1. Which one of the following is not considered one of the three primary financial statements? A) Balance sheet. C) Statement of cash flows. B) Income statement. D) Statement of business activities.

Financial Management ENMG 658/BTEC 680 Quiz 1 Name: _____________________ 1. Which one of the following is not considered one of the three primary financial statements? A) Balance sheet. C) Statement of cash flows. B) Income statement. D) Statement of business activities. 2. A balance sheet is designed to show: A) How much a business is worth. B) The cost of replacing the assets and of paying off the liabilities at a particular date. C) The profitability of the business during the current year. D) The assets, liabilities, and owners' equity in the business at a particular date. 3. Which of the following transactions would not be considered an expenditure? A) Payment of Utilities B) Payment of Supplies C) Depreciation Expense D) Cost of Goods Sold Expense E) C and D 4. If total assets equal $155,000 and total liabilities equal $75,000, the total owners' equity must equal: A) $80,000 B) $230,000. C) Cannot be determined from the information given. D) Some other amount. 5. If a company purchases equipment for $150,000 by issuing a note payable: A) Total assets will remain the same. B) Total assets will increase by $150,000. C) The company's total owners' equity will decrease. D) Total assets will decrease by $150,000. 6. The net change in Working Capital is reflected in which section of the Cash Flow Statement? A) Investment Activities C) Operating Activities B) Not reflected on Cash Flow Statement D) Financing Activities 7. Per the \"Matching Principle\" the cost of insurance is considered an expense A) Only when the policy is purchased. B) Only when the premium is paid. C) Evenly as time passes on the term of the policy. D) Only when the entire policy period has passed. 8. Based on the following information, what is the net change in Cash for the period? Net Income = $155,000 Depreciation = $55,000 Accounts Receivable increased $15,000 Prepaids decreased $6,000 Accounts Payable increased $30,000 A) B) C) D) $121,000 $219,000 $261,000 $231,000 9. Assets are considered current assets if they are cash or will usually be converted into cash: A) Within a year or less. C) Within 3 months. B) Within 6 months or less. D) Within a month 10. Closing entries should be made (the income statement closed out): A) Only if there is a loss. C) Only if there is a profit. B) Every year. D) Only when an entity goes out of business. 11. Gross margin is the difference between: A) Net sales and all expenses B) Net sales and net income. C) Net sales and the cost of goods sold. D) The cost of merchandise purchased and the cost of merchandise sold. 12. Kangaroo Shoes reports net sales of $3,000,000, gross margin of $735,000 and net income of $325,000. The company's cost of goods sold is: A) $2,675,000. B) $410,000. C) Some other number. D) $2,265,000 13. The lower of cost or market presentation (a reflection of conservatism principle) is shown by which of the following (circle ALL correct answers): A) the market value of a patent owned by XYZ Company increases in value, XYZ Company makes no change to their balance sheet B) the market value of a patent owned by XYZ Company increases in value, XYZ Company increases the carrying value of the patent on their balance sheet C) the market value of a patent owned by XYZ Company decreases in value, XYZ Company makes no change to their balance sheet D) the market value of a patent owned by XYZ Company decreases in value, XYZ Company reduces the carrying value of the patent on their balance sheet Use the following to answer questions 14-16: Marvin Corp uses its periodic inventory system and the following information is available: Sales ................................ ................................ .. Inventory Beginning ................................ ...... Inventory Ending ................................ ........... Purchases ................................ ......................... $39,000 5,000 8,000 16,000 14. Calculate the cost of goods sold: A) $29,000. B) $ 39,000. C) Some other number. D) $13,000. 15. Calculate the gross margin. A) $10,000 B) $26,000 C) Some other number D) $0 16. Calculate the Gross Margin as a percentage of sales: A) 66.7% B) 25.6% C) Some other number D) 0% 17. An increase in Accounts Receivable would be reflected on the Cash Flow statement as: A) not reflected on the Cash Flow statement. B) a \"use\" of cash in the Investing section. C) a \"use\" of cash in the Operating Activities section. D) a \"source\" of cash in the Financing section. 