2.Which of the
following statements about the Public Company Accounting Oversight Board
(PCAOB) is not true? (Points : 2)
The PCAOB was
created by the Sarbanes-Oxley Act to regulate the accounting firms that audit
financial statements of public companies.
Independent
auditors are required to register with the PCAOB.
The PCAOB has the
power to impose sanctions against a registered accounting firm.
The PCAOB requires public accounting firms to conduct
peer reviews of other such firms and make their report public.
3.Which financial
statement matches asset increases from operating a business with asset
decreases from operating the business? (Points : 2)
Statement of
changes in equity
Balance sheet
Income statement
Statement of cash
flows
4.The Blumer
Company entered into the following transactions during 2010:
The company
was started with $22,000 of common stock issued to investors for cash.
On July 1,
the company purchased land that cost $15,500 cash.
There was
$700 of supplies purchased on account.
The amount of total liabilities appearing on the December 31, 2010 balance
sheet would be: (Points : 2)
$3,600
$4,000
$475
$700
5.Rowena Company
spent cash to purchase equipment. As a result of this event: (Points : 2)
total liabilities
increased.
total assets
increased.
net income
increased.
total assets were unchanged.
6.ABC Company
acquired $23,000 by issuing common stock to investors. Which of the
following choices accurately reflects how this event would affect the
company’s financial statement?
Row
Assets
=
Liab.
+
Equity
Rev.
–
Exp.
=
Net Inc.
Cash Flow
One
23,000
=
NA
+
23,000
NA
–
NA
=
NA
23,000 FA
Two
23,000
=
NA
+
23,000
23,000
–
NA
=
23,000
NA
Three
23,000
=
NA
+
23,000
23,000
–
NA
=
23,000
23,000 FA
Four
23,000
=
23,000
+
NA
23,000
–
NA
=
23,000
23,000 OA
(Points : 2)
Row One
Row Two
Row Three
Row Four
7.Parrot Company
paid a $300 cash dividend. Which of the following choices accurately
reflects how this event would affect the company’s financial statements?
Balance Sheet
Income
Statement
Row
Assets
=
Liab.
+
Equity
Rev.
–
Exp.
=
Net Inc.
Statement of
Cash Flows
One
NA
=
300
+
(300)
NA
–
300
=
(300)
NA
Two
(300)
=
NA
+
(300)
NA
–
300
=
(300)
(300) FA
Three
(300)
=
NA
+
(300)
NA
–
NA
=
NA
(300) FA
Four
(300)
=
NA
+
(300)
NA
–
NA
=
NA
(300) OA
(Points
: 2)
Row One
Row Two
Row Three
Row Four
8.Sefcik Company
purchased supplies on account. Which of the following choices accurately
reflects how this event would affect the company’s financial statements?
Row
Assets
=
Liab.
+
Equity
Rev.
–
Exp.
=
Net Inc.
Cash Flow
One
+
=
NA
+
–
NA
–
+
=
–
NA
Two
+ –
=
NA
+
NA
NA
–
NA
=
NA
– OA
Three
+
=
+
+
NA
NA
–
NA
=
NA
NA
Four
+ –
=
NA
+
NA
NA
–
NA
=
NA
NA
(Points : 2)
Row One
Row Two
Row Three
Row Four
9.Ohio Company
provided services to a customer for $1,700 cash. As a result of this event:
(Points : 2)
total assets
decreased.
total liabilities
increased.
retained earnings increased.
cash flows from
financing activities increased.
10.The claims of a
business’s creditors are called: (Points : 2)
assets.
liabilities.
equity.
revenue.
11.The
Sarbanes-Oxley Act: (Points : 2)
was prompted by
corporate bankruptcies and audit failures.
limits an auditor’s
ability to provide non-audit services to a client.
clarifies the
responsibility of a company’s management for its financial statements.
all
of the above.
12.Hardin Company
began operations in 2010. During the year, the following cash transactions
occurred:
Issued
stock for $40,000
Borrowed
$24,000 from bank
Provided
services to customers for $53,000 cash
Paid back
$8,000 of the loan from the bank
Paid rent
expense, $9,000
Paid
operating expenses, $29,000
Assuming that Hardin engaged in no transactions during the year other than
those listed above, what was the amount of net income or loss for the year?
(Points : 2)
$19,000 net income
$15,000 net income
$12,000 net income
$11,000 net loss
13.In event of
liquidation of a business: (Points : 2)
creditors have priority claim on the business’s assets.
investors have
priority claim on the business’s assets.
resource users have
priority claim on the business’s assets.
stakeholders are
assured of receiving the resources they had provided to the business.
14.The Blumer
Company entered into the following transactions during 2010: There was $700
of supplies purchased on account. Sales on account amounted to $9,500. Cash
collections of receivables were $5,500. Supplies on hand as of December 31,
2010 amounted to $225. The beginning balance of supplies at January 1, 2010
was $100.
The adjusting entry necessary to record the supplies expense would result
in a: (Points : 2)
$700 increase in
assets and liabilities.
$700 decrease in
assets and equity.
$575 decrease in assets and equity.
$575 increase in
assets and liabilities.
15.The amount of
land owned by a business appears on which financial statement? (Points : 2)
Income statement
Statement of
changes in stockholders’ equity
Statement of cash
flows
Balance sheet
16.The purpose of
the accrual basis of accounting is to: (Points : 2)
report revenue when
cash is received.
improve the matching of revenue and expense in the
proper period.
report expenses
when cash disbursements are made.
improve the
company’s earnings per share.
17.Which of the
following groups has primary responsibility for establishing generally
accepted accounting principles for businesses in the United States? (Points
: 2)
The U.S. Supreme
Court
Each state’s
Secretary of the Treasury
The Financial Accounting Standards Board
The Internal
Revenue Service
18.In 1998, Parker
Corporation purchased land for $130,000. In 2010, Parker Company had the
land appraised, and its value was estimated to be $190,000. Also during
2010, another company offered Parker $145,000 for the parcel of land. When
the balance sheet is prepared at the end of 2010, at what dollar amount
should the land be reported? (Points : 2)
$190,000
$145,000
$130,000
None of the above
19.Which of the
following accounts is a permanent account (an account that is not closed)?
(Points : 2)
Prepaid Insurance
Service Revenue
Salaries Expense
Rent Expense
20.Which of the
following lists represents the correct sequence of stages in an accounting
cycle? (Points : 2)
Record
transactions, prepare statements, adjust accounts, and close temporary
accounts
Prepare statements,
close temporary accounts, record transactions, and adjust accounts
Close temporary
accounts, record transactions, prepare statements, and adjust accounts
Record transactions, adjust accounts, prepare
statements, and close temporary accounts
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