ACCT 284 Practice Exam 1

  1. Which of these is not a decision maker for the purpose of financial accounting
  2. Lenders
  3. Managers
  4. IRS
  5. Shareholders
  6. Stockholders equity is made up of which two accounts?
  7. Retained Earnings and Revenue
  8. Retained Earnings and Net Income
  9. Contributed Capital and Retained Earnings
  10. Contributed Capital and Dividends
  11. Which of the four financial statements reports the change in earnings for the period?
  12. Balance Sheet
  13. Income Statement
  14. Statement of Cash Flows
  15. Retained Earnings
  16. What is the equation for the Statement of Cash Flows?
  17. Operating CF + Investing CF + Financing CF = Change in Cash
  18. Operating CF + Investing CF + Financing CF = End Cash
  19. Operating CF + Financial CF + Managerial CF = End Cash
  20. None of the Above
  21. What is the equation for the Statement of Retained Earnings?
  22. Beginning Retained Earnings = Ending Retained Earnings + Net Income – Dividends
  23. Ending Retained Earnings = Beginning Retained Earnings + Revenue – Depreciation
  24. Ending Retained Earnings = Beginning Retained Earnings + Net Income – Dividends
  25. Beginning Retained Earnings = Ending Retained Earnings + Net Income - Depreciation
  26. Which of these is the committee/agency that decides when a new rule needs to be written?
  27. GAAP
  28. FASB
  29. PCAOB
  30. SEC
  31. T/F Auditors are responsible for financial statements
  32. True
  33. False
  34. Which of these is not an advantage of a corporation?
  35. Easier to raise capital
  36. Easier to have ownership changes
  37. Flow through taxation
  38. Limited Liability
  39. Buying and selling property is which type of activity on the cash flow statement?
  40. Operating
  41. Investing
  42. Financing
  43. Doesn’t belong on the cash flow statement
  44. Unearned revenue is which type of account?
  45. Revenue
  46. Expense
  47. Asset
  48. Liability
  49. Cost of Goods Sold is which type of account?
  50. Revenue
  51. Expense
  52. Asset
  53. Liability
  54. Which activities must occur in order to record revenue under the revenue recognition principle?
  55. Reasonable assumption you will provide a product or service
  56. The product or service has been provided
  57. Reasonable assumption that payment will be collected
  58. Payment has been collected
  59. Both A and D
  60. Both B and C
  61. Which of these is a long-term liability?
  62. Accounts Payable
  63. 3 Month Note Payable
  64. Unearned Revenue
  65. 2 Year Note Payable
  66. Apple purchases a new building costing $50,000 by signing a three-year note from the bank for $30,000 and paying the rest in cash. What would be the effect on the accounts?
  67. Assets increase by 50,000 and liabilities increase by 50,000
  68. Assets Decrease by 20,000 and liabilities decrease by 30,000
  69. Assets Increase by 30,000 and liabilities decrease by 30,000
  70. Assets increase by 30,000 and liabilities increase by 30,000

Answer the next two questions using the following table

Contributed Capital / 20,000
Retained Earnings / 30,000
Assets / 25,000
Dividends / 5,000
Expenses / 12,000
  1. What are liabilities for the current year?
  2. 20,000
  3. 25,000
  4. 27,000
  5. 30,000
  6. What are revenues for the current year if beginning retained earnings equal 10,000?
  7. 30,000
  8. 37,000
  9. 42,000
  10. 45,000
  11. Which of these accounts does not increase on the credit side?
  12. Revenue
  13. Expenses
  14. Common Stock
  15. Liabilities
  16. What does a net profit margin of .03 mean to a company?
  17. For every dollar of sales, a company keeps $.03
  18. For every dollar of liabilities, a company has .03 assets
  19. For every dollar of sales, a company has .03 expenses
  20. For every dollar of assets, a company has .03 liabilities
  21. Which of these is not a limitation of the income statement?
  22. Does not actually show cash on hand
  23. Uses estimates
  24. Doesn’t show the correct amount of income for the period
  25. Not an accurate measure of the change in value of a company
  26. Which of these types of accounting is required by GAAP?
  27. Cash
  28. Accrual
  29. Estimates
  30. Tax