BU127 final exam flash cards Questions
& Answers
What involves raising the necessary funds to support the business? -
ANSWERSFinancing
The best interpretation of the word credit is the: - ANSWERSRight side of the account
Which financial statement would indicate whether the company relies more on debt or
shareholders' equity to finance its assets? - ANSWERSStatement of financial position
At the beginning of the quarter, your company borrows $20,000 using a four-year
promissory note that states an annual interest rate of 8% plus principal repayments of
$5,000 each year. Interest is paid at the end of the second and fourth quarter, whereas
principal payments are due at the end of each year. How does this new promissory note
affect the amounts of current and non-current liabilities reported on the balance sheet at
the end of the first quarter? A. Current Liabilities: INcrease by $400 Non-Current
Liabilities: Increase by $20,000 B. Current Liabilities: Increase by $1,600 Non-Current
Liabilities: Increase by $20,000 C .Current Liabilities: Increase by $5,400 Non-Current
Liabilities: Increase by $20,000 D. Current Liabilities: Increase by $5,400 Non-Current
Liabilities: Increase by $15,000 - ANSWERSD: Current Liabilities: Increase by $5,400
Non-Current Liabilities: Increase by $15,000
A $15,000 overstatement of the 2011 ending inventory was discovered after the
financial statements for 2011 were prepared. How would that inventory error impact the
2011 financial status? A. Current assets were overstated and net income was
understated. B. Current assets were understated and net income was understated. C.
Current assets were overstated and net income was overstated. D. Current assets were
understated and net income was overstated. - ANSWERSC. Current assets were
overstated and net income was overstated
which of the following is least likely to have a liability called deferred revenue?
-an insurance company
-a retailer
-a magazine subscription company
-a university or college - ANSWERSA retailer
An accountant has debited an asset account for $500 and credited a revenue account
for $1000. What can be done to complete the recording of the transaction? -
ANSWERSDebit another asset account for $500
At the end of 2013, Libby Company reported an ending balance for retained earnings of
$50,000. During 2014, the company reported the following amounts: Dividends declared
, and paid, $30,000 and profit, $40,000. The 2014 statement of Retained Earnings should
report an ending balance for retained earnings of which of the following? A. $60,000. B.
$80,000. C. $90,000. D. $100,000. - ANSWERSA: $50,000 - $30,000 + $40,000 =
$60,000
If a business declared and paid a $500 dividend, it would appear on which of the
following? A. Income statement only. B. Statement of financial position only. C.
Statement of changes in equity and the statement of cash flows. D. Statement of
changes in equity only. - ANSWERSC. Statement of changes in equity and the
statement of cash flows.
On a classified balance sheet, prepaid expenses are classified as - ANSWERSA current
asset
-which of the following would not be considered an internal user of accounting data?
A) the president of a company
B) the controller of a company
C) a creditor of a company
D) a salesperson of a company - ANSWERSC) a creditor of a company
During 2007, a company's assets rise $56,000 and its liabilities rise $38,000. If no
dividend is paid and no further capital is contributed, shareholders' equity would: A. rise
$56,000. B. rise $18,000. C. fall $38,000. D. fall $94,000. - ANSWERSB. rise $18,000
which of the following liability accounts is usually not satisfied by payment of cash?
-trade payables
-unearned revenues
-taxes payable
-short-term borrowings - ANSWERSunearned revenues
The financial statement that summarizes the changes in contributed capital and retained
earnings for a specific period of time is the - ANSWERSStatement of changes in equity
If golden company owed eye company $500, where would golden company reflect this?
- ANSWERSStatement of financial position
The continuity assumption is inappropriate when: - ANSWERSLiquidation appears likely
which of the following items has no effect on retained earnings?
-Expense
-Dividends
-revenue
-hiring a new employee - ANSWERSHiring a new employee
& Answers
What involves raising the necessary funds to support the business? -
ANSWERSFinancing
The best interpretation of the word credit is the: - ANSWERSRight side of the account
Which financial statement would indicate whether the company relies more on debt or
shareholders' equity to finance its assets? - ANSWERSStatement of financial position
At the beginning of the quarter, your company borrows $20,000 using a four-year
promissory note that states an annual interest rate of 8% plus principal repayments of
$5,000 each year. Interest is paid at the end of the second and fourth quarter, whereas
principal payments are due at the end of each year. How does this new promissory note
affect the amounts of current and non-current liabilities reported on the balance sheet at
the end of the first quarter? A. Current Liabilities: INcrease by $400 Non-Current
Liabilities: Increase by $20,000 B. Current Liabilities: Increase by $1,600 Non-Current
Liabilities: Increase by $20,000 C .Current Liabilities: Increase by $5,400 Non-Current
Liabilities: Increase by $20,000 D. Current Liabilities: Increase by $5,400 Non-Current
Liabilities: Increase by $15,000 - ANSWERSD: Current Liabilities: Increase by $5,400
Non-Current Liabilities: Increase by $15,000
A $15,000 overstatement of the 2011 ending inventory was discovered after the
financial statements for 2011 were prepared. How would that inventory error impact the
2011 financial status? A. Current assets were overstated and net income was
understated. B. Current assets were understated and net income was understated. C.
Current assets were overstated and net income was overstated. D. Current assets were
understated and net income was overstated. - ANSWERSC. Current assets were
overstated and net income was overstated
which of the following is least likely to have a liability called deferred revenue?
-an insurance company
-a retailer
-a magazine subscription company
-a university or college - ANSWERSA retailer
An accountant has debited an asset account for $500 and credited a revenue account
for $1000. What can be done to complete the recording of the transaction? -
ANSWERSDebit another asset account for $500
At the end of 2013, Libby Company reported an ending balance for retained earnings of
$50,000. During 2014, the company reported the following amounts: Dividends declared
, and paid, $30,000 and profit, $40,000. The 2014 statement of Retained Earnings should
report an ending balance for retained earnings of which of the following? A. $60,000. B.
$80,000. C. $90,000. D. $100,000. - ANSWERSA: $50,000 - $30,000 + $40,000 =
$60,000
If a business declared and paid a $500 dividend, it would appear on which of the
following? A. Income statement only. B. Statement of financial position only. C.
Statement of changes in equity and the statement of cash flows. D. Statement of
changes in equity only. - ANSWERSC. Statement of changes in equity and the
statement of cash flows.
On a classified balance sheet, prepaid expenses are classified as - ANSWERSA current
asset
-which of the following would not be considered an internal user of accounting data?
A) the president of a company
B) the controller of a company
C) a creditor of a company
D) a salesperson of a company - ANSWERSC) a creditor of a company
During 2007, a company's assets rise $56,000 and its liabilities rise $38,000. If no
dividend is paid and no further capital is contributed, shareholders' equity would: A. rise
$56,000. B. rise $18,000. C. fall $38,000. D. fall $94,000. - ANSWERSB. rise $18,000
which of the following liability accounts is usually not satisfied by payment of cash?
-trade payables
-unearned revenues
-taxes payable
-short-term borrowings - ANSWERSunearned revenues
The financial statement that summarizes the changes in contributed capital and retained
earnings for a specific period of time is the - ANSWERSStatement of changes in equity
If golden company owed eye company $500, where would golden company reflect this?
- ANSWERSStatement of financial position
The continuity assumption is inappropriate when: - ANSWERSLiquidation appears likely
which of the following items has no effect on retained earnings?
-Expense
-Dividends
-revenue
-hiring a new employee - ANSWERSHiring a new employee
