1. external users want answers to all of the following questions

1.  External users want answers to all of the following questions except: 

        Is the company earning satisfactory income?

        Will the company be able to pay its debts as they come due?

        Did the company use a budget to plan its expenses?

        How does the company compare in profitability with competitors?

 

2.  Issuing shares of stock in exchange for cash is an example of a(n): 

        delivering activity.

        investing activity.

        financing activity.

        operating activity.

 

3.  Which activities involve putting the resources of the business into action to generate a profit? 

        Delivering

        Financing

        Investing

        Operating

 

4.  The cost of assets consumed or services used is also known as:  

        a revenue.

        an expense.

        a liability.

        an asset.

 

5.   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? 

        $25,000  

        $5,000

        $30,000

        $23,000

 

6.   In a classified balance sheet, assets are usually classified as:  

        current assets; long-term assets; property, plant, and equipment; and tangible assets.

        current assets; long-term investments; property, plant, and equipment; and common stocks.

        current assets; long-term investments; and tangible assets.

        current assets; long-term investments; property, plant, and equipment; and intangible assets..

 

7.   Which of the following is not considered an asset? 

        Equipment

        Dividends

        Accounts receivable

        Inventory

 

8.  These are selected account balances on December 31, 2010.

 

-Land (location of the corporation’s office building)    $50,000

-Land (held for future use)    75,000

-Corporate Office Building   300,000

-Inventory      100,000

-Equipment     225,000

-Office Furniture    50,000

-Accumulated Depreciation    150,000

 

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet? 

        $650,000

        $550,000

        $475,000

        $800,000

 

9.   For 2010, Mossland Corporation reported net income of $28,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?  

        $4.67  

        $0.25

        $66.67

        $14.86

 

10.  Morten Corporation had beginning retained earnings of $764,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. There were no dividends issued. What was their net income for the year? 

        $69,000   

        $22,000

        $116,000

        $91,000

 

11.  Money collected from customers before the work is done is treated as: 

        prepaid expenses

        accrued revenues

        unearned revenues

        accrued expenses

 

12.   Which one of the following is not a part of an account?  

        Credit side

        Trial balance

        Debit side

        Title

 

13.   Which of the following describes the classification and normal balance of the retained earnings account?  

        Asset, debit

        Stockholders’ equity, credit

        Revenues, credit

        Expense, debit

 

14.  A debit is the normal balance for which account listed below? 

        Furniture

        Accounts payable

        Rent revenue

        Capital stock issued

 

15.   Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?  

        Dividends payable and rent expense

        Repair expense and notes payable

        Prepaid insurance and advertising expense

        Service revenues and equipment

 

 

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