Question 21 1 points Save

Costs incurred in operating a business are also known as

revenues.

expenses.

liabilities.

dividends.

Question 22 1 points Save

Governments have an interest in the economic performance of business because of

tax collections.

community involvement from the business.

business incentives.

all of these.

Question 23 1 points Save

Companies using a low-cost emphasis provide products and services that compete on features other than price.

True

False

Question 24 1 points Save

Rights to payments from customers are

liabilities.

prepaid expenses.

accounts receivable.

accounts payable.

Question 25 1 points Save

A low-cost emphasis strives to provide

no-frills, standardized products and services.

products and services that provide unique market needs.

products and services that provide prestige and image for customers.

products and services that compete on features other than price.

Question 26 1 points Save

For a corporation, stockholders' equity consists of

assets plus liabilities.

current assets plus long-term assets.

intangible assets.

capital stock and retained earnings.

Question 27 1 points Save

On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does this transaction affect Smart's accounts?

Increase insurance expense and decrease cash by $7,200 each

Increase prepaid insurance and decrease cash by $7,200 each

Increase unearned insurance and decrease cash by $7,200 each

Increase prepaid insurance and decrease retained earnings by $7,200 each

Question 28 1 points Save

Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of capital stock. How does this transaction affect Eagle Eye's accounts?

Increase in stock expense and decrease cash by $6,000 each

Increase capital stock and increase cash by $6,000 each

Increase capital stock and increase revenue by $6,000 each

Increase capital stock and decrease retained earnings by $6,000 each

Question 29 1 points Save

Deferred revenues (unearned revenues) are items initially recorded as liabilities, but expected to become _____ over time.

liabilities

assets

revenues

expenses

Question 30 1 points Save

Which transaction would be recorded in a cash basis system of accounting?

Purchase of equipment on credit

Purchase of supplies on credit

Sale of goods on credit

Sale of goods for cash

Question 31 1 points Save

As time passes, fixed assets, other than land, lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called

equipment allocation.

depreciation.

accumulation.

matching.

Question 32 1 points Save

Land is an example of a current asset.

True

False

Question 33 1 points Save

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

A gain on the sale of land

A decrease in accounts payable

An increase in accrued liabilities

Dividends paid on common stock

Question 34 1 points Save

Under the cash basis of accounting, no adjustments are necessary prior to the preparation of the financial statements.

True

False

Question 35 1 points Save

The accrual basis of accounting requires revenue to be recorded when the service is performed.

True

False

Question 36 1 points Save

"Brand name" recognition is an example of goodwill.

True

False

Question 37 1 points Save

Depreciation Expense and Accumulated Depreciation are classified, respectively, as

expense and contra asset.

asset and contra liability.

revenue and asset.

contra asset and expense.

Question 38 1 points Save

In October, cash is received in advance of rendering services. Assuming that half of the services have been performed by December 31, the year-end adjustment would

decrease Unearned Service Revenue and decrease Cash.

increase Accounts Receivable and increase Service Revenue.

increase Cash and increase Service Revenue.

decrease Unearned Service Revenue and increase Service Revenue.

Question 39 1 points Save

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

An increase in inventory

A decrease in accounts payable

Preferred dividends declared and paid

A decrease in accounts receivable

Question 40 1 points Save

On June 1, Green Pea, Inc. purchased $1,200 worth of supplies on account. Prior to the purchase, the balance in the supplies account was $0. On December 31, the fiscal year-end for Green Pea, it is determined that $700 of supplies still remain. What is the balance in the supplies account after adjustment?

$0

$700

$500

$1,200