ACCT 240 Final Exam(100% Correct answers)
Accounting is known as the language of: correct answers Business
Probable future sacrifice of economic benefits arising from present obligations is termed as a(n):
correct answers liability
GAAP correct answers Generally Accepted Accounting Principles. The standards and rules that
accountants follow while recording and reporting financial activities.
Sarah uses her financial accounting knowledge to buy a rising stock at $500 per share with
annual dividends of $50. She sells the stock a year later for $560 per share. What is the annual
return (%)? correct answers 22%
A(n) ______________ is a future economic benefit owned or controlled by a company. correct
answers Asset
Lancer Corporation purchased 10 battery packs for $8 each and sold them to customers for $15
each. What is Lancer's total gross profit? correct answers $70
A(n) _____ is a decrease in net assets to generate revenue. correct answers Expense
Assets should be listed in order by __________________________ on the balance sheet. correct
answers Order of liquidity
Cost of sales refers to the cost of the merchandise that: correct answers Customers purchased
during the period.
Which of the following financial statements classify business activities into operating, investing,
and financing activities? correct answers Statement of cash flows
Lancer Company has been in business for two years. During the first year, it earned net income
of $45,000 and paid dividends of $10,000. During year two, the company had earnings of
$56,000 and paid dividends of $12,000. What is the balance in Lancer Company's retained
earnings at the end of year two? correct answers $79,000
What is the group called elected by the shareholders to make policy decisions? correct answers
Board of Directors
Net assets are defined as: correct answers Assets - Liabilities
The Hayes Corporation is a car dealer. A new car is received from the manufacturer during
September at a cost of $33,000. This vehicle is sold in October to a customer for $42,000. In
connection with this transaction, which of the following statements is correct? correct answers
The company will report cost of goods sold of $33,000.
, Which of the following accounts shows the difference between the lifelong earnings of a
company and its payments to owners? correct answers Retained Earnings
The SEC refers to: correct answers Securities and Exchange Commission.
Which of the following is the name for state laws, which govern financial reporting? correct
answers Blue Sky Laws
Account balances can change because of the passage of time. (T/F) correct answers True
Which of the following transactions will require an adjusting entry at the end of the year? correct
answers Received $12,000 rent for 6 months, including 2 months of the forthcoming year
The term accounts payable indicates amounts a company owes to its suppliers. (T/F) correct
answers True
Duggan Corporation paid $600 for insurance at the beginning of December. The payment
covered the months of December, January, and February. What should the balance be in the
prepaid insurance account at the end of December (December 31st) if Duggan's accountant
makes the correct adjusting entry? correct answers $400
Which of the following is the U.S. organization, which has ultimate responsibility for the
availability of complete and reliable information about every organization that issues publicly
traded securities? correct answers The SEC
Purchase of inventory on account will result in: correct answers Increase in Accounts Payable
Which is reported on the balance sheet as an asset? correct answers Prepaid Expense
Companies that do not issue stock on public exchanges are required to comply with state laws.
(T/F) correct answers True
An accrued expense is an expense which: correct answers has been incurred but not paid.
Saturn Corporation sold inventory costing $32,000 for $45,000 cash. Which of the following
statements is true of this transaction? correct answers Cost of goods sold increases by $32,000.
Which of the following transactions would have no effect (zero $ impact) on the amount of total
assets? correct answers Acquiring assets for cash
Elwood Company purchases a truck for $8,000, paying $2,000 cash and signing a note payable
for the remaining amount. Which of the following is true of this transaction? correct answers
Assets and liabilities will increase by $6,000.
Accounting is known as the language of: correct answers Business
Probable future sacrifice of economic benefits arising from present obligations is termed as a(n):
correct answers liability
GAAP correct answers Generally Accepted Accounting Principles. The standards and rules that
accountants follow while recording and reporting financial activities.
Sarah uses her financial accounting knowledge to buy a rising stock at $500 per share with
annual dividends of $50. She sells the stock a year later for $560 per share. What is the annual
return (%)? correct answers 22%
A(n) ______________ is a future economic benefit owned or controlled by a company. correct
answers Asset
Lancer Corporation purchased 10 battery packs for $8 each and sold them to customers for $15
each. What is Lancer's total gross profit? correct answers $70
A(n) _____ is a decrease in net assets to generate revenue. correct answers Expense
Assets should be listed in order by __________________________ on the balance sheet. correct
answers Order of liquidity
Cost of sales refers to the cost of the merchandise that: correct answers Customers purchased
during the period.
Which of the following financial statements classify business activities into operating, investing,
and financing activities? correct answers Statement of cash flows
Lancer Company has been in business for two years. During the first year, it earned net income
of $45,000 and paid dividends of $10,000. During year two, the company had earnings of
$56,000 and paid dividends of $12,000. What is the balance in Lancer Company's retained
earnings at the end of year two? correct answers $79,000
What is the group called elected by the shareholders to make policy decisions? correct answers
Board of Directors
Net assets are defined as: correct answers Assets - Liabilities
The Hayes Corporation is a car dealer. A new car is received from the manufacturer during
September at a cost of $33,000. This vehicle is sold in October to a customer for $42,000. In
connection with this transaction, which of the following statements is correct? correct answers
The company will report cost of goods sold of $33,000.
, Which of the following accounts shows the difference between the lifelong earnings of a
company and its payments to owners? correct answers Retained Earnings
The SEC refers to: correct answers Securities and Exchange Commission.
Which of the following is the name for state laws, which govern financial reporting? correct
answers Blue Sky Laws
Account balances can change because of the passage of time. (T/F) correct answers True
Which of the following transactions will require an adjusting entry at the end of the year? correct
answers Received $12,000 rent for 6 months, including 2 months of the forthcoming year
The term accounts payable indicates amounts a company owes to its suppliers. (T/F) correct
answers True
Duggan Corporation paid $600 for insurance at the beginning of December. The payment
covered the months of December, January, and February. What should the balance be in the
prepaid insurance account at the end of December (December 31st) if Duggan's accountant
makes the correct adjusting entry? correct answers $400
Which of the following is the U.S. organization, which has ultimate responsibility for the
availability of complete and reliable information about every organization that issues publicly
traded securities? correct answers The SEC
Purchase of inventory on account will result in: correct answers Increase in Accounts Payable
Which is reported on the balance sheet as an asset? correct answers Prepaid Expense
Companies that do not issue stock on public exchanges are required to comply with state laws.
(T/F) correct answers True
An accrued expense is an expense which: correct answers has been incurred but not paid.
Saturn Corporation sold inventory costing $32,000 for $45,000 cash. Which of the following
statements is true of this transaction? correct answers Cost of goods sold increases by $32,000.
Which of the following transactions would have no effect (zero $ impact) on the amount of total
assets? correct answers Acquiring assets for cash
Elwood Company purchases a truck for $8,000, paying $2,000 cash and signing a note payable
for the remaining amount. Which of the following is true of this transaction? correct answers
Assets and liabilities will increase by $6,000.
