169) Determine the net income of a company for which the following information is available
for the month of September.
Service revenue
$
300,000
Rent expense
48,000
Utilities expense
3,200
Salaries expense
81,000
A) $263,800.
B) $432,200.
C) $171,000.
D) $167,800.
E) $252,000.
170) A company acquires equipment for $75,000 cash. This represents a(n):
A) Operating activity.
B) Investing activity.
C) Financing activity.
D) Revenue activity.
E) Expense activity.
171) A company borrows $125,000 from the Northern Bank and receives the loan proceeds in
cash. This represents a(n):
A) Revenue activity.
B) Operating activity.
C) Expense activity.
D) Investing activity.
E) Financing activity.
172) Zippy had cash inflows from operations of $60,500; cash outflows from investing activities
of $47,000; and cash inflows from financing of $25,000. The net change in cash was:
A) $38,500 increase.
B) $38,500 decrease.
C) $132,500 decrease.
D) $132,000 increase.
E) $11,500 decrease.
173) Zapper has beginning equity of $257,000, net income of $51,000, dividends paid of
$40,000 and stockholder investments of $6,000. Its ending equity is:
A) $223,000.
B) $240,000.
C) $268,000.
D) $274,000.
E) $208,000.
174) Cragmont has beginning equity of $277,000, net income of $63,000, dividends of $25,000
and no additional investments by stockholders during the period. Its ending equity is:
A) $365,000.
B) $239,000.
C) $189,000.
D) $315,000.
E) $277,000.
175) Rent expense appears on which of the following statements?
A) Balance sheet.
B) Income statement.
C) Statement of retained earnings.
D) Income statement and balance sheet.
E) Statement of cash flows and balance sheet.
176) A company’s balance sheet shows: cash $22,000, accounts receivable $16,000, office
equipment $50,000, and accounts payable $17,000. What is the amount of stockholders’ equity?
A) $17,000.
B) $29,000.
C) $71,000.
D) $88,000.
E) $105,000.
177) A company reported total equity of $145,000 at the beginning of the year. The company
reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the
year totaled $92,000. What are the total assets of the company at the end of the year?
A) $45,000.
B) $92,000.
C) $98,000.
D) $210,000.
E) $282,000.
178) Flitter reported net income of $17,500 for the past year. At the beginning of the year the
company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had
increased to $300,000 and liabilities were $75,000. Calculate its return on assets:
A) 8.8%.
B) 7.0%.
C) 5.8%.
D) 35.0%.
E) 23.3%.
179) Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year.
Its assets at the beginning of the year were $400,000. At the end of the year assets were worth
$450,000. Calculate its return on assets.
A) 7.1%.
B) 7.5%.
C) 6.7%.
D) 20.0%.
E) 18.8%.
180) Rico’s Taqueria had cash inflows from operating activities of $27,000; cash outflows from
investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate
the net increase or decrease in cash.
A) $61,000 increase.
B) $37,000 increase.
C) $7,000 decrease.
D) $7,000 increase.
E) $34,000 decrease.
181) Charlie’s Chocolates’ had stock issuances of $50,000 and dividends of $20,000. The
company has revenues of $83,000 and expenses of $64,000. Calculate its net income.
A) $30,000.
B) $83,000.
C) $64,000.
D) $19,000.
E) $49,000.
182) Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000, expenses of
$65,000, and dividends to stockholders of $9,000; there were no stock issuances. Calculate the
ending equity.
A) $88,000.
B) $25,000.
C) $97,000.
D) $38,000.
E) $47,000.
183) Doc’s Ribhouse had beginning equity of $52,000; net income of $35,000, and dividends of
$12,000. There were no stockholder investments during the year. Calculate the ending equity.
A) $(5,000).
B) $29,000.
C) $5,000.
D) $99,000.
E) $75,000.
184) A company’s balance sheet shows: cash $24,000, accounts receivable $30,000, equipment
$50,000, and equity $72,000. What is the amount of liabilities?
A) $104,000.
B) $76,000.
C) $32,000.
D) $68,000.
E) $176,000.
185) If a company has excess space in its building that it rents to another company for $700,
what is the effect on the accounting equation during the first month?
A) Assets would decrease $700 and liabilities would decrease $700.
B) Assets would decrease $700 and equity would increase $700.
C) Assets would increase $700 and equity would decrease $700.
D) Assets would increase $700 and equity would increase $700.
E) Liabilities would decrease $700 and equity would increase $700.
186) All of the following are classified as assets except:
A) Accounts Receivable.
B) Supplies.
C) Equipment.
D) Accounts Payable.
E) Land.
187) Which of the following accounts is not included in the calculation of a company’s ending
retained earnings?
A) Revenues.
B) Expenses.
C) Dividends.
D) Beginning Retained Earnings.
E) Cash.
188) All of the following are classified as liabilities except:
A) Accounts Receivable.
B) Notes Payable.
C) Wages Payable.
D) Accounts Payable.
E) Taxes Payable.
189) Billington Corp borrows $80,000 cash from Second National Bank. How does this
transaction affect the accounting equation for Billington?
A) Assets would decrease $80,000 and liabilities would decrease $80,000.
B) Assets would decrease $80,000 and equity would increase $80,000.
C) Assets would increase $80,000 and equity would decrease $80,000.
D) Assets would increase $80,000 and liabilities would increase $80,000.
E) Liabilities would decrease $80,000 and equity would increase $80,000.
190) If the assets of a company increase by $55,000 during the year and its liabilities increase by
$25,000 during the same year, then the change in equity of the company during the year must
have been:
A) An increase of $80,000.
B) A decrease of $80,000.
C) An increase of $30,000.
D) A decrease of $30,000.
