Accounting And Business Full Test Bank Deines Chapter 1 - Test Bank | Introduction to Accounting 8e by Ainsworth Deines by Ainsworth Deines. DOCX document preview.
Chapter 1
Accounting and Business
MATCHING
1. Match the following with the descriptions below.
A. Assets
B. Liability
C. Net Assets
D. Owners’ Equity
E. Revenue
F. Expense
G. Net Income
_____ 1. Assets minus liabilities
_____ 2. The obligation to transfer economic resources to suppliers of goods and
services at some point in the future
_____ 3. A company's total revenues less its total expenses for a period of time
_____ 4. An amount incurred from using resources or services in an effort to generate
revenues
_____ 5. The rights to use resources that have expected future economic benefits
_____ 6. An amount earned from rendering services or transferring resources to
customers
_____ 7. Represents the claims on the business to transfer the residual interest (net assets
of the business) to the owners
2. Match the following balance sheet classifications with the accounts listed below.
A. Current Assets
B. Investments
C. Property, Plant, and Equipment
D. Intangible Assets
E. Current Liabilities
F. Long-Term Liabilities
G. Stockholders’ Equity
H. Does not appear on the Balance Sheet
_____ 1. Accounts Receivable
_____ 2. Note Payable due in 60 days
_____ 3. Cash
_____ 4. Advertising Expense
_____ 5. Inventory
_____ 6. Interest Payable
_____ 7. Equipment
_____ 8. Patent
_____ 9. Land
_____ 10. Accounts Payable
_____ 11. Note Payable (due in 10 years)
_____ 12. Investment in Nike Common Stock
_____ 13. Retained Earnings
_____ 14. Note Receivable from customer due in 5 years
_____ 15. Prepaid Rent
Answers: 1. A; 2. E; 3. A; 4. H; 5. A; 6. E; 7. C; 8. D; 9. C; 10. E; 11. F;
12. B; 13. G; 14. B; 15. A
3. Match the following balance sheet classifications with the accounts listed below.
A. Current Assets
B. Investments
C. Property, Plant, and Equipment
D. Intangible Assets
E. Current Liabilities
F. Long-Term Liabilities
G. Stockholders’ Equity
H. Does not appear on the Balance Sheet
_____ 1. Salary Expense
_____ 2. Note Receivable due in 60 days
_____ 3. Accounts Payable
_____ 4. Cash
_____ 5. Building
_____ 6. Interest Payable
_____ 7. 1,000 shares of Microsoft stock
_____ 8. Land
_____ 9. Patent
_____ 10. Interest Receivable
_____ 11. Note Payable (due in 10 years)
_____ 12. Common Stock
_____ 13. Inventory
_____ 14. Note Receivable from customer due in 5 years
_____ 15. Interest Expense
Answers: 1. H; 2. A; 3. E; 4. A; 5. C; 6. E; 7. B; 8. C; 9. D; 10. A; 11. F; 12. G;13. A;14. B;15. H
