Balance Sheet and Separate Legal Entity

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ACCT 1010 Fall 2013 Ch 1 Quiz
Name: __________________________ Date: _____________

1.The proprietorship form of business organization
A)must have at least two owners in most states.
B)generally receives favorable tax treatment relative to a corporation. C)combines the records of the business with the personal records of the owner. D)is classified as a separate legal entity.

2.The retained earnings statement would not show
A)the retained earnings beginning balance.
B)revenues and expenses.
C)dividends.
D)the ending retained earning balance.

3.Net income will result during a time period when:
A)assets exceed liabilities.
B)assets exceed revenues.
C)expenses exceed revenues.
D)revenues exceed expenses.

4.Which of the following is not a common way that managers use the balance sheet? A)To analyze the balances of assets, liabilities, and stockholders' equity throughout the accounting period B)To determine if the cash balance is sufficient for future needs C)To analyze the balance between debt and common stock financing D)To analyze the balance of accounts receivable on the last day of the accounting period

5.A business organized as a separate legal entity is a
A)corporation.
B)proprietor.
C)government unit.
D)partnership.

6.The right to receive money in the future is called a(n)
A)account payable.
B)account receivable.
C)liability.
D)revenue.

7.Gibson Company recorded the following cash transactions for the year: Paid $180,000 for salaries.
Paid $80,000 to purchase office equipment.
Paid $20,000 for utilities.
Paid $8,000 in dividends.
Collected $300,000 from customers.
What was Gibson's net cash provided by operating activities? A)$100,000
B)$20,000
C)$120,000
D)$92,000

8.If total liabilities increased by $45,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period? A)$60,000 decrease

B)$60,000 increase
C)$75,000 increase
D)$90,000 increase

9.The primary purpose of the statement of cash flows is to report A)a company's investing transactions.
B)a company's financing transactions.
C)information about cash receipts and cash payments of a company. D)the net increase or decrease in cash.

10.If total liabilities decreased by $45,000 and stockholders' equity decreased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period? A)$60,000 increase

B)$30,000 decrease
C)$60,000 decrease
D)$30,000 increase

11.Which type of corporate information is readily available to investors? A)financial comparison of operating alternatives
B)marketing strategies for a product that will be introduced in eighteen months C)forecasts of cash needs for the upcoming year
D)amount of net income retained in the business

12.All of the following are advantages for choosing a proprietorship for a business except: A)A proprietorship is a simple form of business to set up.
B)A proprietorship gives the owner control of the business. C)Proprietorship receive more favorable tax treatment.
D)Transfer of ownership is easily achieved through stock sales.

13.The management discussion and analysis (MD&A) section of the annual report covers all of the following aspects except: A)The ability of the company to pay near-term obligations.
B)The certification criteria of the company's auditors.
C)The company's ability to fund operations and expansion.
D)The results of the company operations.

14.Which financial statement is prepared first?
A)Balance sheet
B)Income statement
C)Retained earnings statement
D)Statement of cash flows

15.A business organized as a corporation
A)is not a separate legal entity in most states.
B)requires that stockholders be personally liable for the debts of the business. C)is owned by its...
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