ACCT 2101 FINAL EXAM STUDY GUIDE CHAPTER 1 - 12 Questions with completed solutions

Chapter 1 1.The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) a. account payable. b. account receivable. c. revenue. d. expense. 2.The right to receive money in the future is called a(n) a. account payable. b. account receivable. c. liability. d. revenue. 3.Borrowing money is an example of a(n) a. delivering activity. b. financing activity. c. investing activity. d. operating activity. 4.Which activities involve putting the resources of the business into action to generate a profit? a. Delivering b. Financing c. Investing d. Operating 5.When expenses exceed revenues, which of the following is true? a. a net loss results b. a net income results c. assets equal liabilities d. assets are increased 6.The retained earnings statement shows all of the following except: a. The amounts of changes in retained earnings during the period. b. The causes of changes in retained earnings during the period. c. The time period following the one shown for the income statement. d. Beginning retained earnings on the first line of the statement. 7.Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries. Paid $60,000 to purchase office equipment. Paid $15,000 for utilities. Paid $6,000 in dividends. Collected $225,000 from customers. What was Jackson’s net cash provided by operating activities? a. $75,000 (--15000) b. $15,000 c. $90,000 d. $69,000 8.Which of the following financial statements is divided into major categories of operating, investing, and financing activities? a. The income statement. b. The balance sheet. c. The retained earnings statement. d. The statement of cash flows. 9.Ending retained earnings for a period is equal to: a. Beginning retained earnings + Net income + Dividends b. Beginning retained earnings – Net income – Dividends c. Beginning retained earnings + Net income – Dividends d. Beginning retained earnings – Net income + Dividends 10.To show how successfully your business performed during a period of time, you would report its revenues and expense in the a. balance sheet. b. income statement. ACCT 2101 FINAL EXAM STUDY GUIDE CHAPTER 1 - 12 c. statement of cash flows. d. retained earnings statement. 11.Net income results when a. Assets > Liabilities. b. Revenues = Expenses. c. Revenues > Expenses. d. Revenues < Expenses. 12.Henson Company began the year with retained earnings of $350,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson’s retained earnings at the end of the year? a. $510,000 b. $430,000 (+--40000) c. $810,000 d. $470,000 13.Finney Company began the year by issuing $20,000 of common stock for cash. The company recorded revenues of $185,000, expenses of $160,000, and paid dividends of $10,000. What was Finney’s net income for the year? a. $15,000 b. $35,000 c. $25,000 (-) d. $45,000 14.Gilkey Corporation began the year with retained earnings of $155,000. During the year, the company issued $210,000 of common stock, recorded expenses of $600,000, and paid dividends of $40,000. If Gilkey’s ending retained earnings was $165,000, what was the company’s revenue for the year? a. $610,000 b. $650,000 (+X--40000=, X=) c. $820,000 d. $860,000 15.The accounting equation may be expressed as: a. Assets = Stockholders’ Equity – Liabilities. b. Assets = Liabilities + Stockholders’ Equity. c. Assets + Liabilities = Stockholders’ Equity. d. Assets + Stockholders’ Equity = Liabilities. 16.Elston Company compiled the following financial information as of December 31, 2012: Revenues $420,000 Common stock 90,000 Equipment 120,000 Expenses 375,000 Cash 105,000 Dividends 30,000 Supplies 15,000 Accounts payable 60,000 Accounts receivable 45,000 Retained earnings, 1/1/12 225,000 Elston’s assets on December 31, 2012 are: a. $705,000 b. $510,000 c. $240,000 d. $285,000 (++15000+45000) 17.Benedict Company compiled the following financial information as of December 31, 2012: Revenues $280,000 Common stock 60,000 Equipment 80,000 Expenses 250,000 Cash 70,000 Dividends 20,000 Supplies 10,000 Accounts payable 40,000 Accounts receivable 30,000 Retained earnings, 1/1/12 150,000