ACCT 201 EXAM #1

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KronnyEC
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261420
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ACCT 201 EXAM #1
Updated:
2014-02-14 22:03:29
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ACCT 201
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Flashcards for ACCT 201 from Chapters 1 to 3.
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  1. Corporations generally receive more favorable tax treatment than solo proprietorships and corporations. True or False?
    False
  2. What are the 3 forms of business organization.
    • 1. Sole proprietorships
    • 2. Partnership.
    • 3. Corporation.
  3. Which is an advantage of corporations relative to partnerhips and sole proprietorships?
    Reduced legal liability for investors.
  4. Easy transfer of ownership is a characteristic of which form of business organization.
    Corporation
  5. In which forms of business organizations are the owners personally liable for all the debts of the business.
    Soloe proprietorships and partnerships
  6. Internal users of accounting information include a company's stockholders. True or False?
    False
  7. To which of the following questions will internal users want answers?
    • 1. What selling price for our product will maximize the company's net income?
    • 2. Which product line is most profitable?
    • 3. Is cash sufficient to pay dividends to stockholder?
    • 4. All of the answer choices are correct.
    • ** Answer 4 **
  8. The results of the Sarbanes-Oxley Act.
    • 1. Top management must now certify the accuracy of financial information.
    • 2. Penalties for fraudulent activity increased.
    • 3. Auditors cannot provide non-audit services to the same client.
  9. Interest expense is classified under operating activities on the statement of cash flows. True or False?
    True
  10. Paying interest expense and receiving interest revenue are examples of.
    Operating activities.
  11. The payment of dividends is an example of.
    Financing activity
  12. Which of the following is an example of financing activity?
    A. Issuing shares of common stock
    B. Buying delivery equipment
    C. Buying inventory.
    D. Selling goods on account
    A. Issuing shares of common stock
    (this multiple choice question has been scrambled)
  13. Resources owned by a business are referred to as.
    Assets
  14. In terms of principal types of business activities, paying salaries expense is an example of
    operating activities.
  15. What kind of classification is cost of goods sold?
    Expense
  16. Which of the following would not appear on the income statement?
    A. Service revenue
    B. Interest expense
    C. Net income
    D. Dividends Paid
    D. Dividends Paid
    (this multiple choice question has been scrambled)
  17. Net income will result during a time period when.
    revenues exceed expenses.
  18.  Current assest are economic resources that are expected to be converted to cash or used up by the business within one year or the or the normal operating cycle, whichever is shorter. True or False.
    False
  19. In a classified balance sheet, how are assets ususally classified.
    • Current assets
    • long-term investments
    • property, plant and equipment
    • intangible assets
  20. In what order are current assets listed?
    By liquidity
  21. Which of the follow is not classified as a current asset?
    A. Inventory
    B. Patents
    C. Prepaid expenses
    D. Accounts recievable
    B. Patents
    (this multiple choice question has been scrambled)
  22. Which of one of the following is not an alternate means of expressing a ratio?
    A. Proportion
    B. Rate
    C. Percentage
    D. Dollar amount
    D. Dollar amount
    (this multiple choice question has been scrambled)
  23. Earnings per share is computed by dividing net income.
    A. less preferred stock dividends by the average common shares outsanding.
    B. by the average common shares outstanding.
    C. by the ending common shares outstanding.
    D. less preferred stock dividends by the ending common shares outstanding.
    A. less preferred stock dividends by the average common shares outstanding.
    (this multiple choice question has been scrambled)
  24. What is an indicator of profitability?
    Earnings per share.
  25. Issuing new shares of common stock will.
    Increase common stock.
  26. Which statement is used by most corporations instead of the retained earnings statement?
    A. Statement of cash flows
    B. Blance sheet.
    C. Statement of owners' equity.
    D. Statement of stockholders' equity.
    D. Statement of stockholders' equity.
    (this multiple choice question has been scrambled)
  27. Which one of the following does not affect retained earnings?.
    A. Issuance of common stock
    B. Net income
    C. Net loss
    D. Dividends
    A. Issuance of common stock
    (this multiple choice question has been scrambled)
  28. The current ratio is a liquidity ratio that is computed as current assets divided by current liabilities. True or False?
    True
  29. Which of these measures is an evaluation of a company's ability to pay current liabilities?
    A. None of these answer choices are correct.
    B. Both earnings per share and current ratio.
    C. Earnings per share
    D. Current ratio
    D. Current ratio.
    (this multiple choice question has been scrambled)
  30. What is measured by current assets minus current liabilities?
    A. Working capital.
    B. Solvency
    C. Cash Flow
    D. Profitability.
    A. Working capital
    (this multiple choice question has been scrambled)
  31. Expenses decrease retained earnings. True or False.
    True
  32. The effect on the basic accounting equation of performance services for cash are to.
    A. Increase assets and decrease stockholders' equity.
    B. increase assets and  increase liabilities.
    C. increase assets and increase stockholders' equity.
    D. increase liabilities and increase stockholders' equity.
    C. increase assets and increase stockholders' equity.
    (this multiple choice question has been scrambled)
  33. Retained earnings is decreased by
    A. owner's investment.
    B. assets.
    C. revenues
    D. expenses.
    D. expenses.
    (this multiple choice question has been scrambled)
  34. If an expense is paid with cash.
    A. retained earnings will increase.
    B. assets will decrease.
    C. liabilities will increase.
    D. expenses will decrease.
    B. assets will decrease.
    (this multiple choice question has been scrambled)
  35. If cash is received in advance from a customer.
    A. assets will decrease.
    B. liabilities will increase.
    C. retained earnings will increase.
    D. stockholders' equity will decrease.
    B. liabilities will increase.
    (this multiple choice question has been scrambled)
  36. Receipt of an unearned revenue.
    A. decreases a revenue; increase stockholders' equity.
    B. decreases a liability; increases stockholders' equity.
    C. increases an asset; increases a liability.
    D. increases an asset; increases a revenue.
    C. increases an asset; increases a liability
    (this multiple choice question has been scrambled)
  37. Payment of a dividend.
    A. increases retained earnings; increases expenses.
    B. decreases cash; increases stockholders' equity.
    C. decreases cash; decreases retained earnings.
    D. increases expenses; decreases cash.
    C. decreases cash; decreases retained earnings.
    (this multiple choice question has been scrambled)

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