Cash is an asset. It has a normal Debit balance.

	True
	False

A transaction that is likely to cause an increase in a current liability is:

1)	accrual of bad debts expense.

2)	accrual of interest expense.

3)	payment of accrued wages.

4)	depreciation of equipment.

The long-term liability for deferred income taxes arises because:

1)	some expenses are deducted for tax purposes before they are deducted for book purposes.

2)	income tax rates change from year to year.

3)	the company has not paid income taxes currently due.

4)	some book income will never be subject to income tax.

Which of the following is true regarding bond discounts and/or premiums?

1)	Bond discount is amortized but bond premium is not.

2)	Bond premium is amortized but bond discount is not.

3)	Both bond discount and premium are amortized.

4)	Neither bond discount nor premium is amortized.

When a supplier makes a downward adjustment in the amount owed by a creditor, the creditor will:

1)	reduce the amount of the account payable to the supplier, and decrease cash.

2)	reduce the amount of the account payable to the supplier, and decrease an asset such as inventory.

3)	increase the amount of the account payable to the supplier, and decrease an asset such as inventory.

4)	reduce the amount of the account payable to the supplier, and increase cash.

In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would:

1)	Increase liabilities and increase expenses.

2)	Increase assets and decrease liabilities.

3)	Decrease assets and increase revenue.

4)	Decrease assets and decrease expenses.

Interest receivable is a liability.

	True
	False

Retained earnings represents:

1)	the total net income of the firm since its beginning.

2)	net income that has been reinvested in the company.

3)	cash that is available for dividends.

4)	net income plus gains (or minus losses) on treasury stock transactions.

Return on Investment (ROI) can be described or computed in each of the following ways, except:

	Turnover x Margin = ROI
	(Net Income / Sales) x (Sales / Average Total Assets) = ROI
	Net Income / Average Total Assets = ROI
	Amount Invested / Amount of Return = ROI

The principle of full disclosure pertains to:

1)	The entity fully discloses all necessary information to prevent all users of financial statements from being misled.

2)	All of the choices are correct.

3)	The entity fully discloses all proprietary information.

4)	The entity fully discloses all necessary information to prevent a reasonably astute user of financial statements from being misled.

5)	The entity fully discloses all client data.

Assume that Kulpa Company has a current ratio of 0.7. Which of the following transactions would increase this ratio?

options:

Selling Merchandise Inventory at cost for Cash.

Paying off Accounts Payable with Cash.

Purchasing Merchandise Inventory on credit.

Collecting Accounts Receivable in Cash

Which of the following is not an owner's equity account?

options:

1)	Minority interests.

2)	Paid-in-capital in excess of par.

3)	Common stock.

4)	Retained earnings.

5)	Capital stock.

Factors that usually affect retained earnings directly include:

options:

1)	stock dividends and gains or losses from the sale of treasury stock.

2)	extraordinary items and losses from discontinued operations.

3)	net income or loss, and the issuance of stock at an amount in excess of par value.

4)	net income or loss, and dividends.

In consolidated financial statements:

options:

1)	None of the a choices are correct.

2)	The parent's and subsidiary's financial statements are reported on a combined basis.

3)	The parent's and subsidiary's financial statements are reported on a separate basis.

4)	Financial statements are reported on an industry wide basis.