18. Generally accepted accounting principles are rules for the accounting profession developed over time by: A) Financial Accounting Standards Board B) Sarbanes-Oxley Act C) General Accounting Standards Board D) All of the above 19. Which opinion by a CPA firm as a result of an audit is the most favorable for a company? A) Adverse opinion B) Unqualified opinion C) Qualified opinion D) No opinion 20. If a company is publicly traded and has over 500 shareholders, they must remit a 10k Annual Statement Report to: A) The Public Register Group B) Each stockholder C) General Accounting Standards Board D) Securities and Exchange Commission 21. A company purchased a piece of equipment costing $350,000 with an estimated useful life of 5 years. Using Straight Line depreciation methods, what is the net book value of the asset after year 3? A) $0. The equipment should be expensed at time of purchase B) $140,000 C) $210,000 D) Some other number Use the following to answer questions 22-23: ABC Manufacturing has the following transactions recorded in their General Ledger system for the month of December 2013: Payment of Utilities $80,000 ($60,000 is Variable and $20,000 Fixed) Beginning Inventory $35,000 Inventory purchases totaling $235,000 Ending inventory valuation is $120,000 Payment for Repairs to production equipment totaling $45,000 Payment for Building repairs totaling $25,000 Sales recorded for the month totaling $650,000 Payroll recorded as follows: Variable Labor $65,000 Fixed Salaries $35,000 Depreciation for month recorded at $45,000 22. What is the Gross Margin for December 2013? A) $305,000 B) $285,000 C) $330,000 D) Some other amount 23. What is the Net Income before Tax? A) $225,000 B) $270,000 C) $330,000 D) Some other amount 24. An increase in Accounts Payable would be reflected on the Cash Flow statement as: A) a \"use\" of cash in the Operating Activities section B) a \"source\" of cash in the Operating Activities section C) a \"source\" of cash in the Financing section D) a \"use\" of cash in the Financing section 25. Which accounting transaction below is an example of the matching principle? A) Recording Depreciation on an Asset B) Taking the month-end inventory and recording COGS C) Booking a property tax bill to prepaids D) All of the Above E) A & B BONUS QUESTIONS (worth 1 point each): B1. Double-entry accounting is characterized by which of the following? A) Every transaction affects both an asset account and either a liability account or an owners' equity account. B) The total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries. C) The number of ledger accounts with debit balances is equal to the number with credit balances. D) The number of debit entries posted to the ledger equals the number of credit entries. B2. What is The Accounting Equation? Financial Management ENMG 658/BTEC 680 Quiz 1 Name: _____________________ 1. Which one of the following is not considered one of the three primary financial statements? A) Balance sheet. C) Statement of cash flows. B) Income statement. D) Statement of business activities. 2. A balance sheet is designed to show: A) How much a business is worth. B) The cost of replacing the assets and of paying off the liabilities at a particular date. C) The profitability of the business during the current year. D) The assets, liabilities, and owners' equity in the business at a particular date. 3. Which of the following transactions would not be considered an expenditure? A) Payment of Utilities B) Payment of Supplies C) Depreciation Expense D) Cost of Goods Sold Expense E) C and D 4. If total assets equal $155,000 and total liabilities equal $75,000, the total owners' equity must equal: A) $80,000 B) $230,000. C) Cannot be determined from the information given. D) Some other amount. 5. If a company purchases equipment for $150,000 by issuing a note payable: A) Total assets will remain the same. B) Total assets will increase by $150,000. C) The company's total owners' equity will decrease. D) Total assets will decrease by $150,000. 6. The net change in Working Capital is reflected in which section of the Cash Flow Statement? A) Investment Activities C) Operating Activities B) Not reflected on Cash Flow Statement D) Financing Activities 7. Per the \"Matching Principle\" the cost of insurance is considered an expense A) Only when the policy is purchased. B) Only when the premium is paid. C) Evenly as time passes on the term of the policy. D) Only when the entire policy period has passed. 8. Based on the following information, what is the net change in Cash for the period? Net Income = $155,000 Depreciation = $55,000 Accounts Receivable increased $15,000 Prepaids decreased $6,000 Accounts Payable increased $30,000 A) B) C) D) $121,000 $219,000 $261,000 $231,000 9. Assets are considered current assets if they are cash or will usually be converted into cash: A) Within a year or less. C) Within 3 months. B) Within 6 months or less. D) Within a month 10. Closing entries should be made (the income statement closed out): A) Only if there is a loss. C) Only if there is a profit. B) Every year. D) Only when an entity goes out of business. 