1. A corporation has which of the following set of characteristics? a. Shared co
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Question
1. A corporation has which of the following set of characteristics?
a. Shared control, tax advantages, increased skills and resources
b. Simple to set up and maintains control with founder
c. Easier to transfer ownership and raise funds, no personal liability
d. Harder to raise funds and gives owner control
2. An item is considered material if
a. it doesn’t costs a lot of money.
b. it is of a tangible good.
c. it is likely to influence the decision of an investor or creditor.
d. the cost of reporting the item is greater than its benefits.
3. The accounting equation may be expressed as
a. Assets = Stockholders’ Equity – Liabilities.
b. Assets = Liabilities + Stockholders’ Equity.
c. Assets + Liabilities = Stockholders’ Equity.
d. Assets + Stockholders’ Equity = Liabilities.
4. If total liabilities decreased by $50,000 and stockholders’ equity increased by $10,000 during a period of time, then total assets must change by what amount and direction during that same period?
a. $40,000 decrease
b. $40,000 increase
c. $50,000 increase
d. $60,000 increase
5. For 2014 Kuhlman Corporation reported net income of $28,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2014 earnings per share?
a. $1.75
b. $0.57
c. $25.00
d. $0.07
6. Generally accepted accounting principles are:
a. a set of standards and rules that are recognized as a general guide for financial reporting.
b. usually established by the Internal Revenue Service.
c. the guidelines used to resolve ethical dilemmas.
d. fundamental truths that can be derived from the laws of nature.
7. A company using the same accounting principles from year to year is an application of
a. timeliness.
b. consistency.
c. full disclosure.
d. materiality.
8. Which accounts normally have debit balances?
a. Assets, expenses, and revenues
b. Assets, expense, and retained earnings
c. Assets, liabilities, and dividends
d. Assets, expenses, and dividends
9. Winrow Company showed the following balances at the end of its first year:
Cash $11,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 5,000
Dividends 500
Revenues 17,000
Expenses 12,500
What did Winrow Company show as total credits on its trial balance?
a. $27,500
b. $27,000
c. $26,500
d. $28,000
Explanation / Answer
A) C
A corporation is a legal entity which has its own rights and obligations. This means that corporations have their own legal personality that makes them separate from their owners.
2) C it is likely to influence the decision of the investor
Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements
3) B Assets = Liabilities + Shareholders' Equity.
The accounting equation is the basis upon which the double entryaccounting system is constructed.
4) A $40000 decrease as Assets = Liabilities + Shareholders' Equity.=-50000+10000=$40000
5) EPS=Net Income/Shares Outstanding=28000/16000=$1.75 Ans A
6) A . a set of standards and rules that are recognized as a general guide for financial reporting.
Generally accepted accounting principles (GAAP) are the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice.
7) B Consisitency
8) D Assets,expenses and dividends
9)
Accounts payable 2,000
Notes payable 3,000
Common stock 5,000
Revenues 17,000
Ans B 27000
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