Name: mba560 quiz 1
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1.Hardin Company began operations in 2010. During the year, the following cash transactions
occurred:

Issued stock for $40,000
Borrowed $24,000 from bank
Provided services to customers for $53,000 cash
Paid back $8,000 of the loan from the bank
Paid rent expense, $9,000
Paid operating expenses, $29,000

Assuming that Hardin engaged in no transactions during the year other than those listed above, what was the amount of net income or loss for the year? (Points : 2)

$19,000 net income
$15,000 net income
$12,000 net income
$11,000 net loss

Question 2.2.Dale Company purchased land costing $2,400 by paying cash. The company earned $2,000 revenue on account and incurred $1,100 of operating expenses on account. As a result of these transactions: (Points : 2)

Total assets increased by $2,400.
Liabilities increased by $1,100.
Total assets increased by $5,400.
Both A and B.

Question 3.3.Liabilities are: (Points : 2)

claims of creditors.
the ownerâ€™s interest in the company.
claims of investors.
both A and B.

Question 4.4.Parrot Company paid a $300 cash dividend. Which of the following choices accurately reflects how this event would affect the company’s financial statements?

Balance Sheet

Income Statement

Row

Assets

Liab.

Equity

Rev.

–

Exp.

Net Inc.

Statement of Cash Flows

One	NA	=	300	+	(300)	NA	–	300	=	(300)	NA
Two	(300)	=	NA	+	(300)	NA	–	300	=	(300)	(300) FA
Three	(300)	=	NA	+	(300)	NA	–	NA	=	NA	(300) FA
Four	(300)	=	NA	+	(300)	NA	–	NA	=	NA	(300) OA

(Points : 2)

Row One
Row Two
Row Three
Row Four

Question 5.5.At the end of the accounting period, Sefcik Company made an adjusting entry for supplies consumed. Which of the following choices reflects how this event would affect the company’s financial statements?

Row	Assets	=	Liab.	+	Equity	Rev.	–	Exp.	=	Net Inc.	Cash Flow
One	+ –	=	NA	+	NA	NA	–	+	=	–	NA
Two	–	=	NA	+	–	NA	–	+	=	–	NA
Three	–	=	–	+	NA	NA	–	NA	=	NA	NA
Four	+ –	=	NA	+	NA	NA	–	NA	=	NA	+ IA

(Points : 2)

Row One
Row Two
Row Three
Row Four

Question 6.6.As of December 31, 2009, Bueno Company had $1,000 in liabilities, $8,000 in common stock, and $2,500 in retained earnings. The total amount of assets on that date is: (Points : 2)

$10,000
$12,500
$11,500
$7,500

Question 7.7.The Redding Company recorded salaries earned by employees but not yet paid. Which of the following represents the effect of this transaction on the financial statements?

Row	Assets	=	Liab.	+	Equity	Rev.	–	Exp.	=	Net Inc.	Cash Flow
One	+	=	+	+	NA	+	–	NA	=	+	– OA
Two	NA	=	+	+	–	NA	–	+	=	–	– OA
Three	–	=	NA	+	–	NA	–	+	=	–	NA
Four	NA	=	+	+	–	NA	–	+	=	–	NA

(Points : 2)

Row One
Row Two
Row Three
Row Four

Question 8.8.The accounting equation may be written: (Points : 2)

Revenues â€“ Expenses = Net Income.
Assets = Liabilities.
Liabilities = Equity.
Assets = Claims on Assets.

Question 9.9.An element that is often present when fraud occurs is: (Points : 2)

the availability of an opportunity.
the existence of some form of pressure.
the ability to rationalize.
all of the above.

Question 10.10.Which of the following would be included in the “cash flows from investing activities” section of the statement of cash flows? (Points : 2)

Borrowed $10,000 from a local bank
Paid $1,000 of expenses with cash
Sold land for cash
Issued common stock for cash

Question 11.11.Expenses are shown on the: (Points : 2)

income statement.
statement of changes in stockholdersâ€™ equity.
balance sheet.
all of the above.

Question 12.12.The claims of a businessâ€™s creditors are called: (Points : 2)

assets.
liabilities.
equity.
revenue.

Question 13.13.Which of the following would be included in the “cash flows from financing activities” section of the statement of cash flows? (Points : 2)

Collected cash from accounts receivable
Finance Company loaned cash to another company
Paid cash dividend to stockholders
Purchased business insurance

Question 14.14.Expenses that are matched with the period in which they are incurred are frequently called: (Points : 2)

period costs.
frequency expenses.
market expenses.
working costs.

Question 15.15.Accounting information is said to be reliable if: (Points : 2)

it is based on recent (not longer than 6 months) information.
it was prepared by someone with good credentials in accounting, such as a certified public accountant.
it can be independently verified.
it complies with rules and standards of the Internal Revenue Service.

Question 16.16.Which of the following groups has primary responsibility for establishing generally accepted accounting principles for businesses in the United States? (Points : 2)

The U.S. Supreme Court
Each stateâ€™s Secretary of the Treasury
The Financial Accounting Standards Board
The Internal Revenue Service

Question 17.17.The purpose of the accrual basis of accounting is to: (Points : 2)

report revenue when cash is received.
improve the matching of revenue and expense in the proper period.
report expenses when cash disbursements are made.
improve the company’s earnings per share.

Question 18.18.An asset use transaction: (Points : 2)

increases one asset and decreases another.
decreases an asset and decreases a liability or equity.
increases an asset and decreases a liability or equity.
increases an asset and increases a liability or equity.

Question 19.19.Which of the following accounts is a permanent account (an account that is not closed)? (Points : 2)

Prepaid Insurance
Service Revenue
Salaries Expense
Rent Expense

Question 20.20.Which of the following lists represents the correct sequence of stages in an accounting cycle? (Points : 2)

Record transactions, prepare statements, adjust accounts, and close temporary accounts
Prepare statements, close temporary accounts, record transactions, and adjust accounts
Close temporary accounts, record transactions, prepare statements, and adjust accounts
Record transactions, adjust accounts, prepare statements, and close temporary accounts

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