Acct 284 - ClemExam 1 – Spring 2009Page 1

Accounting 284

Exam 1A - Clem

Spring 2009

Name (please print) ______Signature______

Row # ______

Please circle your class time:

TR 12:40-2:00 (Section A)TR 11:00-12:20 (Section B)

Exam Instructions:

1.Use a number 2 pencil to complete the answer sheet.

2.Be sure your name and 9 number University ID are on the answer sheet. Only put your name on the exam.

3.There are 30 questions on the exam. Make sure you have 30 questions and that you answer them all.

4.You need to circle the answers ON YOUR EXAM as well as filling them out on the answer sheet. You will not get the answer sheet back.

5.When you finish the exam, please bring it to the front of the room with your answer sheet and your photo ID, along with rest of your personal belongings. Plan to leave the room without returning to your seat.

Acct 284 - ClemExam 1 – Spring 2009Page 1

  1. Which financial statement shows the financial position of a business as of a given date?

A)balance sheet.

B)income statement.

C)statement of cash flows.

D)statement of retained earnings.

  1. The accounts payable account has a beginning balance of $1,000 and we purchased $3,000 of inventory on credit during the month. The ending balance was $800. How much did we pay our creditors during the month?

A)$2,800

B)$3,000

C)$3,200

D)$3,800

Adjusting entries NEVER include
A) / prepaid expenses.
B) / interest payable.
C) / unearned revenue.
D) / cash.
  1. Anna Inc. had the following items reported on its most recent financial statements

Total revenues…………………..$500,000

Dividends……………………….$ 10,000

Total assets………………………$425,000

Total liabilities…………………..$125,000

Total contributed capital………...$100,000

Beginning retained earnings…….$140,000

What total expenses were reported by Anna for the year?

A)$155,000

B)$275,000

C)$310,000

D)$430,000

  1. On January 1, 2005, Thomas Company paid $1,000 for a two-year insurance policy on the plant. The accounting period ends December 31. At the end of 2005, the financial statements should report:

Prepaid insuranceInsurance expense

A)$500$500

B)$0$1,000

C)$1,000$0

D)$250$250

  1. Which of the following accounts is increased by credit entries and decreased by debit entries

A)Cash

B)Advertising expense

C)Equipment

D)Accounts payable

  1. The primary objective of financial information is to

A)provide information to detect fraud in the preparation of financial statements.

B)provide information about the taxable income of the company.

C)provide managers with information about the efficiency and effectiveness of the production process.

D)provide useful economic information about a business to help external parties make sound financial decisions.

  1. The advantages of incorporation include all of the following EXCEPT:

A)Ability to raise capital

B)Tax deductibility of dividends

C)Ease of transfer of ownership

D)Limited liability of owners

  1. Which of the following is most often included in current assets?

A)prepaid expenses

B)property, plant, and equipment

C)intangible assets

D)unearned revenue

  1. When a company pays back an amount due to a supplier for a prior purchase,

A)assets decrease and liabilities decrease

B)assets increase and stockholders’ equity increases

C)liabilities increase and stockholders’ equity decreases

D)assets increase and liabilities decrease

  1. The two categories of stockholders' equity usually found on the balance sheet of a corporation are

A)contributed capital and long-term liabilities.

B)contributed capital and property, plant, and equipment.

C)retained earnings and notes payable.

D)contributed capital and retained earnings.

  1. Failure to make an adjusting entry to recognize accrued utilities payable would cause an:

A)understatement of expenses and liabilities and an overstatement of stockholders’ equity.

B)overstatement of expenses and liabilities and an understatement of stockholders’ equity.

C)understatement of expenses, liabilities, and stockholders’ equity.

D)overstatement of assets, expenses, and stockholders’ equity.

  1. If you wanted to know what accounting rules a company follows related to its inventory, where would you look?

A)the notes to the financial statements.

B)the income statement.

C)the balance sheet.

D)the headings to the financial statements.

  1. An examination of the financial statements of a business to ensure that they conform with generally accepted accounting principles is called

A)a certification.

