Question 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
Question 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
Question 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
Question 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
Question 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
Question 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
Question 7. A transaction is an event that will causee changes in a firm's resources:
a. True
b. False
Question 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
Question 9. A balance among the elements of the accounting equation must maintained at all times:
True or False
Question 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