Choose the Most Correct Answer. Show Your Work on Computational Problems for Full Credit

Name: ______

ACG 201

Chapter 2 Quiz

Spring 2013

Choose the most correct answer. Show your work on computational problems for full credit.

1. / In a classified balance sheet, assets are usually classified as:
A) / current assets; long-term assets; property, plant, and equipment; and intangible assets.
B) / current assets; long-term investments; property, plant, and equipment; and common stocks.
C) / current assets; long-term investments; tangible assets; and intangible assets.
D) / current assets; long-term investments; property, plant, and equipment; and intangible assets.
2. / Liabilities are generally classified on a balance sheet as
A) / small liabilities and large liabilities.
B) / present liabilities and future liabilities.
C) / tangible liabilities and intangible liabilities.
D) / current liabilities and long-term liabilities.
3. / Use the following data to determine the total dollar amount of assets to be classified as current assets.
Carne Auto Supplies
Balance Sheet
December 31, 2012
Cash / $ 60,000 / Accounts Payable / $ 65,00000
Prepaid Insurance / 40,000 / Salaries Payable / 10,00000
Accounts Receivable / 50,000 / Mortgage Payable / 90,00000
Inventory / 70,000 / Total Liabilities / $165,00000
Land held for investment / 80,000
Land / 95,000
Buildings / $100,000 / Common Stock / $120,00000
Less Accumulated / Retained Earnings / 250,00000
Depreciation / (30,000) / 70,000 / Total SE / $370,00000
Trademarks / 70,000 / Total Liabilities and
Total Assets / $535,000 / Stockholders' Equity / $535,0000
0
A) / $220,000.
B) / $150,000.
C) / $300,000.
D) / $180,000.
4. / Use the following data to calculate the current ratio.
Carne Auto Supplies
Balance Sheet
December 31, 2012
Cash / $ 60,000 / Accounts Payable / $ 65,000
Prepaid Insurance / 40,000 / Salaries Payable / 10,000
Accounts Receivable / 50,000 / Mortgage Payable / 90,000
Inventory / 70,000 / Total Liabilities / $165,000
Land held for investment / 80,000
Land / 95,000
Buildings / $100,000 / Common Stock / $120,000
Less Accumulated / Retained Earnings / 250,000
Depreciation / (30,000) / 70,000 / Total SE / $370,000
Trademarks / 70,000 / Total Liabilities and
Total Assets / $535,000 / Stockholders' Equity / $535,000
A) / 1.86 : 1.
B) / 2.00 : 1.
C) / 3.38 : 1.
D) / 2.93 : 1. (Current Assets/Current Liab = $220,000 / $75,000)
5. / K2 Corporation has assets of $1.80 million, common stock of $468,000, and retained earnings of $285,000. What are the creditors' claims on their assets?
A) / $1,617,000
B) / $ 753,000
C) / $1,047,000
D) / $1,983,000

$1.80 million = Liabilities + ($468,000 + $285,000)

$1.80 million – 753,000 = Liabilities

$1,047,000 = Liabilities

6. / Issuing new shares of common stock will
A) / increase retained earnings.
B) / decrease retained earnings.
C) / increase common stock.
D) / decrease common stock.
7. / What organization issues U.S. accounting standards?
A) / Security Exchange Commission.
B) / International Accounting Standards Committee.
C) / International Auditing Standards Committee.
D) / Financial Accounting Standards Board.
8. / Two of the major characteristics that make accounting information useful are
A) / Relevance and Faithful representation.
B) / Verifiability and timeliness.
C) / Comparability and flexibility.
D) / Understandability and consistency.
9. / A company using the same accounting principles from year to year is an application of
A) / timeliness.
B) / consistency.
C) / full disclosure.
D) / materiality.
10. / The periodicity assumption states that the economic life of a business can be divided into
A) / equal time periods.
B) / cyclical time periods.
C) / artificial time periods.
D) / perpetual time periods.

Page 1 of 3