ACCT TEST 1

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

• Rules of Financial Reporting (RFR).

• Generally Accepted Accounting Principles (GAAP).

• Standards of Professional Compliance (SPC

• generally Accepted Auditing Standards (GAAS).

The role of the Public Company Accounting Oversight Board is to:

• Advise investors and creditors of companies’ future profit potential.

• • 
    

    Assist company management in the case of financial default on debt.

• Ensure that auditors follow a strict set of guidelines when conducting their audits.

• Develop accounting and reporting standards in the United States.

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

Multiple Choice

• cash, Repairs and Maintenance Expense, Dividends.

• Salaries Payable, Deferred Revenue, Delivery Expense.

• Accounts Payable, Service Revenue, Common Stock.

• Income Tax Payable, Service Revenue, Dividends.

Which of the following accounts normally has a debit balance?

• Deferred Revenue

• Service Revenue

• Salaries Expense

• Accounts Payable

An expense has what effect on the accounting equation?

• Decrease stockholders' equity

• No effect

• Decrease liabilities

• Increase assets

The following table contains financial information for Dillon Incorporated before closing entries:
 

Cash$ 12,600Supplies5,900Prepaid Rent2,600Salaries Expense6,100Equipment65,500Service Revenue28,300Miscellaneous Expense20,400Dividends3,400Accounts Payable4,500Common Stock66,100Retained Earnings17,600

What is Dillon's net income?

Multiple Choice

• $7,800

• $1,800

• $2,300

• $8,800

Using the information below from the accounting records of Thomas Corporation, equity (also known as the owners’ claims to the company's resources) must amount to:
 

Assets$ 1,200,000Liabilities$   800,000Net income$   100,000Retained earnings$   250,000

• $250,000

• $800,000

• 1,200,000

• $400,000

At the beginning of December, Coastal Corporation had $2,800 in supplies on hand. During the month, supplies purchased amounted to $3,100, but by the end of the month the supplies balance was only $1,900. What is the appropriate month-end adjusting entry?

Multiple Choice

• Debit Cash $4,000, credit Supplies $4,000

• Debit Supplies Expense $4,000, credit Supplies $4,000

• Debit Supplies $4,000, credit Supplies Expense $4,000

• Debit Cash $1,900, credit Supplies $1,900

Draco Company engages in the following cash payments:
 

Purchase equipment$ 3,950Pay rent600Repay loan to the bank4,700Pay workers’ salaries1,000

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

• $1,600

• $3,950

• $5,700

• $8,650

the following amounts are reported in the ledger of Harmony Company:

 

Assets$78,000Liabilities40,000Retained Earnings10,000

 

What is the balance in the Common Stock account?

• • 
    

    $50,000

• $28,000

• $68,000

• $38,000