4. Match the following with the descriptions below.
A. Return on Sales Ratio
B. Balance Sheet
C. Current Liability
D. Statement of Cash Flows
E. Statement of Owners' Equity
F. Current Ratio
G. Debt-to-Equity Ratio
H. Current Asset
I. Net Income
_____ 1. A measure of company solvency and its ability to meet its long-term
obligations
_____ 2. An asset likely to be used or consumed within one year
_____ 3. The financial statement designed to show the ending amounts of a company's
assets, liabilities, and owners’ equity
_____ 4. A liability likely to be paid or otherwise discharged within one year
_____ 5. A measure of company liquidity; the relationship between current assets and
current liabilities
_____ 6. A measure of company profitability; the relationship between net income and
sales
_____ 7. The financial statement designed to show the cash inflows and cash outflows of
the company for a period of time
_____ 8. An increase in the owners’ equity as a result of the firm’s ongoing operations
_____ 9. The financial statement designed to show the changes to owners' equity during
a specified time period
5. Match the following acronyms to the descriptions below.
- IASB
- FASB
- SEC
- GAAP
- SFAC
_____ 1. Sets accounting standards for businesses not in the United States
_____ 2. Describes the accounting concepts used in the United States
_____ 3. Regulates the financial markets in the United States
_____ 4. Sets the accounting standards for all companies (public and private) in the
United States
_____ 5. Are the accounting standards used by companies (public and private) in the
United States
6. Match the following with the descriptions below.
A. Accrual Basis of Accounting
B. Business Entity Concept
C. Going Concern Concept
D. Monetary Unit Concept
E. Periodicity Concept
F. Limited Liability
_____ 1. The concept that requires an accounting system to reflect only information
about the economic events that pertain to a particular entity
_____ 2. The concept that asserts money is the common measurement unit
_____ 3. A system in which income is measured as the difference between the revenues
earned and the expenses incurred during the period, regardless of when cash is
paid or received
_____ 4. A legal concept that says the money invested in a corporation is at risk but
investors’ personal possessions are not at risk if the business fails
_____ 5. The concept that assumes that, absent any information to the contrary, the
business entity will continue into the foreseeable future
_____ 6. The concept that requires that the success or failure of the business be
determined at regular intervals
7. Match the following with the descriptions below.
A. Corporation
B. Limited Liability Company
C. Limited Liability Partnership
D. Limited Partnership
E. Mutual Agency
F. Limited Liability
G. Partnership
H. S Corporation
I. Sole Proprietorship
_____ 1. A partnership composed of one or more general partners and one or more
limited partners; only the general partners' personal possessions are at risk if
the business should fail
_____ 2. A small business corporation owned by no more than 75 individuals; its profits
are taxed at the individual level rather than the corporate level
_____ 3. A business entity that is legally separate and distinct from its owners
_____ 4. The business entity eliminates the impact of unlimited liability for all the
owners, does not limit the number of owners, and does not limit participation in
the management of the firm
_____ 5. A situation whereby each partner has the power to act for all and legally
obligate all partners
_____ 6. A partnership in which the individual partners are liable only for their own
actions and the actions of those individuals under their control
_____ 7. A business entity owned by one person whose personal possessions are at risk
if the business fails
_____ 8. A situation in which the money invested in a corporation is at risk but investors'
personal possessions are not at risk if the business fails
_____ 9. A business owned by two or more individuals whose personal possessions are
at risk if the business fails
8. Match the type of firms with the companies below.
A. Service Firm
B. Manufacturing
C. Merchandising
_____ 1. Deloitte (accounting firm)
_____ 2. Xerox
_____ 3. Macy’s
_____ 4. Southwest Airline
_____ 5. Pepsi Cola
_____ 6. Wendy’s
_____ 7. Union Pacific Railroad
_____ 8. British Petroleum
9. Match the type of firms with the companies below.
A. Service firm
B. Manufacturing
C. Merchandising
_____ 1. Disney Theme Parks
_____ 2. Coors Brewing Company
_____ 3. Grant Thornton (CPA Firm)
_____ 4. Red Lobster
_____ 5. Walmart
_____ 6. H&R Block
_____ 7. UPS
_____ 8. General Motors
10. Match the financial statement to the item listed below. Some may have more than one
answer.
A. Income Statement
B. Statement of Stockholders’ Equity
C. Statement of Cash Flows
D. Balance Sheet
_____ 1. Cash from operations
_____ 2. Total Assets
_____ 3. Net Income
_____ 4. Change in cash during the time period
_____ 5. Total Liabilities and Stockholders’ Equity
_____ 6. Dividends declared
_____ 7. Cash provided and used by financing activities
_____ 8. Cost of Sales
_____ 9. Cash at year-end
_____10. Beginning Retained Earnings
Answers: 1. C; 2.D; 3. A and B; 4. C; 5. D; 6. B; 7. C; 8. A; C and D; 10. B
MULTIPLE CHOICE
11. The accounting concept requiring that an accounting system reflect information relating only to those economic events pertaining to a particular entity is the:
A) business entity concept.
B) going entity concept.
