ACC Exam 1 Questions with Complete
and Correct Answers
Assets - Answer-How are PREPAID EXPENSES reported in the financial statements?
Retained Earnings - Answer-What is Wal-Mart's LARGEST source of financing?
79 cents - Answer-A Company reports Total Sales of $365,000 and Total Cost of Goods Sold of $289,000.
Assuming they sell you an item for $1.00, on average, what is the Company's wholesale purchase price
of that item?
1,000 - Answer-Refer to the restaurant example that we did in class. Assume that the rent is reduced
from $5,000 per month to $2,000 per month. With this change, how many customers must you have
each MONTH to pay for your "fixed costs"?
2,250 - Answer-Refer to the original data in the restaurant example that we did in class (so rent is
$5,000 per month as it was in the original data). Now assume that the staff cost is increased from $4 per
meal to $6 per meal. With this change, how many customers must you have each MONTH to pay for
your "fixed costs"?
, A right to force the business into bankruptcy if dividends are not paid - Answer-Which ONE of the
following is NOT a characteristic of equity financing?
-A right to share in the profits of the business
-A right to share in any remaining resources when the business is terminated
-A right to force the business into bankruptcy if dividends are not paid
-A right to have a say in the affairs of the business
Statement of budgeted surplus - Answer-Which ONE of the following is NOT one of the general purpose
financial statements?
-Statement of budgeted surplus
-Statement of cash flows
-Income statement
-Balance sheet
To create comparable information - Answer-What is the reason for the existence of GAAP?
The shareholders - Answer-Who selects a corporation's Board of Directors?
Goods purchased and held for resale - Answer-Which ONE of the following statements BEST describes
INVENTORY?
-Goods used by company employees on a daily basis
-Goods due from customers who have purchased on account
-Goods owned or controlled by a company
-Goods purchased and held for resale
and Correct Answers
Assets - Answer-How are PREPAID EXPENSES reported in the financial statements?
Retained Earnings - Answer-What is Wal-Mart's LARGEST source of financing?
79 cents - Answer-A Company reports Total Sales of $365,000 and Total Cost of Goods Sold of $289,000.
Assuming they sell you an item for $1.00, on average, what is the Company's wholesale purchase price
of that item?
1,000 - Answer-Refer to the restaurant example that we did in class. Assume that the rent is reduced
from $5,000 per month to $2,000 per month. With this change, how many customers must you have
each MONTH to pay for your "fixed costs"?
2,250 - Answer-Refer to the original data in the restaurant example that we did in class (so rent is
$5,000 per month as it was in the original data). Now assume that the staff cost is increased from $4 per
meal to $6 per meal. With this change, how many customers must you have each MONTH to pay for
your "fixed costs"?
, A right to force the business into bankruptcy if dividends are not paid - Answer-Which ONE of the
following is NOT a characteristic of equity financing?
-A right to share in the profits of the business
-A right to share in any remaining resources when the business is terminated
-A right to force the business into bankruptcy if dividends are not paid
-A right to have a say in the affairs of the business
Statement of budgeted surplus - Answer-Which ONE of the following is NOT one of the general purpose
financial statements?
-Statement of budgeted surplus
-Statement of cash flows
-Income statement
-Balance sheet
To create comparable information - Answer-What is the reason for the existence of GAAP?
The shareholders - Answer-Who selects a corporation's Board of Directors?
Goods purchased and held for resale - Answer-Which ONE of the following statements BEST describes
INVENTORY?
-Goods used by company employees on a daily basis
-Goods due from customers who have purchased on account
-Goods owned or controlled by a company
-Goods purchased and held for resale
