Chp 1 & 2 Exam Review

Sales of products or services are referred to as

• Liabilities.

• Expenses.

• Assets.

• Revenues.

Liabilities Represent

• Owners’ claims to a company’s resources.

• The resources of a company.

• Sales of products or services to customers.

• Amounts owed to creditors.

Company provides services to customers totaling $3,900, for which it billed the customers. How would the transaction be recorded?

• Debit Cash $3,900, credit Service Revenue $3,900

• Debit Service Revenue $3,900, credit Accounts Receivable $3,900

• Debit Accounts Receivable $3,900, credit Cash $3,900

• Debit Accounts Receivable $3,900, credit Service Revenue $3,900

The owners’ claims to resources are referred to as

• Dividends.

• Liabilities.

• Stockholders’ equity.

• Assets.

The financial statement that shows the financial position of a company at a specific point in time is called the:

• Statement of Cash Flows.

• Income Statement.

• Balance Sheet.

• Statement of Stockholders’ Equity.

Which financial statement conveys a company’s ability to generate profits in the current period?

The body of rules and procedures that guide the measurement and communication of financial accounting information is known as

• SEC

• GAAP

• FASB

• RFP

Financial accounting and reporting standards in the United States are established primarily by the

• FASB

• SEC

• IASB

• The U.S. Congress

The ending Retained Earnings balance of Big Mike's Joint increased by $7.3 million from the beginning of the year. The company declared a dividend of $2.5 million during the year. What was the amount of net income during the year?

• $4.8 million

• $9.8 million

• $18.3 million

• $2.9 million

Answer explanation

Increase in Retained Earnings ($7.3 million) = Net Income − Dividends ($2.5 million).

Net Income = $7.3 million + $2.5 million = $9.8 million.

Which of the following accounts would normally have a credit balance?

• Accounts Payable, Service Revenue, Common Stock.

• Income Tax Payable, Service Revenue, Dividends.

• Salaries Payable, Deferred Revenue, Delivery Expense.

• Cash, Repairs and Maintenance Expense, Dividends.