QUESTION 1 Which of the following would not be an example of a business which is primarily a merchandiser? O a. Target b. Amazon Oc Walmart d. General Motors QUESTION 2 Which of the following is a true statement about corporations? a Corporation ownership is divided into shares of stock. Ob Corporations experience more difficulty than proprietorships in obtaining large shares of stock c Corporations are not organized as separate legal taxable entities. d. Investors in corporations have unlimited liability QUESTION 3 emphasis while Motel 6 operates with a The Ritz Carlton and Motel 6 are both hotel providers. The Ritz Carlton operates with a emphasis a. premium price premium price b. low cost low cost c low cost premium price d. premium price: low cost QUESTION 4 When a business owes money, the financial term is called a(n): a. asset O b.revenue O c. liability Od. expense QUESTION 5 The difference between the amount of assets owned by a business and the amounts owed is called: earnings liabilities equity gross profit QUESTION 6 is the increase in assets from selling products and services. a. Liability b. Equity c. Expense d. Revenue QUESTION 7 The financial statement which includes "As of a specific date in its heading is the: O a. income statement b. balance sheet c. statement of cash flows d. statement of retained earnings QUESTION 8 Given the following list of accounts, calculate Total Assets: Accounts Receivable $10,000 Capital Stock $20,000 Cash $15,000 Revenues $50,000 Rent Expense $12,000 a. $25,000 b. $45,000 c. $83,000 d. $95,000 QUESTION 9 The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or a year, is called ank O a balance sheet b. income statement c. statement of cash flows d. statement of retained earnings QUESTION 10 Which of the following group of accounts are all assets? a Buildings, Accounts Payable, Accounts Receivable b. Accounts Receivable, Revenues, Supplies c. Cash, Buildings, Supplies d. Unearned Revenues, Cash, Rent Expense QUESTION 11 Which of the following situations decreases stockholder's equity? a Cash is received from customers b. Utility bill is incurred for the month Supplies are purchased on account d Services (revenues) are provided on account QUESTION 12 Holly Inc. has the following assets and liabilities as of the end of the year. Assets $68,000 Liabilities $32,000 What is the stockholder's equity as of the end of the year? a. $100,000 b. $36,000 c. $68,000 d. $32,000 QUESTION 13 Phillips Corporation purchased supplies on account. What is the effect of this transaction? a. Cash decreases and supplies increases. b. Total assets and total liabilities both increase. c. Total assets decrease and liabilities increase. d. Total assets remain unchanged. QUESTION 14 Johnson Inc. borrowed $15,000 from a bank in exchange for cash. What is the effect of this transaction? a. Total assets remain unchanged. b. Liabilities increase. c. Total equity increases. d. Net income increases. QUESTION 15 Ultra Company paid a utility bill of $500 and paid monthly rent of $700 in September. What are the total expenses for the month? a. $1,200 O b. $700 c. $500 Od. $200 QUESTION 16 Gibbons Company has the following balances: Retained Earnings $26,000 Assets $47,000 Liabilities $5,000 What is the balance in the capital stock account? a $42,000 b. $16,000 c. $21,000 d. $78,000 QUESTION 17 The accounts which impact Retained Earnings include: a. Revenues, cash, and dividends b. Cash, dividends, and accounts payable Revenues, expenses, and dividends d. Revenues, expenses, and cash QUESTION 18 Using accrual accounting, expenses are recorded and reported only a. if they are paid before they are incurred. b.when they are incurred, whether or not paid in cash. Cc when they are incurred and paid at the same time. d.if they are paid after they are incurred. QUESTION 19 Assured Inc. provided services of $1,000,000 to clients on account. How does this transaction affect Assured's accounts? a. Accounts receivable and revenues increase by $1,000,000 each b. Revenues and accounts payable increase by 51.000.000 each. Cash and revenues increase by $1,000,000 each, d. Accounts receivable and unearned revenues increase by $1.000.000 each QUESTION 20 A landscaping firm receives $3,000 from a customer to perform services for the months of June July, and August of the $3,000, how much should be recognized on the income statement as revenue for the month of June? a. 50 b. $1,000 $3,000 d $2.000 QUESTION 21 The balance in the office supplies account on September 1st was $7,200. Supplies purchased during the month were $3,500. The supplies on hand at September 30th were $2,500. The amount of supplies expense for the month of September was: a $6,200 b. $13,200 @c. $3.500 d. 58.200 QUESTION 22 On April 1st. Bear Inc. paid $2,400 for an insurance premium on a two year insurance policy. As of the end of the December of the first year, what should be the balance in the prepaid insurance account? a $1,500 b. 50 c. $1,200 d. $900 QUESTION 23 The liabilities that are to paid in less than one year are called a long-term liabilities b. current liabilities contingent liabilities d. notes payable QUESTION 24 The difference between sales and cost of goods sold for a merchandising business is called: a. operating expenses Ob gross profit c. net sales d. gross sales QUESTION 25 East Inc, buys inventory on account. Which of the following is true regarding the impact of this transaction on the accounting equation? a. Revenues increase; liabilities increase b. Expenses increase; liabilities decrease. c. Assets increase; liabilities increase. d. Assets decrease; liabilities decrease. QUESTION 26 Sunshine Inc. has the following balances: Net Sales $50,000 Cost of Goods Sold $15,000 Operating expenses $20,000 What is Sunshine Inc.'s gross profit? a. $30,000 b. $45,000 c. $15,000 d. $35,000 QUESTION 27 Which of the following accounts are subtracted from gross profit to arrive at net income? a. Operating expenses b. Accounts payable c. Accounts receivable d. Cost of goods sold QUESTION 28 Frames & Company sold merchandise on account for $30,000. The cost of the merchandise was $12,000. Which of the following statements is true? a. The net change in assets was $18,000 and the income statement effect was $12,000. b. The net change in assets was $18,000 and the income statement effect was $18,000. c. The net change in assets was $30,000 and the income statement effect was $18,000. d. The net change in assets was $30,000 and the income statement effect was $30,000 QUESTION 29 If Martin inc. sold $550,000 worth of merchandise, had $50,000 returned by the customer, and then the balance was paid by the customer within the 2% discount period, how much were Martin's net sales? a. $490,000 b. 5495,000 C. 5510,000 d. 5500,000 QUESTION 30 of the buyer is to pay the transportation cost for delivering merchandise, delivery terms are stated as: FOB net 30. b FOB destination FOR Seller d. FOB spping point QUESTION 31 Match each account with its proper classification. Equipment Salaries payable Capital stock Revenues A. Asset B. Equity C. Retained Earnings D. Liability QUESTION 32 Match each account with the financial statement that it appears on. Notes payable Salaries expense Dividends Cash receipts from customers A. Statement of Retained Earnings B. Income Statement C. Balance sheet D. Statement of cash flows QUESTION 33 What are the sources of financing for a business? a. creditors b. investors c. profitable operations d. all of the above