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WorksheetsA100
Total questions: 81
Worksheet time: 20hrs 10mins
Purchase of fixed assets are classified as...
Financing cash outflow
Operating Cash outflow
Investing cash outflow
Dividends
Payments made to debt holders of the business
Classified as investing cash outflow when paid
Payments from the corporation to equity holders in the business
Which is FALSE regarding the SEC?
Only applied to publicly held comapnies
Requires all businesses to complete a 10K annually
Formed after the stock market crashed in 1929
S
Which of the following is true
Gaap gives less guidance than IFRS
GAAP is a principle-based system
GAap are the rules compaies based in the U.S are required to use
Which of the following is primarily responsible for the info provided on finacial statements?
Comapnys top management
Board of directors
External Auditors
Which of the following is the primary objective of finacial accounting?
Provide useful info about future business strategies
Provide useful info to help external parties make informed decisions
Provide useful finacial info to stockholders only
What does GAAP stand for
Generally Accepted Accounting Principles
Generally applied accounting procedures
Government-approved accounting practices
For accounting information to be useful, it must be what?
consistent and comparable
Relevant and consistent
Relevant and a faithful representation
Which best describes the purpose of an auditor?
lend credibility to entity's financial statements
prove accuracy for entity's financial statements
To audit every transaction
Which of the following is an asset account
Equipment
Accounts Payable
COmmon stock
retained earnings
Which is true of retained earnings
Amount of cash the company has at the end of the period
Amount received when common stock is issued
All the net incomes company has earned minus any losses minus dividends
R
Which is true of the Balnace Sheet?
Assets + Liabilities = Stock Equity
Stock equity is assets - liabilities
Should be the 1st statement prepared
Balances are zeroed at the end of the period
Which of the following is true?
Ending balances on the income statement are carried over to the next period
The income statement covers a period of time while the balance sheet covers a specific point
All public business are required to use the cash basis of accounting
Which is true of accrual accounting?
An expense may be shown on the income statement before its paid
Revenue is recorded when cash is received
Not accepted by GAAP or IFRS
WHich is true regarding the statement of retained earnings?
Should be prepared after balance sheet but before income statement
Common stock is a component of this statement
Ending balance on this statement is carried over to the balance sheet
WHich of the following is an expense on the income statement?
Accounts Payable
Notes Payable
Cost of goods sold
wages payable
Which statement would you use to determine if a comapny can pay back their liabilities that are due?
Income statement
Balance sheet
Statement of cash flows
statement of retained earnings
Corporation had assets of $270,000 and liabilities of $160,000, both accounts increased, assets by $25,000 and liabilities by $5,000. What was the stockholder's equity?
$130,000
$190,000
$80,000
Which would NOT be reported in the operating section of cash flows statement?
Cash paid for interest expense
Cash paid for dividends to stockholders
Cash paid for employee wages
D
Retained earnings increase $20,000 in the current year. Given that the company declared $25,000 of dividends what was their net income or loss?
Net income was $5000
Net Income was $45,000
Net loss was $5000
Net loss $45,000
A company purchased supplies for cash, which will be consumed during future months. Which correctly describes the impact of the purchase on the financial statements?
Total Assets will remain unchanged
Total assets will decrease
Operating expenses will increase
Operating expenses will decrease
Recognizing an expense may include which...
Decrease in liabilities
Increase in assets
Increase in liabilities
decrease in assets
Which of these transactions will result in an increase of operating income on the day of the transaction?
Sale of investment at a gain
Providing a service to a customer on account
The receipt of cash dividends from investment
$38,750
$155,000
$116,250
$77,550
What is true about the common stock account
Balance increases when stock is issued
Common stock appears on the income statement
Affects Net income
Only account in stockholders equity
When a company borrow money from the bank...
Net income is increased
Amount borrowed increases stockholders equity
Amount borrowed is shown as a liability
Exchange of one asset for another
Which is true
Revenue can't be recorded until cash is received
Balances on Income statements are carried to the next period
No impact on net income when cash is collected from accounts recievable
Company used $400 electricity in first month, payment isnt due until next month, so you waited to pay... which is true
Record $400 expense when you pay it in month 2, nothing in month 1
Record $400 expense and increase liabilities in month 1
Record expense and reduce assets in month 1
Increase both assets and liabilities by $400 in month 1
$7500
$6000
$9000
$4500
When a payment is collected from a customer on account, the result is...
Increase total assets and no change to net income
Increase net income no change to total assets
No change to either total assets or net income
Both net income and total assets increase
When a company issues common stock, what accounts are effected?
(a)
When a company borrows money from the bank, what accounts are effected?
(a)
When a company pays its workers, what accounts are effected?
(a)
Company earns $12,000 revenue, only received $2000, will receive the rest of the $10,000 next month. What accounts are effected?
What increases retained earnings
increased Revnue
Decreased revnue
Decreased assets
increased liabilities
Which of the following statements is true?
When a payment is made for supplies, it is recorded as an expense on the Income Statement.
The amount in supplies expense is the amount of supplies used during the period.
The asset account "supplies" is reduced when payments are made for supplies.
