objective of financial accounting and the objective of managerial accounting?

The following data were taken from Miller Company's balance sheet: ​ Dec.31,Year 2 Dec.31,Year 1 Total liabilities $150,000 $105,000 Total stockholders' equity 75,000 60,000 ​ (a)Compute the ratio of liabilities to stockholders' equity.Round your answer to one decimal place. (​b)Has the creditors' risk increased or decreased from December 31,Year 1,to December 31,Year 2?

Identify which of the following accounts would appear on a balance sheet.

Indicate whether each of the following accounts represents an asset,liability,or stockholders' equity:

A retained earnings statement reports the changes in the retained earnings for a period of time.

Accounting information users need reports about the economic activities and condition of businesses.

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

The monetary unit assumption requires that economic data be recorded in dollars for companies in the United States.