11. Gross margin is the difference between: A) Net sales and all expenses B) Net sales and net income. C) Net sales and the cost of goods sold. D) The cost of merchandise purchased and the cost of merchandise sold. 12. Kangaroo Shoes reports net sales of $3,000,000, gross margin of $735,000 and net income of $325,000. The company's cost of goods sold is: A) $2,675,000. B) $410,000. C) Some other number. D) $2,265,000 13. The lower of cost or market presentation (a reflection of conservatism principle) is shown by which of the following (circle ALL correct answers): A) the market value of a patent owned by XYZ Company increases in value, XYZ Company makes no change to their balance sheet B) the market value of a patent owned by XYZ Company increases in value, XYZ Company increases the carrying value of the patent on their balance sheet C) the market value of a patent owned by XYZ Company decreases in value, XYZ Company makes no change to their balance sheet D) the market value of a patent owned by XYZ Company decreases in value, XYZ Company reduces the carrying value of the patent on their balance sheet Use the following to answer questions 14-16: Marvin Corp uses its periodic inventory system and the following information is available: Sales ................................ ................................ .. Inventory Beginning ................................ ...... Inventory Ending ................................ ........... Purchases ................................ ......................... $39,000 5,000 8,000 16,000 14. Calculate the cost of goods sold: A) $29,000. B) $ 39,000. C) Some other number. D) $13,000. 15. Calculate the gross margin. A) $10,000 B) $26,000 C) Some other number D) $0 16. Calculate the Gross Margin as a percentage of sales: A) 66.7% B) 25.6% C) Some other number D) 0% 17. An increase in Accounts Receivable would be reflected on the Cash Flow statement as: A) not reflected on the Cash Flow statement. B) a \"use\" of cash in the Investing section. C) a \"use\" of cash in the Operating Activities section. D) a \"source\" of cash in the Financing section. 18. Generally accepted accounting principles are rules for the accounting profession developed over time by: A) Financial Accounting Standards Board B) Sarbanes-Oxley Act C) General Accounting Standards Board D) All of the above 19. Which opinion by a CPA firm as a result of an audit is the most favorable for a company? A) Adverse opinion B) Unqualified opinion C) Qualified opinion D) No opinion 20. If a company is publicly traded and has over 500 shareholders, they must remit a 10k Annual Statement Report to: A) The Public Register Group B) Each stockholder C) General Accounting Standards Board D) Securities and Exchange Commission 21. A company purchased a piece of equipment costing $350,000 with an estimated useful life of 5 years. Using Straight Line depreciation methods, what is the net book value of the asset after year 3? A) $0. The equipment should be expensed at time of purchase B) $140,000 C) $210,000 D) Some other number Use the following to answer questions 22-23: ABC Manufacturing has the following transactions recorded in their General Ledger system for the month of December 2013: Payment of Utilities $80,000 ($60,000 is Variable and $20,000 Fixed) Beginning Inventory $35,000 Inventory purchases totaling $235,000 Ending inventory valuation is $120,000 Payment for Repairs to production equipment totaling $45,000 Payment for Building repairs totaling $25,000 Sales recorded for the month totaling $650,000 Payroll recorded as follows: Variable Labor $65,000 Fixed Salaries $35,000 Depreciation for month recorded at $45,000 22. What is the Gross Margin for December 2013? A) $305,000 B) $285,000 C) $330,000 D) Some other amount 23. What is the Net Income before Tax? A) $225,000 B) $270,000 C) $330,000 D) Some other amount 24. An increase in Accounts Payable would be reflected on the Cash Flow statement as: A) a \"use\" of cash in the Operating Activities section B) a \"source\" of cash in the Operating Activities section C) a \"source\" of cash in the Financing section D) a \"use\" of cash in the Financing section 25. Which accounting transaction below is an example of the matching principle? A) Recording Depreciation on an Asset B) Taking the month-end inventory and recording COGS C) Booking a property tax bill to prepaids D) All of the Above E) A & B BONUS QUESTIONS (worth 1 point each): B1. Double-entry accounting is characterized by which of the following? A) Every transaction affects both an asset account and either a liability account or an owners' equity account. B) The total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries. C) The number of ledger accounts with debit balances is equal to the number with credit balances. D) The number of debit entries posted to the ledger equals the number of credit entries. B2. What is The Accounting Equation