Select the appropriate response:
1. The accounting profession can be divided into three major categories; specifically, the practice of public accounting, private accounting, and governmental accounting. A somewhat unique and important service of public accountants is:
a. Financial accounting.
b. Managerial accounting.
c. Auditing.
d. Cost accounting.
2. The primary private sector agency that oversees external financial reporting standards is the:
a. Financial Accounting Standards Board.
b. Federal Bureau of Investigation.
c. General Accounting Office.
d. Internal Revenue Service.
3. Which of the following equations properly represents a derivation of the fundamental accounting equation?
a. Assets + liabilities = owner's equity.
b. Assets = owner's equity.
c. Cash = assets.
d. Assets - liabilities = owner's equity.
4. Wilson Company owns land which cost $100,000. If a "quick sale" of the land was necessary to generate cash, the company feels it would receive only $80,000. The company continues to report the asset on the balance sheet at $100,000. This is justified under which of the following concepts?
a. The historical-cost principle.
b. The objectivity principle.
c. Neither of the above.
d. Both "a" and "b".
5. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?
a. Net loss.
b. Net income.
c. Dividends.
d. Investments by stockholders.
6. Which of these items would be accounted for as an expense?
a. Repayment of a bank loan.
b. Dividends to stockholders.
c. The purchase of land.
d. Payment of the current period's rent.
7. Which of the following transactions would have no impact on stockholders' equity?
a. Purchase of land from the proceeds of a bank loan.
b. Dividends to stockholders.
c. Net loss.
d. Investments of cash by stockholders.
8. Which of the following would not be included on a balance sheet?
a. Accounts receivable.
b. Accounts payable.
c. Sales.
d. Cash.
9. Remington provided the following information about its balance sheet:
Cash $ 100
Accounts receivable 500
Stockholders' equity 700
Accounts payable 200
Bank loans 1,000
Based on the information provided, how much are Remington's liabilities?
a. $200.
b. $900.
c. $1,200.
d. $1,700.
10. Gerald had beginning total stockholders' equity of $160,000. During the year, total assets increased by $240,000 and total liabilities increased by $120,000. Gerald's net income was $180,000. No additional investments were made; however, dividends did occur during the year. How much were the dividends?
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