Every adjustment entry affects:

		at least one permanent account and one temporary account.
		only a permanent account.
		only a temporary account.
		only a revenue account.

2 points

QUESTION 2

The owner of a corporation is called a:

		partner.
		stockholder.
		director.
		manager.

2 points

QUESTION 3

When a corporation is owned by a few persons or by a family, it is called a:

		closely held corporation.
		publicly held corporation.
		partnership.
		sole proprietorship.

2 points

QUESTION 4

A distribution of cash to stockholders of a publicly held corporation is called:

		net profit.
		dividend.
		revenue.
		interest.

2 points

QUESTION 5

The process of preparing and closing the accounts of an organization for an accounting period is called a/an:

		journal entry.
		posting entry.
		adjusting entry.
		closing entry.

2 points

QUESTION 6

The adjusting entry for supplies should be:

		debit supplies expenses, credit supplies.
		debit supplies, credit supplies expenses.
		debit sales, credit prepaid insurance.
		debit supplies, credit expenses.

2 points

QUESTION 7

The second part of stockholder equity is called:

		retained earnings.
		revenue.
		net loss.
		net capital.

2 points

QUESTION 8

How many financial statements do corporations prepare?

		Four
		Five
		Two
		Three

2 points

QUESTION 9

The Income Statement of a merchandising business has:

		five sections.
		four sections.
		two sections.
		three sections.

2 points

QUESTION 10

The operating income is an excess of:

		gross profit over operating expenses.
		gross loss over operating expenses.
		gross profit over cost of merchandise sold.
		operating expenses over gross profit.

2 points

QUESTION 11

An analysis that reports each dollar amount in a financial statement as a percentage of another amount is called:

		vertical analysis.
		horizontal analysis.
		percentage analysis.
		financial statement analysis.

2 points

QUESTION 12

A statement that reports the changes in the retained earnings accounts during an accounting period is called the:

		statement of changes in owner's equity.
		statement of retained earnings.
		statement of income.
		statement of stockholders' account.

2 points

QUESTION 13

Which statement classifies activities as operating, investing, or financing?

		Income statement
		Cash flow statement
		Statement of retained earning
		Statement of stockholders

2 points

QUESTION 14

Which account should you debit to close the net loss of a merchandise business?

		Operating income account
		Retained earnings account
		Stockholders account
		Income Statement Account

2 points

QUESTION 15

The maximum number of shares a corporation may issue is called:

		authorized capital stock.
		preferred stock.
		equity stock.
		issued stock.

2 points

QUESTION 16

Match the terms in column I with the descriptions in Column II.

Match the terms in column I with the descriptions in Column II.

comparability

horizontal analysis

vertical analysis

base period

preferred stock

authorized capital stock

earnings distributions

proxy

statements of stockholders' equity

cost of goods sold

A.

legal form to transfer voting rights

B.

comparison of the same items for two or more accounting periods

C.

accounting information to be compared between two fiscal periods

D.

preference over common stock

E.

the maximum number of shares a corporation may issue

F.

changes in all stockholders' equity accounts

G.

period used for comparison

H.

cost of goods sold

I.

dividends

J.

relationship of items from one period to another