ACCT 207 TEST 1 QUESTIONS WITH VERIFIED
ANSWERS
Accounting can be viewed as - Answers - an information system that communicates the
business activities to interested parties.
describe the calculation for the current ratio - Answers - Current Assets/Current
Liabilities
Using the following information, determine the amount of cash on the balance sheet.
Assume that the company has only three assets. Liabilities equal $3,000; stockholders'
equity equals $25,000; inventories equal $1,000; and land equals $22,000. - Answers -
5000
net profit margin is calculated - Answers - Net Income/Sales Revenue
The multiple-step income statement provides classifications of revenues and expenses.
The statement contains three important subtotals. Which of the following is NOT a
subtotal?
a. Income from operations
b. Net income
c. Gross margin
d. Net sales - Answers - Net sales
If retained earnings at the beginning of the year were $30,000, retained earnings at the
end of the year were $50,000, and dividends paid during the year were $1,000, what
was the net income earned for the year? - Answers - 21000
Cash is reported on which two statements? - Answers - The balance sheet and the
statement of cash flows
Retained earnings are reported on which two statements? - Answers - The balance
sheet and the statement of retained earnings
Which of the following statements best describes an independent accountant? -
Answers - An accounting professional who conducts an examination of a company's
financial statements
An independent auditor is hired to conduct an examination of a company's financial
statements. The objective of this examination is to gather evidence that will enable the
auditor to form an opinion as to whether - Answers - the financial statements fairly
present the company's financial position and results of operations.
, The income statement reports the results of a company's operations for a given period
of time. Which of the following statement describes revenues? - Answers - the increase
in assets that result from the sale of products and services
Investors rely on income statement information to __________ and creditors rely on it to
__________. - Answers - buy stock; make loans
assets, expenses and dividends are - Answers - increased on debit and decreased on
credit
liabilities, revenue and common stock are - Answers - increased on credit and
decreased on debit
liabilities are: - Answers - accounts payable , unearned revenue, interest payable
,salaries payable ,income taxes payable, notes payable
revenue is - Answers - sales, service, interest income, rent revenue
assets are: - Answers - cash, investments, accounts receivable, inventory, land,
buildings
expenses are: - Answers - cost of goods sold, salaries expense, rent expense,
insurance expense, depreciation expense, advertising expense
The Financial Accounting Standards Board (FASB) has developed four enhancing
characteristics that support the fundamental characteristics of accounting information.
Which of the following is NOT one of the enhancing characteristics?
a. Comparability
b. Timeliness
c. Conservatism
d. Verifiability - Answers - Conservatism
Accounting principles are general approaches that are used in the measurement and
recording of business activities. Which of the following is NOT one of these principles?
a. Matching principle
b. Revenue recognition principle
c. Fair market value principle
d. Historical cost principle - Answers - Fair market value principle
Signing a note payable to borrow cash will - Answers - increase assets and increase
liabilities.
Transaction analysis usually begins with - Answers - source documents
On June 1, Techie Toys had a $500 credit balance in Accounts Payable. During the
month, the company purchased office supplies for $1,750. Techie Toys paid $1,950 to
ANSWERS
Accounting can be viewed as - Answers - an information system that communicates the
business activities to interested parties.
describe the calculation for the current ratio - Answers - Current Assets/Current
Liabilities
Using the following information, determine the amount of cash on the balance sheet.
Assume that the company has only three assets. Liabilities equal $3,000; stockholders'
equity equals $25,000; inventories equal $1,000; and land equals $22,000. - Answers -
5000
net profit margin is calculated - Answers - Net Income/Sales Revenue
The multiple-step income statement provides classifications of revenues and expenses.
The statement contains three important subtotals. Which of the following is NOT a
subtotal?
a. Income from operations
b. Net income
c. Gross margin
d. Net sales - Answers - Net sales
If retained earnings at the beginning of the year were $30,000, retained earnings at the
end of the year were $50,000, and dividends paid during the year were $1,000, what
was the net income earned for the year? - Answers - 21000
Cash is reported on which two statements? - Answers - The balance sheet and the
statement of cash flows
Retained earnings are reported on which two statements? - Answers - The balance
sheet and the statement of retained earnings
Which of the following statements best describes an independent accountant? -
Answers - An accounting professional who conducts an examination of a company's
financial statements
An independent auditor is hired to conduct an examination of a company's financial
statements. The objective of this examination is to gather evidence that will enable the
auditor to form an opinion as to whether - Answers - the financial statements fairly
present the company's financial position and results of operations.
, The income statement reports the results of a company's operations for a given period
of time. Which of the following statement describes revenues? - Answers - the increase
in assets that result from the sale of products and services
Investors rely on income statement information to __________ and creditors rely on it to
__________. - Answers - buy stock; make loans
assets, expenses and dividends are - Answers - increased on debit and decreased on
credit
liabilities, revenue and common stock are - Answers - increased on credit and
decreased on debit
liabilities are: - Answers - accounts payable , unearned revenue, interest payable
,salaries payable ,income taxes payable, notes payable
revenue is - Answers - sales, service, interest income, rent revenue
assets are: - Answers - cash, investments, accounts receivable, inventory, land,
buildings
expenses are: - Answers - cost of goods sold, salaries expense, rent expense,
insurance expense, depreciation expense, advertising expense
The Financial Accounting Standards Board (FASB) has developed four enhancing
characteristics that support the fundamental characteristics of accounting information.
Which of the following is NOT one of the enhancing characteristics?
a. Comparability
b. Timeliness
c. Conservatism
d. Verifiability - Answers - Conservatism
Accounting principles are general approaches that are used in the measurement and
recording of business activities. Which of the following is NOT one of these principles?
a. Matching principle
b. Revenue recognition principle
c. Fair market value principle
d. Historical cost principle - Answers - Fair market value principle
Signing a note payable to borrow cash will - Answers - increase assets and increase
liabilities.
Transaction analysis usually begins with - Answers - source documents
On June 1, Techie Toys had a $500 credit balance in Accounts Payable. During the
month, the company purchased office supplies for $1,750. Techie Toys paid $1,950 to
