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Exam 1: Business Decisions and Financial Accounting

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Question 91

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The following accounts are taken from the December 31, Year 4 financial statements of a company. -Use the information above to answer the following question.What is the amount of retained earnings on the Balance Sheet at the end of Year 4?

A) $7,725.
B) $6,725.
C) $4,800.
D) $4,725.

E) A) and D)
F) A) and C)

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Question 92

Multiple Choice

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-Use the information above to answer the following question.What amount is represented by letter C in the statement of cash flows?

A) $14,000
B) $10,000
C) ($14,000)
D) $0

E) B) and D)
F) B) and C)

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Question 93

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Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period.Ace Electronics should report Salaries and Wages Expense of ______ on the income statement,Salaries and Wages Payable of ______ on the balance sheet,and a reduction in Cash of ______.

Choose the appropriate letter to match the characteristics with the type of company.A given characteristic may match more than one type of company. CHARACTERISTIC 1.________ Issues shares of stock that are traded on a stock exchange such as the NYSE 2.________ The owners of the business are personally liable for the debts of the company 3.________ Shares of stock must be purchased directly from current owners 4.________ Can raise more financial capital by selling stock to the greatest number of investors 5.________ The easiest form of business to start 6.________ The business ceases to exist upon the departure of one of the owners 7.________ The owners pay taxes on the profits of the business TYPE OF COMPANY A.Partnership B.Publicly traded corporation C.Privately traded corporation D.Sole Proprietorship

The following accounts are taken from the December 31, Year 4 financial statements of a company. -Use the information above to answer the following question.What is the amount of total assets at the end of Year 4?

Investors in stock of a company increase their wealth by receiving dividends and by:

Which of the following statements about the financial statements is correct?

Choose the appropriate letter to match the description of the business activity with the category. BUSINESS ACTIVITY 1.____ The purchase of a new line of assembly equipment 2.____ Company payment of a dividend 3.____ The purchase of office supplies 4.____ The purchase of advertising time by the company 5.____ The building of a new factory 6.____ Company repayment of a bank loan CATEGORY A.Operating activity B.Investing activity C.Financing activity

Dividends are subtracted from revenues on the income statement.

Each item in the statement of retained earnings can appear on another financial statement.Choose the appropriate letter to match the item in the statement of retained earnings with the related financial statement. ITEM ON STATEMENT OF RETAINED EARNINGS 1.____ Retained earnings,January 1,Year 3 2.____ Net income for Year 3 3.____ Dividends for Year 3 4.____ Retained earnings,December 31,Year 3 FINANCIAL STATEMENT A.Balance sheet at end of Year 3 B.Statement of cash flows for Year 3 C.Income statement for Year 2 D.Balance sheet at end of Year 2 E.Income statement for Year 3

Which of the following statements concerning financial reporting is not correct?

Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected.Ace Electronics should report revenues of:

The unit of measure assumption states that:

Generally Accepted Accounting Principles (GAAP)require profitable companies to distribute some of their earnings to their stockholders.

Investors and creditors look at the balance sheet to see whether the company:

In this period,a company recorded Sales Revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Which of the following statements is correct?.

Creditors are:

During the first year of operations,a company sold $100,000 of goods to customers and received $90,000 in cash from customers.The remainder is owed to the company at the end of the year.The company incurred $70,000 in expenses for the year and paid $65,000 in cash for these expenses.The remainder is owed by the company at the end of the year.Based on this information,what is the amount of net income for the year?

The first year of operations for a company was Year 1.The net income for the year Year 1 was $20,000 and dividends of $12,000 were paid.In Year 2, the company reported net income of $34,000 and paid dividends of $5,000.At the end of Year 1, the company had total assets of $150,000.At the end of Year 2, the company had total assets of $240,000. -Use the information above to answer the following question.What was the amount of retained earnings at the end of Year 1?

Find the missing data.