The asset account "supplies" and the expense account "supplies expense" will always have the same balance.
Which of the following is true?
Insurance expense is the amount of insurance that expired during the period
When payments are made for insurance, both the cash account and the prepaid insurance account are decreased.
Insurance expense always shows the amount paid for insurance during the period.
Recording insurance expense increases the asset account "prepaid insurance".
Which of the following is true regarding depreciation?
Recording depreciation on an asset increases the net carrying value of that asset.
Depreciation expense is recorded on all fixed assets.
Accumulated depreciation is a liability account.
The balance in the accumulated depreciation account increases as depreciation is recorded.
Iuka Company bought a piece of equipment for $8,000 on July 1, 2025. Iuka expects the equipment will last four years and then be worthless. Which of the following correctly states Iuka's annual financial statements at December 31, 2026?
Net carrying value $5,000; depreciation expense $2000
Net carrying value $4,000; depreciation expense $2,000
Net carrying value $4,000; depreciation expense $4,000
Net carrying value $5,000; depreciation expense $1,000
Fiat borrowed $80,000 on October 1, 2025. Fiat will not make any payments until October 1, 2027, and at that time, Fiat will pay $84,000. Which of the following correctly states the annual financial statements as of December 31, 2026?
Interest payable of $2,500; interest expense of $2,500
Interest payable of $1,500; interest expense of $2,000
Interest payable of $4,000; interest expense of $2,500
Interest payable of $2,500; interest expense of $2,000
The bookkeeper for Mustang Company forgot to make the end-of-the-period adjustment for the interest expense that had accrued during 2025. Which of the following is the result on Mustang's 2025 financial statements?
Assets are overstated, and net income is understated.
Liabilities are understated, and expenses are overstated.
Liabilities are understated, and net income is overstated.
Assets are overstated, and liabilities are understated.
Which of the following is true of depreciation?
Because depreciation is recorded on fixed assets, cash paid for depreciation is an investing cash outflow.
As accumulated depreciation increases, the net carrying value of fixed assets decreases.
Depreciation is recorded on land, buildings and equipment.
Recording depreciation reduces the balance in current assets.
Prospect Incorporated had the following totals for the year:
Sales = $76,000
Salary expense = $14,000
Gain on land sale = $ 3,000
Cost of goods sold = $28,000
Rent expense = $10,000
What is Prospect’s gross profit?
$51,000
$48,000
$27,000
$24,000
Pitkin Company had the following land transactions:
In 2016 - Purchased Land A for $14,000
In 2017 - Purchased Land B for $8,000
In 2019 - Sold all of Land A for $13,000 and half of Land B for $3,500
What is the balance in Pitkin’s land account at December 31, 2019?
$4000
$5000
$4500
$5500
Which of the following is true about assets?
When land is sold for a loss, total assets decrease by the amount of the loss
When land is sold for a gain, total assets increase by the sales price
Paying for 6 months of insurance decreases total assets by amount paid
Paying an account payable has no impact on total assets
Cougar Corporation bought inventory on account on August 23rd. Cougar paid its supplier for the inventory on August 28th. Cougar sold the inventory on account on September 2nd and received payment from its customer on September 12th. On what date did Cougar record the inventory as an expense?
Aug 28
Aug 23
Sep 2
Sep 12
Which of the following is true?
Total assets are increased when an accounts receivable is collected.
Total assets are increased when a payment is made for prepaid rent.
Interest payable will always equal interest expense.
Total liabilities are increased when an adjustment is recorded to accrue interest expense.
Which of the following is true of unearned revenue?
Assets are increased when unearned revenue is earned.
Net income is increased when unearned revenue is received.
Liabilities are decreased when unearned revenue is earned.
Net income is decreased when unearned revenue is received.
Malibu Company went into business in 2019 and in that year, its total sales were $62,000. At the end of 2019, Malibu had a balance in accounts receivable of $4,000 and a balance in unearned revenue of $1,000. How much did Malibu receive in cash during 2019?
$62,000
$59,000
65,000
$58,000
Which of the following is a correct classification on the statement of cash flows?
Paying an account payable is an operating cash outflow.
Receiving cash for a sale of inventory is an investing cash inflow.
Paying interest on a loan is an operating cash inflow.
Paying dividends is an operating cash outflow.
Which of the following transactions increases total assets?
Collecting an account receivable
Buying inventory on account
Buying enough insurance to cover insurance expense for the next three months
Paying employees for work done during the prior week
The salary of the factory supervisor is classified as
a variable cost.
an administrative expense.
an inventoriable cost.
a process cost.
If the selling price per unit increases, the break-even point in units will
increase
decrease
remain the same
change in the same percentage as the change in the sales price.
Cost of goods sold is
an expense account subtracted from gross profit to arrive at net income.
a contra-inventory account on the balance sheet.
a liability account on the balance sheet.
an expense account subtracted from revenue to arrive at gross profit.
Which of the following is true of the contribution margin?
It is the total of the variable costs plus fixed costs.
It is the portion of the sales available to cover fixed costs and net income.
It is an account on the company's balance sheet.
