Kelley School of Business - A100 Midterm
Exam Questions and Correct Answers
Four examples of intangible assets: - CORRECT ANSWER -Patents
Copyrights
Trademarks
Goodwill
Examples of current liabilities (4) - CORRECT ANSWER -Accounts Payable
Wages Payable
Utilities Payable
Short-term NotesPayable
Etc.
Examples of long-term liabilities (2) - CORRECT ANSWER -Notes Payable
Bonds Payable
Examples of stockholders' equity (2) - CORRECT ANSWER -Common Stock
Retained Earnings
When a company sells an asset other than its inventory, what steps need to be
taken? - CORRECT ANSWER -1) Remove the asset
2) Record the cash received
,3) Recognize any gain or loss on the sale
Where would pre-paid rent be accounted for? - CORRECT ANSWER -Current assets
Where would unearned revenue be accounted for? - CORRECT ANSWER -Liabilities
What does financing account for? - CORRECT ANSWER -Transactions with
stockholders' and bankers (except interest)
What does investing account for? - CORRECT ANSWER -Buying and selling land,
buildings, and equipment
What does operating account for? - CORRECT ANSWER -Everything else
Formula for statement of cash flows? - CORRECT ANSWER -Beginning cash
+/- Cash flows from operations
+/- Cash flows from investing
+/- Cash flows from financing
= Ending cash
Two rules to remember for statement of cash flows? - CORRECT ANSWER -1) Only
include cash transactions the company made during the period.
2) If no cash was received or paid, the transaction does not go on this statement.
, When a payment is received from a customer on account, the result of this receipt
is:
1) to increase total assets and no change to stockholders equity
2) to increase stockholders' equity and no change to total assets
3) No change to Either total assets or stockholders' equity
4) To decrease total liabilities and increase total assets
5) To increase both total assets and stockholders equity - CORRECT ANSWER -The
answer is: 3
Accrual Accounting:
1) Is sometimes called "cash basis of accounting
2) Is not allowed under either IFRS or GAAP
3) Does not reflect the operations of a business as accurately as cash basis
4) Requires that an expense be shown as an expense only when it is paid
5) Requires that a sale be recorded as revenue before the cash is received -
CORRECT ANSWER -The answer is: 5
Which of the following is the correct classification on the statement of cash flows:
1) Total operating cash flows includes all receipts and payments for operating
activities as well as any interest paid
2) Total investing cash flows includes the cost of all fixed assets purchased as well
as the gain or loss on sale of land
Exam Questions and Correct Answers
Four examples of intangible assets: - CORRECT ANSWER -Patents
Copyrights
Trademarks
Goodwill
Examples of current liabilities (4) - CORRECT ANSWER -Accounts Payable
Wages Payable
Utilities Payable
Short-term NotesPayable
Etc.
Examples of long-term liabilities (2) - CORRECT ANSWER -Notes Payable
Bonds Payable
Examples of stockholders' equity (2) - CORRECT ANSWER -Common Stock
Retained Earnings
When a company sells an asset other than its inventory, what steps need to be
taken? - CORRECT ANSWER -1) Remove the asset
2) Record the cash received
,3) Recognize any gain or loss on the sale
Where would pre-paid rent be accounted for? - CORRECT ANSWER -Current assets
Where would unearned revenue be accounted for? - CORRECT ANSWER -Liabilities
What does financing account for? - CORRECT ANSWER -Transactions with
stockholders' and bankers (except interest)
What does investing account for? - CORRECT ANSWER -Buying and selling land,
buildings, and equipment
What does operating account for? - CORRECT ANSWER -Everything else
Formula for statement of cash flows? - CORRECT ANSWER -Beginning cash
+/- Cash flows from operations
+/- Cash flows from investing
+/- Cash flows from financing
= Ending cash
Two rules to remember for statement of cash flows? - CORRECT ANSWER -1) Only
include cash transactions the company made during the period.
2) If no cash was received or paid, the transaction does not go on this statement.
, When a payment is received from a customer on account, the result of this receipt
is:
1) to increase total assets and no change to stockholders equity
2) to increase stockholders' equity and no change to total assets
3) No change to Either total assets or stockholders' equity
4) To decrease total liabilities and increase total assets
5) To increase both total assets and stockholders equity - CORRECT ANSWER -The
answer is: 3
Accrual Accounting:
1) Is sometimes called "cash basis of accounting
2) Is not allowed under either IFRS or GAAP
3) Does not reflect the operations of a business as accurately as cash basis
4) Requires that an expense be shown as an expense only when it is paid
5) Requires that a sale be recorded as revenue before the cash is received -
CORRECT ANSWER -The answer is: 5
Which of the following is the correct classification on the statement of cash flows:
1) Total operating cash flows includes all receipts and payments for operating
activities as well as any interest paid
2) Total investing cash flows includes the cost of all fixed assets purchased as well
as the gain or loss on sale of land
