Accounting Essay 7

At the end of 2011, retained earnings for the Bisk Company was $1,750. Revenue earned by the company in 2011 was $2,000, expenses paid during the period were $1,100, and dividends paid during the period were $500. Based on this information alone, retained earnings at the beginning of 2011 was [pic] |[pic] |$850. | |[pic][pic] |$1,350. | |[pic] |$4,000. | |[pic] |$2,150. | GAAP† stands for [pic] [pic] |Generally Authorized Auditing Principles | |[pic] |Government Authorized Accounting Procedures | |[pic] |Generally Applied Accounting Procedures | |[pic][pic] |Generally Accepted Accounting Principles | The total equity of Timberlake Company at the beginning of 2011 amounted to $3,500. During 2011 the company reported net income of $1,800 and paid a $500 dividend. If retained earnings at the end of 2011 is $2,200, what was beginning contributed capital? [pic] |[pic] |$2,100 | |[pic] |$3,100 | |[pic] |$400 | |[pic][pic] |$2,600 | Which of the following could represent the effects of an asset source transaction on a company's financial statements? |[pic] | [pic] |[pic] |[pic] | |[pic] |[pic] | |[pic][pic] |[pic] | |[pic] |[pic] | The Mason Company is a manufacturer of fine home furnishings. Which term best describes Mason's role in society? [pic] |[pic] |Regulatory Agency | |[pic][pic] |Conversion Agent | |[pic] |Consumer | |[pic] |Resource Owner | Which of the following could describe the effects of an asset exchange transaction on a company's financial statements? [pic] | [pic] |[pic] |[pic] | |[pic] |[pic] | |[pic][pic] |[pic] | |[pic] |[pic] | Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States? pic] |[pic] |U. S. Congress. | |[pic] |Internal Revenue Service. | |[pic][pic] |Financial Accounting Standards Board. | |[pic] |International Accounting Standards Board. | During 2011, Childress Company earned $800 of cash revenue, paid $400 of cash expenses, and paid a $200 cash dividend to its owners. Based on this information alone, [pic] |[pic] |net income amounted to $400. | |[pic] |total assets increased by $200. | |[pic][pic] |cash inflow from operating activi ties was $400. | |>[pic] |all of these are correct. Dividends paid by a company are shown on the [pic] |[pic] |income statement. | |[pic][pic] |statement of changes in stockholders' equity. | |[pic] |statement of cash flows. | |>[pic] |both b and c. | Asset use transactions always involve the payment of cash. [pic] |[pic][pic] |True | |>[pic] |False | The Sarbanes-Oxley Act includes several significant reforms that affect the auditing profession, but it did not reduce an audit firm's ability to provide non-audit services to its audit clients. [pic] |[pic] |True | [pic][pic] |False | Which of the following is not a common feature of ethical misconduct? [pic] |[pic] |The capacity to rationalize. | |[pic] |The presence of an opportunity. | |[pic] |The existence of pressure leading to an incentive. | |[pic][pic] |The existence of a strong system of internal controls. | After closing, only balance sheet accounts have non-zero balances. [pic] |[pic][pic] |True | |[pic] |False | After clos ing, only balance sheet accounts have non-zero balances. [pic] |[pic][pic] |True | [pic] |False | Policies and procedures designed to reduce the opportunities for fraud are often called: [pic] |[pic][pic] |internal controls | |[pic] |accounting principles | |[pic] |asset source transactions | |[pic] |financial systems | Aaronson Company experienced an accounting event that affected its financial statements as indicated below:   [pic] Which of the following accounting events could have caused these effects on ABC's statements? [pic] |[pic] |Recognized accrued salaries owed to employees. | |[pic][pic] |Earned revenue on account. | |[pic] |Issued common stock. | |[pic] |Purchased equipment on account. | The ethical standards for certified public accountants simply require that such accountants comply with applicable laws and regulations. [pic] [pic] |True | |[pic][pic] |False | Which of the following is not a component of the fraud triangle? [pic] |[pic] |Rationalization | |[pic] |Pressure | |[pic] |Opportunity | |[pic][pic] |Trust | The purpose of the accrual basis of accounting is to: [pic] |[pic] |Improve the company's earnings per share. | |[pic][pic] |Report revenue when received. | |>[pic] |Improve the matching of revenue and expense in the proper period. | |[pic] |Report expenses when cash disbursements are made. | A liability account normally has a debit balance. [pic] |[pic] |True | |[pic][pic] |False | The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return on equity. pic] |[pic][pic] |True | |[pic] |False | A high value of the debt to asset ratio may indicate that a company has a high level of debt risk. [pic] |[pic][pic] |True | |[pic] |False | Which of the following errors would cause the debit side of a trial balance to be larger than the credit side? [pic] |[pic] |Revenue earned on account was recorded with a debit to Cash and a credit to Revenue. | |[pic] |Purchase of supplies on account was recorded with a credit to Supplies and a deb it to Accounts Payable. |[pic][pic] |Land purchased with cash was recorded with a debit to the Land account and a credit to Accounts Payable. | |>[pic] |None of these. | The Armstrong Corporation recorded a business event using T-accounts as follows:   [pic] Which of the following reflects how this event affects the company's financial statements? |[pic] | [pic] [pic][pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] | When a company receives cash in advance from a customer, it should debit Cash and credit Accounts Receivable. [pic] |[pic] |True | |[pic][pic] |False | The left side of a T-account is known as the: [pic] [pic] |Claims side | |[pic][pic] |Debit side | |[pic] |Credit side | |[pic] |Equity side | Debits decrease asset accounts. [pic] |[pic] |True | |[pic][pic] |False | Double entry accounting requires that every entry must include at least one debit and at least one credit. pic] |[pic][pic] |True | |[pic] |False | KMR Company provided repair service of $2,800 to a customer who paid $1,300 and promised to pay the remainder next month. Which of the following journal entries correctly records this transaction? [pic] |[pic] |[pic] | |[pic][pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] |