E) An increase of $25,000.
191) All of the following are classified as assets except:
A) Accounts Payable.
B) Accounts Receivable.
C) Cash.
D) Supplies.
E) Prepaid Insurance.
192) Grandmark Printing pays the current month’s rent of $2,000 to the landlord of the building
where its facilities are located. How does this transaction affect the accounting equation for
Grandmark?
A) Assets would decrease $2,000 and liabilities would decrease $2,000.
B) Assets would decrease $2,000 and equity would decrease $2,000.
C) Assets would increase $2,000 and equity would increase $2,000.
D) Assets would increase $2,000 and liabilities would increase $2,000.
E) Liabilities would decrease $2,000 and equity would increase $2,000.
193) Atkins Company collected $1,750 as payment for the amount owed by a customer from
services provided the prior month on credit. How does this transaction affect the accounting
equation for Atkins?
A) Assets would decrease $1,750 and liabilities would decrease $1,750.
B) One asset would increase $1,750 and a different asset would decrease $1,750, causing no net
change in the accounting equation.
C) Assets would increase $1,750 and equity would increase $1,750.
D) Assets would increase $1,750 and liabilities would increase $1,750.
E) Liabilities would decrease $1,750 and equity would increase $1,750.
194) The accounting equation for Ying Company shows a decrease in its assets and a decrease in
its equity. Which of the following transactions could have caused that effect?
A) Cash was received from providing services to a customer.
B) The company paid an amount due on credit.
C) Equipment was purchased for cash.
D) A utility bill was received for the current month, to be paid in the following month.
E) Advertising expense for the month was paid in cash.
195) The accounting equation for Long Company shows an increase in its assets and an increase
in its liabilities. Which of the following transactions could have caused that effect?
A) Cash was received from providing services to a customer.
B) Cash was received as a stockholder investment.
C) Equipment was purchased on credit.
D) Supplies were purchased for cash.
E) Advertising expense for the month was paid in cash.
196) The expense recognition principle, also called the matching principle:
A) Prescribes that accounting information is based on actual cost.
B) Provides guidance on when a company must recognize revenue.
C) Prescribes that a company report the details behind financial statements that would impact
users’ decisions.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
197) The measurement principle, also called the cost principle:
A) Prescribes that accounting information is based on actual cost.
B) Provides guidance on when a company must recognize revenue.
C) Prescribes that a company report the details behind financial statements that would impact
users’ decisions.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
198) The revenue recognition principle:
A) Prescribes that accounting information is based on actual cost.
B) Provides guidance on when a company must recognize revenue.
C) Prescribes that a company report the details behind financial statements that would impact
users’ decisions.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
199) The full disclosure principle:
A) Prescribes that accounting information is based on actual cost.
B) Provides guidance on when a company must recognize revenue.
C) Prescribes that a company report the details behind financial statements that would impact
users’ decisions.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
200) The materiality constraint:
A) Prescribes that accounting information is based on actual cost.
B) Provides guidance on when a company must recognize revenue.
C) Prescribes that only information that would influence the decisions of a reasonable person
need be disclosed.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
201) The going concern assumption:
A) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
B) Means that we can express transactions and events in monetary, or money, units.
C) Presumes that the life of a company can be divided into time periods, such as months and
years, and that useful reports can be prepared for those periods.
D) Means that a business is accounted for separately from other business entities, including its
owner.
E) Prescribes that a company record the expenses it incurred to generate the revenue reported.
202) The monetary unit assumption:
A) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
B) Means that we can express transactions and events in monetary, or money, units.
C) Presumes that the life of a company can be divided into time periods, such as months and
years, and that useful reports can be prepared for those periods.
D) Means that a business is accounted for separately from other business entities, including its
owner.
E) Prescribes that a company record the expenses it incurred to generate the revenue reported.
203) The time period assumption:
A) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
B) Means that we can express transactions and events in monetary, or money, units.
C) Presumes that the life of a company can be divided into time periods, such as months and
years, and that useful reports can be prepared for those periods.
D) Means that a business is accounted for separately from other business entities, including its
owner.
E) Prescribes that a company record the expenses it incurred to generate the revenue reported.
204) The business entity assumption:
A) Means that accounting information reflects a presumption that the business will continue
operating instead of being closed or sold.
B) Means that we can express transactions and events in monetary, or money, units.
C) Presumes that the life of a company can be divided into time periods, such as months and
years, and that useful reports can be prepared for those periods.
D) Means that a business is accounted for separately from other business entities, including its
owner.
E) Prescribes that a company record the expenses it incurred to generate the revenue reported.
205) Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or
Dodd-Frank). Which of the following are two of the important provisions of Dodd-Frank?
A) Clawback and dividend mandate.
B) Clawback and whistleblower.
C) Whistleblower and dividend mandate.
D) Dividend mandate and shareholder loss limitation.
E) Whistleblower and shareholder loss limitation.
206) Clawback provisions and whistleblower provisions are components of which legislation?
A) Sarbanes-Oxley Act.
B) Dodd-Frank Act.
C) Glass-Steagall Act.
D) Securities Exchange Act.
E) Gramm-Leach-Bliley Act.
207) Which of the following accounts is not included in the asset section of the balance sheet?
A) Cash.
B) Accounts receivable.
C) Supplies.
D) Land.
E) Services revenue.
208) Which of the following accounts is not included in the asset section of the balance sheet?
A) Buildings.
B) Wages expense.
C) Supplies.
D) Land.
E) Furniture.
209) Which of the following accounts is not included in the liability section of the balance sheet?
A) Accounts receivable.
B) Wages payable.
C) Accounts payable.
D) Notes payable.
E) Taxes payable.