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MGMT 200 Exam 1 || A+ GRADED
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1) What is the primary purpose of financial accounting? correct answers Measure business activities and communicate those measures to external users to make decisions. 2) Which business form has the advantage of limited liability? correct answers Corporation. 3) Stimpleton Company engages in ...

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  • August 9, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • 1 what is the primary purpose of financial accoun

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MGMT 200 Exam 1 || A+ GRADED
1) What is the primary purpose of financial accounting? correct answers Measure business
activities and communicate those measures to external users to make decisions.

2) Which business form has the advantage of limited liability? correct answers Corporation.

3) Stimpleton Company engages in the following cash payments:

Purchase equipment
$2,000

Pay rent
500

Repay loan to the bank
5,000

Pay workers' salaries
1,000

What is the total amount of cash paid for operating activities? correct answers $1,500.

4) Emmitt had the following final balances after the first year of operations: assets, $55,000;
stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the
amount of Emmitt's liabilities? correct answers $30,000.

5) Using the information below from the accounting records of Thomas Corporation,
stockholders' claims to the company's resources amount to:
Assets
$1,200,000

Liabilities
$800,000

Net income
$100,000

Retained earnings
$250,000 correct answers $400,000.

6) Net income (loss) appears in which two financial statements? correct answers Income
statement and statement of stockholders' equity.

7) Which one of the following statements regarding financial reports is correct?
A) The balance sheet classifies all assets according to operating, investing, and financing
activities.
B) The income statement is used to show that a company's resources equal claims to those
resources.

, C) The statement of stockholders' equity updates the balances of common stock and retained
earnings for related transactions during the year.
D) The statement of cash flows shows cash inflows and outflows from operating activities
only. correct answers C

8) FlintCo purchases additional office equipment to better serves its customers. This cash
purchase is reported in the statement of cash flows as what type of activity? correct answers
Investing activity.

9) Which of the following is the correct order for preparing the financial statements? correct
answers Income statement, statement of stockholders' equity, and balance sheet.

10) Generally Accepted Accounting Principles (GAAP) are best defined as:
A) Standards for presenting financial accounting information.
B) Government-mandated rules that companies must follow.
C) Rules that best estimate profitability for a company.
D) The group of individuals that create and enforce all accounting rules. correct answers A

11) Which of the following is not part of measuring external transactions?
A) Using source documents to analyze accounts affected.
B) Recording transactions.
C) Making payments on all amounts owed.
D) Analyzing transactions for their effect on the accounting equation. correct answers C

12) When cash payments are made to stockholders, what is the effect on the company's
accounts? correct answers Cash decreases and dividends increase

13) Receiving cash from customers before services are performed results in: correct answers
Deferred Revenues.

14) On September 10, MFP Co. paid employee salaries of $7,000 owed to its employees last
month. What are the effects of this transaction on the accounting equation? correct answers
Assets decrease and liabilities decrease.

15) Consider the following transactions:

Issued common stock for cash.
Purchased equipment by signing a note payable.
Provided services to customers on account.
Collected cash from customers on account.

How many of these transactions increased the company's total liabilities?
A) One.
B) Two.
C) Three.
D) Four. correct answers A

16) Assets normally carry a ________ balance and are shown in the ________. correct
answers Debit; Balance sheet

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