B)an audit.

C)a verification.

D)a validation.

  1. Morrow Corp. makes a credit sale (i.e., sale on account) to a customer. The effect of this transaction on the accounting equation is that

A)assets increase and liabilities increase

B)assets increase and stockholders’ equity increases

C)liabilities increase and stockholders’ equity decreases

D)liabilities decrease and stockholders’ equity increases

  1. At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants amounting to $500. On December 31, the owner would show which of the following on its financial statements.

A) unearned rent revenue of $500

B) rent receivable of $500

C) rent payable of $500

D) rent expense of $500

  1. Which of the following is the private body responsible for establishing generally accepted accounting principles (GAAP)?

A)PCAOB

B)SEC

C)FASB

D)APB

  1. Which of the following accounts would NOT be closed at the end of the accounting period?

A)dividends

B)sales revenue

C)cost of goods sold

D)inventory

  1. Which accounting principle states that expenses incurred in generating revenue should be recorded in the same period in which the revenue is recognized?

A)historical cost principleC)matching principle

B)going concern principleD)revenue recognition principle

  1. Abrahams Corporation reported the following amounts at the end of the first year of operations, December 31, 2004: contributed capital $100,000; sales revenue $400,000; total assets $300,000; $5,000 dividends; and total liabilities $180,000. Retained earnings would be

A)$20,000

B)$30,000

C)$70,000

D)$80,000

  1. Which characteristic states that accounting information is unbiased and verifiable?

A)consistencyC)relevance

B)comparabilityD)reliability

  1. On January 1, 2004 the balance in Retained Earnings for Conlon Company was $125,000. During 2004 the company declared and paid cash dividends of $20,000, reported net income of $65,000, and sold additional common stock for $10,000. What was the balance of Retained Earnings on December 31, 2004?

A)$210,000

B)$190,000

C)$180,000

D)$170,000

  1. A cash inflow from financing activities includes

A) / proceeds from selling investments in equity securities of another company.
B) / proceeds from selling equipment.
C) / proceeds from issuance of bonds payable.
D) / receipt of interest payments.
  1. Under accrual basis accounting, revenues are

A)recognized when they are earned.

B)recognized when cash is received.

C)recognized when they are incurred.

D)recognized when cash is paid.

  1. Surfing Magazine receives $50,000 from customers on April 1, 2004 for one-year magazine subscriptions. On December 31, 2004, Surfing Magazine should:

A)report unearned revenue of $50,000

B)report sales revenue of $50,000

C)report sales revenue of $37,500

D)report unearned revenue of $37,500

Retained earnings refers to
A) / the amount reported as “the bottom line” on the income statement.
B) / the accumulated amount of past earnings of a corporation that has not been distributed to shareholders as dividends.
C) / the total amount of stockholders' equity for a corporation.
D) / the amount that shareholders have invested by purchasing a corporation's stock.
The amount of rent expense reported on the income statement is
A) / the amount of cash paid for rent in the current period.
B) / the amount of cash paid for rent in the current period less any unpaid rent at the end of the period.
C) / the amount of rent used up (incurred) in the current period to help generate revenue.
D) / an increase in net income.
Which of the following direct effects on the fundamental accounting model is not possible as a result of transaction analysis?
A) / Increase a liability and increase an asset.
B) / Decrease stockholders' equity and increase an asset.
C) / Increase an asset and decrease an asset.
D) / Decrease stockholders' equity and decrease an asset.
On January 1, 2008, the ledger of Global Corporation correctly showed supplies inventory of $500. During 2008, supplies purchases amounted to $1,200. A count (inventory) of supplies on hand at December 31, 2008, showed $600. The 2008 income statement should report supplies expense amounting to
A) / $ 1,200.
B) / $ 1,100.
C) / $ 800.
D) / $ 600.
Assets are
A) / probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services.
B) / Stockholders’ equity minus liabilities.
C) / probable future economic benefits owned by an entity as a result of past transactions.
D) / the financing provided by the owners and the operations of a business.