C) monetary unit concept.
D) periodicity concept .
12. The accounting concept that assumes that, absent any information to the contrary, the business will continue into the foreseeable future is the:
A) business entity concept.
B) future entity concept.
C) going concern concept.
D) periodicity concept.
13. The accounting concept that asserts that money is the common measurement unit for economic activity is the:
A) business entity concept.
B) monetary unit concept.
C) going concern concept.
D) dollar-value concept.
14. The accounting concept requiring that the profits of a business be determined at regular intervals throughout the life of the business is the:
A) business entity concept.
B) going concern concept.
C) monetary unit concept.
D) periodicity concept.
15. Which of the following is not an objective of financial reporting specified in Concepts
Statement No. 1?
A) To provide information useful to investors and creditors
B) To provide information helpful in assessing the future amounts and timing of cash
flows
C) To provide information about the assets and claims on the assets of a firm
D) To prepare income statements on a timely basis
16. Which of the following is an objective of financial reporting specified in Concepts
Statement No. 1?
A) To provide information useful to investors and creditors
B) To provide a statement of cash flows
C) To provide a balance sheet at the end of a year
D) To prepare income statements on a timely basis
17. The owner of a dry cleaning business maintains separate checkbooks for his business and his personal affairs. This best describes an application of the:
A) business entity concept.
B) going concern concept.
C) monetary unit concept.
D) periodicity concept.
18. The We Build Anything Construction Company recently completed the construction of an office building that took 14 months to complete. Following the completion of this project, the company began construction of a shopping center that took 15 months to complete. The company's financial statements were not prepared at the end of each of these projects but at the end of the fiscal year. This best describes an application of the:
A) business entity concept.
B) periodicity concept.
C) monetary unit concept.
D) going concern concept.
19. In its annual report the FCX Company reported the value of its ending inventory, rather than the number of units on hand. This best describes an application of the:
A) business entity concept.
B) going concern concept.
C) monetary unit concept.
D) periodicity concept.
20. Every three months, Ashmont Antiques produces a report showing profits earned during the most recently ended quarter. This best describes an application of the:
A) business entity concept.
B) periodicity concept.
C) monetary unit concept.
D) going concern concept.
21. A system used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties is referred to as a(n):
A) business system.
B) management system.
C) human resources system.
D) accounting system.
22. According to Concepts Statement No. 2, accounting information should be:
A) relevant and reliable.
B) responsible and reconcilable.
C) accurate and meaningful.
D) accurate and timely.
23. A business owned by one person whose personal possessions are at risk if the business fails is called a:
A) partnership.
B) sole proprietorship.
C) corporation.
D) merchandiser.
24. A business owned by two or more individuals whose personal possessions are at risk if the business fails is called a:
A) sole proprietorship.
B) corporation.
C) partnership.
D) manufacturer.
25. A business entity that is legally separate and distinct from its owners is called a:
A) corporation.
B) sole proprietorship.
C) partnership.
D) service company.
26. Unlimited life is a characteristic of which type of business entity?
A) Corporation
B) Sole proprietorship
C) Partnership
D) Merchandiser
27. Which type of business is required to pay taxes on income earned?
A) Sole proprietorship
B) Corporation
C) Partnership
D) Manufacturer
28. Limited liability is an attribute of which type of business entity?
A) Partnership
B) Sole proprietorship
C) Service company
D) Corporation
29. Limited liability means:
- A company is only liable for an amount that is established by a preset limit.
- Creditors are limited to just the cash available in the company at the time of the loss.
- Creditors of a company can only claim the assets of the firm and not the assets of the owners of the firm.
- Creditors of a firm can claim all the assets of a company but only a limited amount of the owner’s personal assets.