It is the same as net income at the company's breakeven point.
Which of the following are the inventory accounts for a manufacturing company?
Direct materials, direct labor, finished goods
Raw materials, work in process, finished goods
Direct materials, work in process, cost of goods sold
Direct materials, direct labor, manufacturing overhead
The bookkeeper at Simmons Company made a mistake and forgot to record depreciation for 2014. What wouldbe the impact of this error on the Company's annual financial statements?
Both total assets and total expenses are overstated.
Both total assets and net income are overstated.
Both total assets and total expenses are understated.
Liabilities are understated and net income is overstated.
Which of the following lists contains an account that would not appear on the balance sheet?
Common stock, cash, accounts payable, prepaid insurance
Retained earnings, accounts receivable, inventory, utilities payable
Cash, interest payable, accumulated depreciation, inventory
Common stock, accumulated depreciation, cost of goods sold, cash
Which of the following is true of a manufacturing company?
The period costs are all costs of operating the factory.
Period costs are expensed as cost of goods sold when the inventory is sold.
Period costs are expensed as they are incurred.
The salary of the factory foreman is a period cost.
Which of the following is true of the contribution margin income statement?
The percentage of fixed costs to total sales remains constant.
The total amount of variable costs remains constant.
The breakeven point is the level of sales at which total sales equals variable costs plus fixed costs.
Total fixed costs will always equal the contribution margin
Which of the following is a correct classification on the statement of cash flows?
The sales price of land is an investing cash inflow.
Paying an accounts payable is a financing cash outflow.
Making a sale on account is an operating cash inflow.
Paying interest on a note is a financing cash outflow.
Which of the following is a true statement regarding the contribution margin income statement?
Total variable costs is a fixed amount.
Fixed costs per unit decrease as the number of units produced and sold increases.
The contribution margin per unit decreases as the number of units produced and sold increases.
Net income per unit is fixed as the number of units produced and sold varies.
Which of the following would be considered a period cost for a manufacturing firm?
The fork lift driver's wages
The president of the company's salary
Depreciation on equipment in the factory
Property taxes on the factory
On what date would a door handle for a freezer be expensed by a manufacturing company?
hen the door handle is paid for by the company
When the freezer is sold by the company
When payment is received for the sale of the freezer
hen the door handle is attached to the freezer in the production assembly line.
Which of the following is true of a manufacturing company?
Period costs are expensed as cost of goods sold when the inventory is sold.
The salary of the factory foreman is a period cost.
Selling expenses are considered a product cost of the company.
d
Period costs are expensed as they are incurred.
The salary of the factory supervisor is classified as
a non-product cost.
an administrative expense.
an inventoriable cost.
a process cost.
Which of the following is true?
Variable costs vary per unit, and fixed costs are fixed per unit.
The contribution margin per unit stays the same as the number of products produced increases.
The breakeven point is the level of production at which the fixed costs exactly equal variable costs.
Total fixed costs move in direct relationship with sales.
Which of the following is true of the contribution margin income statement?
The percentage of fixed costs to total sales remains constant.
The total amount of variable costs remains constant.
The breakeven point is the level of sales at which total sales equals variable costs plus fixed costs.
Total fixed costs will always equal the contribution margin.
Last month, Buren, Inc. manufactured 10,000 units of its only product, and the cost per unit was $60. At this level of production, variable costs are 50% of total unit costs. If 10,500 units are manufactured this month and cost behavior patterns remain unchanged
total variable cost will remain unchanged.
total cost per unit will decrease.
variable cost per unit will increase.
fixed costs per unit will increase.
Last year Dallas Company reported sales of $640,000, a contribution margin of $160,000, and a net loss of $40,000. Based on this information, Dallas needed how much in total sales to breakeven?
$800,000
$640,000
$480,000
$720,000
Which of the following is correct concerning reactions to INCREASES in activity?
A
B
C
D
The salary paid to the president of a company would best be classified on the income statement as a(n):
period cost
direct labor
manufacturing overhead
inventory cost
Which of the following is true?
Fixed costs per unit always stay the same
Variable costs per unit will always vary
Contribution margin = fixed costs + net income
Fixed costs + variable costs always = total sales
Which of the following costs are always irrelevant in decision making?
Avoidable costs
sunk costs
opportunity costs
fixed costs
A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will:
Have no effect on CM ratio
decrease CM
Have no effect on break even volume
none of the above
Starting point for master budget
sales forecast/budget
Direct material budget
income statement
Production budget
4267
3200
1760
3600
Which of the following is true of fixed and variable costs?
Variable costs per unit increase as you produce and sell more units.
Fixed costs per unit increase as you produce and sell fewer units.
he contribution margin per unit increases as you produce and sell more units.
Total fixed costs increase as you produce and sell more units.
0.25 years
0.12 years
3 years
4 years
Which of the following transactions will increase a current ratio, which is currently 2.5?
receiveing cash from signing a note payable
Recording an expense
Using cash to pay an account payable
collecting accoutns receivable
Equity Holders...
May lose money if stock prices go down
Entitled to regular interest Payments
Legally required to reieve dividends
