Choose from the following list of account titles the one that most accurately fits the des
cription of that account or is an example of that account.An account title may be used m
ore than once or not at all.
a. Cash
b. Prepaid Asset
c. Investments
d. Taxes Payable
e. Preferred Stock
f. Accounts Receivable
g. Land
h. Accounts Payable
i. Retained Earnings
j. Notes Receivable
k. Buildings
l. Notes Payable
m. Common Stock
Rent paid on an office building in advance of use of the facility
A revenue expenditure is deducted from the cost of the asset.
a. True
b. False
Almost all current liabilities affect the operating category of the statement of cash
flows, but one that does not affect cash provided by operating activities is
a. accounts payable.
b. interest payable.
c. notes payable.
d. taxes payable.
Marcos Company reported the following items on its financial statements for the year
ending December 31, 2015:
How much will be reported as retained earnings on Marcos’ balance sheet at
December 31, 2015, if this is the
first year of operations?
a. $ 45,000
b. $ 65,000
c. $ 85,000
d. Not enough information is provided.
A counterbalancing inventory error is one where the error on the balance sheet is offset
by the same amount of error on the income statement.
a. True
b. False
For each of the following accounts, indicate whether it is a balance sheet account or an i
ncome statement account.a. Balance sheet account
b. Income statement account
Accounts Receivable
From the following list, identify whether the change in the account balance during the
year would be reported as operating (O) cash flow, investing (I) cash flow, financing (F)
cash flow or not separately (N) reported on the statement of cash flows. Assume that the
indirect method is used to prepare the operating activities section. Use the following
response choices a-d.
a. operating (O) cash flow
b. investing (I) cash flow
c. financing (F) cash flow
d. not separately (N) reported on the statement of cash flows
Accounts payable
The total amount of simple interest calculated annually on a $4,000 note payable in 5
years at 9% is:
a. $1,800.00
b. $1,411.20
c. $2,154.60
d. $554.04
Morton Corporation reported the following information for the year ended December
31, 2015:
What was the balance of Morton’s’ retained earnings at January 1, 2015?
a. $21,000
b. $29,000
c. $31,000
d. $35,000
Sawyer Corporation purchased land in 2009 for $490,000. In 2015, it purchased a
nearly identical parcel of land for $660,000. In its 2015 balance sheet, Sawyer valued
these two parcels of land at a combined value of $1,320,000. By reporting the land in
this manner, Sawyer Corporation has violated which of the following? a. Going concern
assumption
b. Cost principle
c. Monetary unit measure
d. Time Period assumption
Which one of the following is an operating activity of a business?
a. Paying for purchases of inventory
b. Issuing stock for cash
c. Borrowing money from a bank
d. Purchasing a manufacturing plant
Which of the following events will cause a company’s current ratio to increase?
a. The collection of an account receivable
b. Selling land for cash at a loss
c. The discharge of an account payable by signing a short-term note payable
d. Paying off a long-term loan
In preparing financial statements, accountants should consider all of the following
except :
a. The objectives of financial reporting.
b. The characteristics that make accounting information useful.
c. The most useful way to display the information found on the financial statements.
d. The presentation of the value of a company.
Which statement is true concerning an income statement?
a. The income statement shows how much profit the company has earned since it began
operations.
b. Net income on the income statement should be equal to the amount of cash on the
balance sheet.
c. The income statement summarizes the results of operations for a period of time.
d. The income statement indicates the liquidity of the company on an annual basis.