ACCOUNTING 201 EXAM QUESTIONS
WITH CORRECT ANSWERS ALREADY
PASSED
The acquisition of land by issuing common stock is - Answer-a non cash transaction
which is not reported in the body of a statement of cash flows.
The order of presentation of activities on the statement of cash flows is - Answer-
Operating, investing, and financing
Generally, the most important category on the statement of cash flows is cash flows
from - Answer-Operating activities
Indicate where the event paid income taxes would appear, if at all, on the statement of
cash flows. - Answer-Operating activities section
Indicate where the event common stock issued for cash would appear, if at all, on the
indirect statement of cash flows. - Answer-Financing activities section
Indicate where the event purchased land for cash would appear, if at all, on the indirect
statement of cash flows. - Answer-Investing activities section
Starting with net income and adjusting it for items that affected reported net income but
which did not affect cash is called the - Answer-Indirect method
In developing the cash flows from operating activities, most companies in the U. S. -
Answer-use the indirect method
The cost principle requires that when assets are acquired, they be recorded at -
Answer-Historical cost
The Duce Company has five plants nationwide that cost $100 million. The current
market value of the plants is $500 million. The plants will be recorded and reported as
assets at - Answer-$100 million
The economic entity assumption requires that the activities - Answer-of an entity be kept
separate from the activities of its owner.
A business that enjoys limited liability is a - Answer-Corporation
, Liabilities - Answer-are existing debts and obligations
Owner's equity can be described as - Answer-ownership claim on total assets.
When an owner withdraws cash or other assets from a business for personal use, these
withdrawals are termed - Answer-Drawings
A net loss will result during a time period when - Answer-Expenses exceed revenues
The best interpretation of the word credit is the - Answer-Right side of the account
The procedure of transferring journal entries to the ledger accounts is called - Answer-
Posting
The matching principle matches - Answer-Expenses with Revenues
In a service-type business, revenue is considered earned - Answer-When the service is
performed
Unearned revenues are - Answer-received and recorded as liabilities before they are
earned.
Closing entries are necessary for - Answer-Temporary accounts only
Closing entries are made - Answer-in order to transfer net income (or loss) and owner's
drawing to the owner's capital account.
In order to close the owner's drawing account, the - Answer-owner's capital account
should be debited.
The balance in the income summary account before it is closed will be equal to -
Answer-the net income or loss on the income statement.
After closing entries are posted, the balance in the owner's capital account in the ledger
will be equal to - Answer-the amount of the owner's capital reported on the balance
sheet.
The income statement for the month of June, 2010 of Ramirez Enterprises contains the
following information:
Revenues:
$7,000
Expenses:
Wages Expense
$2,000
Rent Expense
WITH CORRECT ANSWERS ALREADY
PASSED
The acquisition of land by issuing common stock is - Answer-a non cash transaction
which is not reported in the body of a statement of cash flows.
The order of presentation of activities on the statement of cash flows is - Answer-
Operating, investing, and financing
Generally, the most important category on the statement of cash flows is cash flows
from - Answer-Operating activities
Indicate where the event paid income taxes would appear, if at all, on the statement of
cash flows. - Answer-Operating activities section
Indicate where the event common stock issued for cash would appear, if at all, on the
indirect statement of cash flows. - Answer-Financing activities section
Indicate where the event purchased land for cash would appear, if at all, on the indirect
statement of cash flows. - Answer-Investing activities section
Starting with net income and adjusting it for items that affected reported net income but
which did not affect cash is called the - Answer-Indirect method
In developing the cash flows from operating activities, most companies in the U. S. -
Answer-use the indirect method
The cost principle requires that when assets are acquired, they be recorded at -
Answer-Historical cost
The Duce Company has five plants nationwide that cost $100 million. The current
market value of the plants is $500 million. The plants will be recorded and reported as
assets at - Answer-$100 million
The economic entity assumption requires that the activities - Answer-of an entity be kept
separate from the activities of its owner.
A business that enjoys limited liability is a - Answer-Corporation
, Liabilities - Answer-are existing debts and obligations
Owner's equity can be described as - Answer-ownership claim on total assets.
When an owner withdraws cash or other assets from a business for personal use, these
withdrawals are termed - Answer-Drawings
A net loss will result during a time period when - Answer-Expenses exceed revenues
The best interpretation of the word credit is the - Answer-Right side of the account
The procedure of transferring journal entries to the ledger accounts is called - Answer-
Posting
The matching principle matches - Answer-Expenses with Revenues
In a service-type business, revenue is considered earned - Answer-When the service is
performed
Unearned revenues are - Answer-received and recorded as liabilities before they are
earned.
Closing entries are necessary for - Answer-Temporary accounts only
Closing entries are made - Answer-in order to transfer net income (or loss) and owner's
drawing to the owner's capital account.
In order to close the owner's drawing account, the - Answer-owner's capital account
should be debited.
The balance in the income summary account before it is closed will be equal to -
Answer-the net income or loss on the income statement.
After closing entries are posted, the balance in the owner's capital account in the ledger
will be equal to - Answer-the amount of the owner's capital reported on the balance
sheet.
The income statement for the month of June, 2010 of Ramirez Enterprises contains the
following information:
Revenues:
$7,000
Expenses:
Wages Expense
$2,000
Rent Expense
