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ACG 2021 Final Exam (1).
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ACG 2021 Final Exam (1).
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ACG 2021 Final ExamWhich of the following is typically considered a disadvantage of sole proprietorships? -
ANS-owner is personally liable for all debts of the business
The main goal of an accounting system is to: - ANS-capture information about a business so
that it can be reported to decision makers
Crystal Lodging recorded $330,000 in revenues, $247,500 in expenses, and $45,000 of
dividends for the year. The company began the year with total assets of $285,000 and
stockholder's equity of $130,500. What net income (loss) was reported by Crystal Lodging for
the year? - ANS-$82,500
At the end of last year, the company's assets totaled $430,000 and its liabilities totaled
$370,000. During the current year, the company's total assets increased by $29,000 and its total
liabilities increased by $12,000. At the end of the current year, stockholders' equity was: -
ANS-$77,000
Which of the following would not affect a company's net income? - ANS-paying a dividend to
stockholders
Which of the following statements is prepared as of a point in time? - ANS-balance sheet
Which of the following would not be reported on the balance sheet? - ANS-advertising expense
A company's financial records at the end of the year included the following amounts:
What is the amount of net income on the income statement for the year? - ANS-$30,000
A company's financial records at the end of the year included the following amounts:
What is the amount of total assets to be reported on the balance sheet at the end of the year? -
ANS-$102,000
A company's financial records at the end of the year included the following amounts:
What is the amount of total stockholders' equity that would be reported on the balance sheet at
the end of the year? - ANS-$87,000
Accounts receivable are: - ANS-amounts the company expects to collect for previous credit
sales
In the U.S., Generally Accepted Accounting Principles (GAAP) are established by the: -
ANS-Financial Accounting Standards Board (FASB)
,Who has primary responsibility for making sure that a company's financial statements follow
GAAP? - ANS-management
Amounts earned by selling goods or services to customers are called: - ANS-revenues
An economic resource that is owned by a company and will provide future benefits is referred to
as: - ANS-an asset
Which of the following is an accounting transaction? - ANS-a manager signs a promissory note
and receives cash
Every transaction: - ANS-has at least two effects on the basic accounting equation
Sue Shells, Inc. pays back $200,000 on a loan it had obtained earlier from a bank - ANS-assets
decrease by $200,000, liabilities decrease by $200,000, and stockholders' equity is unchanged
During the current year, Sue Shells, Inc.'s total liabilities decreased by $50,000 and
stockholders' equity increased by $10,000. By what amount and in what direction did Sue's total
assets change during the same time period? - ANS-$40,000 decrease
Danny Company purchased supplies using cash. What is the effect on Danny's balance sheet?
- ANS-no effect on total assets; no effect on total liabilities; no effect on total stockholders' equity
During its first year of operations, a company entered into the following transactions:
-borrowed $20,000 from the bank by signing a promissory note
-issued stock to owners for $40,000
-purchased $4,000 of supplies on account
-paid $1,600 to suppliers as payment on account for the supplies purchased
What is the amount of total assets at the end of the year? - ANS-$62,400
Which of the following requires a credit? - ANS-increases to liabilities
In addition to requiring that the accounting equation remain in balance, the double-entry system
also requires that: - ANS-the total dollar amount of debits must equal the total dollar amount of
credits
Accounts Payable had a balance of $9,100 at the beginning of the month. During the month,
three debits in the amounts of $2,350, $5,650, and $7,400 were posted to Accounts Payable,
and three credits in the amounts of $1,800, $4,750, and $6,350 were posted to Accounts
Payable. What is the ending balance of the Accounts Payable account? - ANS-$403,500
For both accounts and amounts, the standard formatting for a journal entry lists: - ANS-debits
first and then credits, indented to the right underneath
, The normal balance of any account is the: - ANS-side which increases that account
The journal entry to record the purchase of supplies on account includes a credit to: -
ANS-accounts payable
Slug, Inc. purchases equipment for $1,200,000 million paying $180,000 in cash and issuing
$1,020,000 in promissory notes. When the journal entry is posted to the related accounts: -
ANS-$1,200,000 will be debited and $180,000 will be credited to asset accounts; $1,020,000
will be credited to liability accounts
Broadway, Inc.'s trial balance was in balance at the end of the period and showed the following
accounts:
What is the balance of the credit column on Broadway's trial balance? - ANS-$120,600
Which one of the following is not a current asset? - ANS-equipment
Which of the following sequences indicates the correct order of steps in the accounting cycle? -
ANS-prepare journal entries, post to ledger, prepare trial balance, and prepare financial
statements
Shaylee, Inc. borrowed $62,000 from a bank, depositing those funds in its bank account and
signing a formal agreement to repay the loan in two years. What is the correct journal entry for
this transaction? - ANS-debit cash and credit notes payable for $62,000
Perfect Pets, Inc. makes a $10,000 payment on account. This would result in a: - ANS-$10,000
debit to accounts payable and a $10,000 credit to cash
Which of the following would not be considered an operating activity? - ANS-purchase
equipment for cash
During the year, Sand, Inc. had $120,000 in revenues, $48,000 in expenses, and paid $3,600 in
dividends. Net income equals: - ANS-$72,000
If a company incorrectly records a payment as an asset instead of an expense, how will this
error affect net income in the current period? - ANS-net income will be too high
The ______________ takes stock of what exists at a point in time whereas the ____________
depicts a flow of what happened over a period of time. - ANS-balance sheet; income statement
Which of the following situations results in deferred revenue? - ANS-received $100 cash from a
customer for an order of goods to be shipped next month
In accordance with the expense recognition principle, expenses are recorded in the period when
the: - ANS-related revenues are recorded
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