30. Which type of business may be owned by one individual?
A) Corporation
B) Sole proprietorship
C) Partnership
D) Both a sole proprietorship and a corporation
31. A law firm is an example of which of the following?
A) Manufacturing firm
B) Merchandising firm
C) Service firm
D) Performance firm
32. Walmart is an example of which of the following?
A) Service firm
B) Merchandising firm
C) Manufacturing firm
D) Producer firm
33. Which of the following would best describe the type of business Disney operates?
A) Service
B) Service and Manufacturing
C) Service and Merchandising
D) Service, Merchandising, and Manufacturing
34. Which of the following best describes the type of business John Deere Inc. is?
- Manufacturing
- Manufacturing and Service
- Manufacturing and Merchandising
- Manufacturing, Service, and Merchandising
35. A company that produces a product from raw materials is called a:
A) service firm.
B) merchandising firm.
C) manufacturing firm.
D) distributor firm.
36. A dry cleaning business is an example of a:
A) service firm.
B) merchandising firm.
C) manufacturing firm.
D) distributor firm.
37. Dell Corporation is an example of a:
A) service firm.
B) merchandising firm.
C) manufacturing firm.
D) distributor firm.
38. A supermarket is an example of a:
A) merchandising firm.
B) service firm.
C) manufacturing firm.
D) producer firm.
39. A company that makes and sells steel is a:
A) service firm.
B) merchandising firm.
C) manufacturing firm.
D) performance firm.
40. The organization responsible for setting U.S. external financial reporting practice is the:
A) Securities and Exchange Commission.
B) Financial Accounting Standards Board.
C) Federal Government.
D) American Institute of Certified Public Accountants.
42. The statements of financial accounting standards, and other authoritative pronouncements that define what constitutes acceptable accounting practice for financial reporting are collectively referred to as:
A) SFAS.
B) FASB.
C) SEC.
D) GAAP.
43. Financial accounting standards that define what constitutes acceptable accounting practice for financial reporting worldwide are referred to as:
A) SFAS.
B) FASB.
C) IFRS.
D) GAAP.
44. IFRS are produced by:
A) International Accounting Standards Board.
B) Securities and Exchange Commission.
C) Financial Accounting Standards Board.
D) International Accounting Committee.
45. IFRS stands for:
A) International Financial Reporting System.
B) International Financial Reporting Standard.
C) International Financing Requirement Standard.
D) International Financing Regulation and Standards.
46. An accountant who has the legal authority to attest to the fair presentation of information in the financial statements of any company is called a/an:
A) certified public accountant.
B) internal auditor.
C) controller.
D) chief financial officer.
47. The body responsible for establishing international accounting standards today is the:
A) FASB.
B) GAAP.
C) SEC.
D) IASB.
49. Which of the following business organizations has general partner(s) and limited partners that have limited liability?
A) Limited Liability Company
B) Limited Partnership
C) Limited Corporate Partnership
D) S Corporation
50. Which of the following is not subject to double taxation?
A) Limited Liability Company
B) S Corporation
C) Limited Liability Partnership
D) Limited Partnership
E) All of the above are not subject to double taxation.
51. Which of the following has limited liability for all owners and is not subject to double
taxation?
A) Corporation
B) Sole Proprietorship
C) Limited Liability Corporation
D) Limited Partnership
52. Which of the following computer-assisted techniques test products before they are produced?
A) CAD
B) CAM
C) CIM
D) CPA
53. This computer-assisted technique improves the speed and precision of the production process.
A) CAD
B) CAM
C) CIM
D) CAP
54. All of the following are external stakeholders except:
A) employees.
B) suppliers.
C) customers.
D) creditors.
55. Which of the following is an internal stakeholder?
A) General public
B) Creditors
C) Suppliers
D) Management
56. Which of the following is an external stakeholder in a supermarket?
A) The manager of the produce department
B) The company that supplies the baked goods for the bakery
C) The cashier at the checkout counter
D) The chief financial officer at the supermarket's corporate headquarters
57. Which of the following is an internal stakeholder in a college?
A) The company that employs graduates of the college
B) The company that services the photocopy machines in the library
C) The faculty
D) The organization that accredits various degree programs of the college
58. Which of the following has the shortest product life cycle?
A) Automobile
B) Game show
C) Airplane
D) Wireless communication
59. Which of the following has the longest product life cycle?
A) Clothing style
B) Rap music
C) Television show
D) Theme park
60. All of the following are basic functions of a business except:
A) marketing.
