Basic Accounting-Part 1

What is the primary purpose of financial accounting?

• Determine the amount of tax liability owed to the government.

• Communicate business transactions to internal management.

• Measure business transactions and communicate those measures to external users to make decisions

• Measure the profitability of the company in order to assist employees with making decisions.

f a company has stockholders' equity of $60,000 at the end of the year, which of the following statements must be true?

• The company's assets exceed liabilities by $60,000.

• he company has issued $60,000 of common stock.

• Net income for the year equals $60,000.

• Total revenues earned during the year equal $60,000.

Transactions of a company involving external sources of funding are referred to as:

• Investing activities

• Financing activities

• External activities.

• Operating activities.

Transactions of a company that include the purchase and sale of long-term productive assets are referred to as:

• Investing activities

• Financing activities

• Expenditure activities.

• Operating activities.

McGill purchases additional office equipment to better serves its customers. This purchase is classified as what type of activity?

• Company activity.

• Financing activity.

• Investing activity

• Operating activity

Transactions related to the primary business activities of the company, such as selling goods and services to customers, are referred to as:

• Investing activities.

• Management activities.

• Operating activities

• Financing activities.

Stimpleton Company engages in the following cash payments:

What is the total amount of cash paid for operating activities?

• 6,000.

• 2000

• 7000

• 1500

Sooner Company has had a net income of $8,000, $5,000, $12,000, and $10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $3,000,what is the ending retained earnings balance?

• 47,000

• 35,000

• 23,000

• 7,000.

On January 1, 2012, Gucci Brothers Inc. started the year with a $492,000 balance in Retained Earningsand a $605,000 balance in Common Stock. During 2012, the company earned net income of $92,000, paida dividend of $15,200, and issued more common stock for $27,500. What is total stockholders' equity onDecember 31, 2012?

• 1,231,700

• 1,097,000

• 1,201,300

• 1,588,300

Which of the following is the correct order for preparing the financial statements?

• Balance sheet, statement of stockholders' equity, and income statement

• Balance sheet, income statement, and statement of stockholders' equity.

• Statement of stockholders' equity, income statement, and balance sheet.

• Income statement, statement of stockholders' equity, and balance sheet