1. Which of the following is NOT a characteristic of a corporation? (Points : 3) Corporations are organized as a separate legal taxable entity. Ownership is divided into shares of stock. Corporations experience an ease in obtaining large amounts of resources by issuing stock. A corporation's resources are limited to its individual owners' resources. Corporations make up 20% of all businesses. 2. A list of assets, liabilities, and owners' equity as of a specific date is a(n) (Points : 3) income statement. balance sheet. statement of cash flows. retained earnings statement. 3. Which of the following is an appropriate representation of the accounting equation? (Points : 3) Assets + liabilities = stockholders' equity Assets = liabilities + stockholders' equity Assets = liabilities Assets = liabilities + retained earnings 4. The sales revenue generated during the normal course of business would be an example of which type of business activity? (Points : 3) Operating Investing Financing None of these 5. Anderson, Inc. purchased land for cash. What effect does this transaction have on the following accounts: (Points : 3) Increase in Cash and decrease in Land Decrease in Cash and decrease in Land Increase in Cash and increase in Land Decrease in Cash and increase in Land 6. Better Belly, Inc. had the following assets and liabilities as of September 30, 2009: Assets $54,433 Liabilities $28,416 What is the stockholders' equity of Better Belly as of September 30, 2009? (Points : 3) $0 $26,017 $82,849 Cannot be determined with this information 7. A to Z Corporation engaged in the following transaction "Issued a $30,000 note payable to borrow cash from the bank." On the Statement of Cash Flows, the transaction would be classified as (Points : 3) Cash Flows from Operating Activities. Cash Flows from Investing Activities. Cash Flows from Financing Activities. Noncash transaction. 8. If Assets have a balance of $50,000 and Stockholders' Equity has a balance of $40,000, then Liabilities must have a balance of (Points : 3) $90,000. $20,000. $40,000. $10,000. 9. Unearned revenue is what type of an account? (Points : 3) Asset Revenue Stockholders' equity Liability 10. If prepaid insurance expires over time, this asset account becomes a(n) (Points : 3) liability. another asset. revenue. expense. 11. Accrued expenses are ordinarily reported on the balance sheet as (Points : 3) assets. liabilities. fixed assets. prepaid expenses. 12. Unearned rent, representing rent paid for the next six months' occupancy, would be reported on the landlord's balance sheet as a(n) (Points : 3) asset. liability. capital stock. revenue. 13. Gross profit is equal to (Points : 3) sales plus (sales discounts and sales returns and allowances) plus cost of merchandise sold. sales plus sales returns and allowances less sales discounts less cost of merchandise sold. sales plus sales discounts less sales returns and allowances less cost of merchandise sold. sales less (sales discounts and sales returns and allowances) less cost of merchandise sold. 14. Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? (Points : 3) As a revenue As the cost of merchandise sold It does not appear on the Balance Sheet As a current asset 15. Apple Co. sells merchandise on credit to Zea Co. in the amount of $8,000. The invoice is dated on September 15 with terms of 1/15, net 45. What is the amount of the discount, and up to what date must the invoice be paid in order for the buyer to take advantage of the discount? (Points : 3) $160, September 30 $160, September 25 $80, September 30 $80, September 25 16. If a $10,000 sale is made on January 1, with terms of 2/10, n/30, how much would the discount be if payment is made on January 9? (Points : 3) $10,000 $200 $1,000 $0 17. Which of the following would be deducted from the balance per books on a bank reconciliation? (Points : 3) Service charges Outstanding checks Deposits in transit Notes collected by the bank 18. A firm's internal control environment is influenced by (Points : 3) Management's operating style. organizational structure. personnel policies. all of these. 19. The objectives of internal control are to (Points : 3) control the internal organization of the accounting department personnel and equipment. provide reasonable assurance that assets are safeguarded, information is processed accurately, and laws and regulations are complied with. prevent fraud and promote the social interest of the company. provide control over "internal-use only" reports and employee internal conduct. 20. Which of the following is NOT defined as cash? (Points : 3) Coins Checks Money orders Commercial paper 21. During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is (Points : 3) fifo. lifo. * average cost. All methods will generate the same cost of merchandise sold. 22. One of the weaknesses of the direct write-off method is that it (Points : 3) understates accounts receivable on the balance sheet. violates the matching principle. is too difficult to use for many companies. is based on estimates. 23. A note receivable due in 90 days is listed on the balance sheet under (Points : 3) long-term liabilities. fixed assets. current assets. current liabilities. 24. The inventory method that assigns the most recent costs to cost of goods sold is (Points : 3) fifo. lifo. average. specific identification. 25. A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold. (Points : 3) $7,350,000 $7,500,000 $5,000,000 $7,650,000 26. All amounts paid to get an asset in place and ready for use are referred to as (Points : 3) capital expenditures. revenue expenditures. residual value. cost of an asset. 27. A machine was purchased for $66,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense? (Points : 3) $13,200 $12,000 $11,000 $10,000 28. Goodwill is (Points : 3) amortized similar to other intangibles. only written down if an impairment in value occurs. charged to expense immediately. amortized over 40 years or its economic life, whichever is shorter. 29. The par value per share of common stock represents (Points : 3) the minimum selling price of the stock established by the articles of incorporation. the minimum amount the stockholder will receive when the corporation is liquidated. the monetary amount assigned to each share of stock in the articles of incorporation. the amount of dividends per share to be received each year. 30. Payroll taxes levied against employees become liabilities (Points : 3) the first of the following month. at the time the liability for the employee's wages is paid. when earned by the employee. at the end of an accounting period. 31. Gross earnings for a payroll period less payroll deductions are referred to as (Points : 3) overtime pay. bonus pay. gross pay. take-home pay. 32. Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet? (Points : 3) Bonds Payable Common Stock Dividends Payable Cash 33. The primary purpose of a stock split is to (Points : 3) increase paid-in capital. reduce the market price of the stock per share. increase the market price of the stock per share. increase retained earnings. 34. If a corporation issues only one class of stock, it is called (Points : 3) common stock. treasury stock. no-par stock. preferred stock. 35. The market interest rate related to a bond is also called the (Points : 3) stated interest rate. effective interest rate. contract interest rate. straight-line r