B) external auditing.
C) finance.
D) human resources.
61. Which of the following is not a correct relationship?
- Production Function—Determine Cost of Products Manufactured
- Marketing Function—Advertising
- Finance Function—Borrow Cash
- Human Resource Function—Lay Off Employees
- All are a correct relationship
62. The business function designed to determine the wants and needs of consumers is referred to as:
A) marketing.
B) finance.
C) human resources.
D) operations.
63. The business function that is responsible for managing a company's capital resources is referred to as:
A) marketing.
B) human resources.
C) finance.
D) operations.
65. The function of business responsible for providing the information used by other functional areas to perform their jobs is referred to as:
A) production and operations.
B) human resources.
C) marketing.
D) accounting and information systems.
66. Which of the following statements about the use of accounting information by the marketing function is false?
A) People in the marketing function use accounting information to help figure selling prices.
B) Accounting information would be needed to appraise different ways of getting the product to customers.
C) Those in the marketing function do not use accounting information; they leave all of that to their accountants.
D) Accounting information is needed for product-selection decisions.
67. Which of the following statements about the use of accounting information by the human resources function is false?
A) People in human resources do not use accounting information; they leave all of that to their accountants.
B) Those in human resources use accounting information to figure employees’ pay.
C) The computation of retirement benefits is a human resource function requiring accounting information.
D) Accounting information is needed to evaluate employees' performance.
68. Which of the following is not an example of a task performed by someone in the finance function?
A) Selecting projects for the firm to invest in
B) Deciding between debt and equity financing of an acquisition
C) Deciding when to raise new capital
D) Determining the percentage of defective products
69. Which of the following is an example of a liability?
A) An amount that must be paid to a business that sold you some supplies
B) The obligation to transfer the net assets of the business to its owners
C) Equipment purchased by the business on a long-term payment plan
D) The amount contributed to the business by your partner
70. Which of the following is not a liability from accounting purposes?
A) An amount that must be paid to a business that sold you some supplies.
B) You promise to increase wages in the coming year by $1 per hour.
C) You borrow $100,000 to buy a new piece of equipment.
D) Your workers have worked all week and you will pay them next Wednesday.
71. The owner of XYZ Corporation includes his personal liabilities with business liabilities. What accounting concept is being violated?
A) Going concern
B) Business entity
C) Monetary unit
D) Periodicity
72. Which of the following led to the need for financial statements to report to owners of a business?
A) The abandonment of a barter economy
B) The expansion of European businesses into Asia and Africa
C) The absence of day-to-day involvement by owners
D) The increased use by business owners of the cash basis of accounting
73. The primary objective of financial reporting is to:
A) determine taxable income and income tax of a business.
B) provide management with information needed to run the day-to-day operations of a business.
C) keep businesses from going bankrupt.
D) provide information useful for making economic decisions.
74. Which of the following is a characteristic of a limited-liability partnership (LLP)?
A) One partner cannot be held responsible for the inappropriate actions of another partner.
B) Partners' personal liability is limited to the amount they have invested in the business.
C) Each partner is liable for the actions of all other partners.
D) As a separate legal entity, the partnership must pay taxes on income.
75. For information to be useful, it must be relevant. Information is relevant when it:
A) is verifiable.
B) causes users to reach a different decision.
C) mirrors the true economic situation of a business.
D) is understandable.
76. Which of the following is not one of the financial statements required for external
reporting today?
A) Income Statement
B) Balance Sheet
C) Statement of Changes in Working Capital
D) Statement of Changes in Stockholders' Equity
77. Which of the following is a characteristic of the corporate form of business?
A) Mutual agency
B) Separate legal entity
C) Relatively easy to form
D) Owners have unlimited liability for the debts of the business.
78. Which of the following explains why it is relatively easy for corporations to raise large amounts of money?
A) Owners have unlimited liability for the debts of the business.
B) Day-to-day operations are closely supervised by owners.
