ACCT 207 MIDTERM ACCURATE STUDY GUIDE
The liability of corporate stockholders is limited to the amount of their investment.
(True/False) - Answers - True: Stockholders in a corporation have limited liability: they
can lose only what they invested and are not personally responsible for corporate debts.
All publicly traded U.S. companies must provide their stockholders with an annual report
each year. (True/False) - Answers - True — Public companies are required by the SEC
to issue an annual report (Form 10-K) containing financial statements and management
discussion.
Which of the following is not a liability?
Which of the following is not a liability?A) Unearned Service Revenue B) Accounts
Payable C) Accounts Receivable D) Interest Payable - Answers - C) Accounts
Receivable — Accounts Receivable is an asset (amounts owed to the company).
Liabilities are debts owed by the company.
True or False: A business organized as a separate legal entity owned by stockholders is
a partnership. - Answers - False — That description fits a corporation, not a partnership.
Partnerships have shared ownership and usually unlimited liability.
Which financial statement reports information at a point in time?A) Balance Sheet B)
Income Statement C) Retained Earnings Statement D) Statement of Cash Flows -
Answers - A) Balance Sheet — The balance sheet shows assets, liabilities, and equity
on a specific date; the other statements cover a period of time.
Ashley's Accessory Shop began June 2022 with assets $210,000 and liabilities
$120,000. During June it recorded revenues $330,000, expenses $165,000, and
dividends $60,000. What is ending stockholders' equity? - Answers - $195,000 —
Beginning SE = 210,000 − 120,000 = 90,000.Net income = 330,000 − 165,000 =
165,000. Change in SE = 165,000 − 60,000 = 105,000. Ending SE = 90,000 + 105,000
= 195,000.
Jimmy's Repair Shop began the year with assets $300,000 and liabilities $240,000.
During the year it recorded revenues $630,000, expenses $330,000, and dividends
$60,000. What is ending stockholders' equity? - Answers - 300,000 — Beginning SE =
300,000 − 240,000 = 60,000.Net income = 630,000 − 330,000 = 300,000.Change in SE
= 300,000 − 60,000 = 240,000.Ending SE = 60,000 + 240,000 = 300,000.
Debts and obligations of a Business are referred to as _______
The liability of corporate stockholders is limited to the amount of their investment.
(True/False) - Answers - True: Stockholders in a corporation have limited liability: they
can lose only what they invested and are not personally responsible for corporate debts.
All publicly traded U.S. companies must provide their stockholders with an annual report
each year. (True/False) - Answers - True — Public companies are required by the SEC
to issue an annual report (Form 10-K) containing financial statements and management
discussion.
Which of the following is not a liability?
Which of the following is not a liability?A) Unearned Service Revenue B) Accounts
Payable C) Accounts Receivable D) Interest Payable - Answers - C) Accounts
Receivable — Accounts Receivable is an asset (amounts owed to the company).
Liabilities are debts owed by the company.
True or False: A business organized as a separate legal entity owned by stockholders is
a partnership. - Answers - False — That description fits a corporation, not a partnership.
Partnerships have shared ownership and usually unlimited liability.
Which financial statement reports information at a point in time?A) Balance Sheet B)
Income Statement C) Retained Earnings Statement D) Statement of Cash Flows -
Answers - A) Balance Sheet — The balance sheet shows assets, liabilities, and equity
on a specific date; the other statements cover a period of time.
Ashley's Accessory Shop began June 2022 with assets $210,000 and liabilities
$120,000. During June it recorded revenues $330,000, expenses $165,000, and
dividends $60,000. What is ending stockholders' equity? - Answers - $195,000 —
Beginning SE = 210,000 − 120,000 = 90,000.Net income = 330,000 − 165,000 =
165,000. Change in SE = 165,000 − 60,000 = 105,000. Ending SE = 90,000 + 105,000
= 195,000.
Jimmy's Repair Shop began the year with assets $300,000 and liabilities $240,000.
During the year it recorded revenues $630,000, expenses $330,000, and dividends
$60,000. What is ending stockholders' equity? - Answers - 300,000 — Beginning SE =
300,000 − 240,000 = 60,000.Net income = 630,000 − 330,000 = 300,000.Change in SE
= 300,000 − 60,000 = 240,000.Ending SE = 60,000 + 240,000 = 300,000.
Debts and obligations of a Business are referred to as _______
