#1. At the end of an accounting period, the amount of net
income earned by a company is transferred to the balance sheet and reported
under which one of the following categories?
a. owner’s equity
b. liabilities
c. assets
d. all of the above
#2. Shari started a computer software firm by investin
$20,000 of her own money. She spent 3/4 of it on office furniture, fixtures for
the business. After borrowing $8,000 from the First National Bank, she spent
1/2 of these funds on computer hardware. At this point, what balances should be
recorded in her accounting system for total assets and total expenses?
a. Total assets $28,000 Total Expenses $16,000
b. Total Assets $12,000 Total Expenses $16,000
c. Total Assets $16,000 total Expenses $0
d. Total Assets $28,000 Total Expenses $0
#3. Net cash flow is generally NOT thought to be a valid
measure of an organization’s performance for a period because it:
a. is usually smaller than the amount of net income
b. includes the results of activites not related to
operations
c. focuses only on the net change in owners equity
d. violates the periodic measurement concept
#4. Which of the following is an operating activity?
a. purchases of $10,000 of inventory from the suppliers
b. payoff of a bank loan of $6,000
c. sale of fully depreciated assets for $1500 previously
used in operations
d. purchase of new equipment for $80,000 to be used in
operations
#5. Net income can be expressed as
a. the excess of revenues over expenses that a business
records during a period
b. the excess of expenses over revenue that a business
records during a period
c. the amount of sales that a business reports during a
period
d. the amount of resources created by a business during a
period
#6. Which of the following shows a typical order of the
types of activities in the transformation process that takes place in the
organizations?
a. operating, investing, financing
b. financing, investing, operating
c. investing, operating, financing
d. operating, financing, investing
#7. A transaction is an event that will causee changes in a
firm’s resources:
a. True
b. False
#8. At the end of April 2007 the Clean Water Company
received $270,000 from customers for water used during March 2007. Clean
Water’s employees were paid $70,000 during April and the company paid $10,000
in rent on their building and $4,000 in utility cost during the month.
Determine profit from operations for the month of April 2007?
NET PROFIT
a. $200,000
b. $210,000
c. $186,000
d. $190,000
9. A balance among the elements of the accounting equation
must maintained at all times:
True or False
#10. Merchandise inventory costing $20,000 was sold to
customers for $28,000 cash. What amount of revenue and cash flow resulted from
this transaction?
a. REVENUE $20,000 CASH FLOW $28,000
b. REVENUE $28,000 CASH FLOW $28,000
c. REVENUE $28,000 CASH FLOW $8,000
d. REVENUE $8,000 CASH FLOW $20,000
e. REVENUE $0 CASH FLOW $0
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