C) Corporations raise capital by seeking relatively small amounts from many people.
D) Corporations are not subject to as much regulation as partnerships and sole proprietorships.
79. What distinguishes partnerships from sole proprietorships?
A) Involvement in day-to-day business activities by owners
B) The extent of liability for the debts of the business
C) The amount of income tax the entity has to pay
D) Mutual agency (each partner can act for other partners)
80. Which of the following is not a cause for the number of partnerships to be relatively small?
A) Unlimited liability
B) Mutual agency (each partner can act for other partners)
C) Double taxation
D) Difficulty of formation
81. Which of the following is a characteristic of an S Corporation?
A) No taxation of income at the corporate level
B) Responsibility of owners for the firm's debt
C) Unlimited liability
D) Mutual agency
82. Which of the following statements is true?
A) Before the advent of a money economy, the double-entry accounting system was not feasible.
B) Accounting systems developed in the eighteenth century because, by then, most people were literate.
C) Double-entry accounting systems have existed for at least 2,000 years.
D) The double-entry accounting system came about as a result of the Great Depression.
83. Which of the following is true about the relationships between the financial statements?
A) The ending balances of the retained earnings found in the Statement of Changes in Stockholders' Equity are found on the Balance Sheet.
B) The net income reported on the Income Statement is also found on the Balance Sheet.
C) The cash inflows identified on the Statement of Cash Flows are reported on the Income Statement.
D) The cash reported on the Income Statement is reported on the Statement of Cash Flows
84. Which of the following is NOT true about the relationship between the financial
statements?
- The net income of the firm is added to owners’ equity
- The cash on the Balance Sheet is found on the Cash Flow Statement
- The net income of the firm is reported on the Income Statement and the Statement of Changes in Shareholders’ Equity
- The cash generated by operations on the Statement of Cash Flows is reported as an increase in Retained Earnings on the Statement of Changes in Shareholders’ Equity
85. The Debt to Equity Ratio is measure with which of the following?
A) Total Liabilities/Total Assets
B) Long-term Liabilities/Total Stockholders' Equity
C) Total Stockholders' Equity/Total Liabilities
D) Total Liabilities/Total Stockholders' Equity
86. If the Debt to Equity Ratio is greater than 1 it means:
A) the company is using debt more than owners’ equity to finance its assets
B) the company has less debt than equity
C) the company has more debt than assets
D) the company is using more of its assets to finance its debt
87. The cash held by a company at the end of the year is found on which of the following two statements?
A) Balance Sheet and Income Statement
B) Balance Sheet and Statement of Cash Flows
C) Income Statement and Statement of Cash Flows
D) Statement of Stockholders' Equity and Cash Flows Statement
88. Net income is found on which of the following two statements?
A) Balance Sheet and Income Statement
B) Statement of Changes in Stockholders' Equity and Income Statement
C) Statement of Changes in Stockholders' Equity and Balance Sheet
D) Statement of Cash Flows and Balance Sheet
89. The Report of the Independent Auditor is the opinion of the CPA firm that examined the financial statements of a company and states which of the following?
A) The financial statements are correct as reported.
B) The financial statements are fairly presented.
C) The financial statements are free from fraud.
D) The financial statements are presented fairly in accordance with GAAP.
90. Which of the following is the ratio for calculating the current ratio?
A) Current Assets/Current Liabilities
B) Current Assets/Total Liabilities
C) Current Liabilities/Current Assets
D) Current Assets/Total Sales
91. Investors read the Independent Auditors’ Opinion because:
A) they want to know if financial statements are mathematically correct.
B) they want some assurance that the financial statements are fairly presented.
C) they want to determine if the auditors found any fraud.
D) they want to know if the auditor thinks the company is a good investment.
92. Which of the following is the ratio for calculating the return on sales ratio?
A) Net Income/Total Stockholders' Equity
B) Current Assets/Total Sales
C) Current Liabilities/Total Sales
D) Net Income/Total Sales
93. The current liquidity of a company is measured by which of the following?
A) Return on Sales Ratio
B) Return on Assets Ratio
C) Current Ratio
D) Debt to Equity Ratio
94. In Luca Pacioli's book The Summa, the fifteenth century accounting system he describes uses all but one of the following books:
A) Memorandum
B) Ledger
C) Cash Book
D) Journal
95. Which of the following events along with Luca Pacioli’s The Summa occurred during the
fifteenth century (1400s)?
A) Columbus’s discovery of America
B) The Revolutionary War
C) The founding of Rome
D) The French Revolution
AU: Answer to question 95 is missing
ESSAYS
96. What is an accounting system? Why are accounting systems necessary to run businesses?
97. Describe the three primary ownership structures and discuss the advantages and disadvantages of each.
98. In each of the following situations, choose the accounting concept that pertains: business entity concept, going concern concept, monetary unit concept, or periodicity concept.
(A) A Japanese company reports its earnings in yen.
(B) The owner of a sole proprietorship pays for the real estate taxes on her personal residence from her personal savings rather than from the business's checking account.
(C) A corporation whose stock is traded on the American Stock Exchange prepares a report of its financial condition for the SEC on a quarterly basis.
(D) Mike and Mattie are partners in a shoe repair business. The business is profitable with plans to show increased profitability into the foreseeable future.
99. Describe what constitutes a stakeholder and then identify which of the following would be a stakeholder for a business that uses the corporate business structure. Explain the basis for each of your choices.
A) The Internal Revenue Service
B) The mayor of the town in which the corporation is located
C) The Chief Executive Officer of the company
D) The president of a competing business
100. Describe the five functional areas of business. In which of the five functional areas does each of the following individuals work?
(A) The personnel director
(B) The assistant controller
(C) The sales manager
(D) The production manager
(E) The treasurer
101. It has been said that the periodicity concept "causes all the problems in accounting." What is the periodicity concept and how does it "cause problems"?
102. Compare and contrast the determination of income under the cash and accrual bases of accounting.
103. List and define the two primary qualities of useful accounting information.
104. Why are international accounting standards needed?
105. Describe what the results of each of the following ratios mean.
a. Current Ratio of 2
b. Debt to Equity Ratio of 3
c. Return on Sales of 10%
106. Determine each of the following:
If your current ratio is 2 and your current assets are $600,000 what is the amount of your current liabilities?
If your debt to equity ratio is 1.5 and your total liabilities are $200,000 what is your total stockholders' equity?
If your return on sales is 8% and your net income is $2,000,000, how much sales did you generate during the year?
107. Hoxie Inc. is an advertising agency and has the following data for the most recent year. Using this data determine Hoxie’s net income. What does the net income represent?
Revenues from Fees $855,000
Cash $25,000
Utilities Expense $52,000
Building $900,000
Notes Payable $300,000
Salaries Expense $125,000
Office Supplies $10,000
Interest Expense $30,000
Office Equipment $200,000
Administrative Expense $75,000
108. Zeman Dance Hall Inc. sponsors monthly dances and has generated data for the most recent year. Using this data, determine Zeman’s net income. What does the net income represent?
Revenues from admissions to dances $955,000
Utilities Expense $110,000
Fees paid to bands $360,000
Building – Dance Hall $1,300,000
Notes Payable $300,000
Advertising Expense $105,000
Office Supplies $10,000
Instrument Rental Cost $20,000
Office Equipment $200,000
Salaries Expense $150,000
109. Identify each of the following as an Asset, Liability, Owners’ Equity, Revenue, or Expense of the Utica Delivery Company.
Cash
Fees earned from delivery
Building: Office and garage for delivery vehicles
Notes signed to raise cash to buy new delivery truck
Cost of advertising for the year
Cost of gas for the year
Delivery truck
Cost of repair to delivery truck
Cost of insurance on delivery truck
Value of cash and assets contributed by owners to start the business
Cost of salaries for delivery personnel
Cost of cleaning the uniforms of delivery personnel
Office Supplies
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Test Bank | Introduction to Accounting 8e by Ainsworth Deines
By Ainsworth Deines