Stockholders’ equity Total expensesOld Exam Packet – Acct 284 Fall 2009Exam 1 – Fall 2008Investing activities: a. involve day to day events like selling goods and services, which occur when running a business.b. involve the buying or selling of land, buildings, equipment, and other longer-term investments.c. only involve financial exchanges.d. All of these.Accumulated depreciation: a. is an expense account.b. is a liability account.c. is a regular asset account.d. is an asset contra-account.At the end of last year, the company's assets totaled $860,000 and its liabilities totaled $740,000. During the current year, the company's total assets increased by $58,000 and its total liabilities increased by $24,000. At the end of the current year, stockholders' equity was a. $154,000.b. $120,000.c. $34,000.d. $178,000.In the U.S., generally accepted accounting principles are established: a. directly by the 1933 Securities Act.b. by the Public Company Accounting Oversight Board.c. by the Financial Accounting Standards Board.d. by the Association of Certified Public Accountants.On March 1, 2006, the premium on a two-year insurance policy on equipment was paid amountingto $1,800. At the end of 2006 (end of the accounting period), the financial statements for 2006, would report a. Insurance expense, $750; Prepaid insurance $1,050. b. Insurance expense, $900; Prepaid insurance $900. c. Insurance expense, $1,800; Prepaid insurance $0. d. Insurance expense, $0; Prepaid insurance $1,800.Which of the following would be listed as a current liability? a. Cash in the bank.b. Notes payable due in two years.c. Supplies.d. Accounts payable.Which of the following describes the classification and normal balance of the retained earnings account? a. Asset, debitb. Stockholders' equity, creditc. Liability, creditd. Stockholders' equity, debit1. A company buys equipment for $500,000 and signs a promissory note for the full amount. How does this transaction affect the accounting equation? a. Assets:  Property and equipment,  Cash; Liabilities: no change; Stockholders' Equity: no change.b. Assets:  Property and equipment; Liabilities:  Notes payable; Stockholders' Equity; nochange.c. Assets:  Property and equipment; Liabilities: no change; Stockholders' Equity:  Retained earnings.d. Assets:  Property and equipment; Liabilities: no change; Stockholders' Equity:  Contributed capital.At the end of the month, the adjusting journal entry to record the use of supplies would include: a. An increase to supplies and an increase to expenses.b. A decrease to supplies and an increase to expenses.c. An increase to supplies and an increase to revenue.d. A decrease to supplies and a decrease to cash.2. According to the principle of conservatism, when faced with uncertainty about the value of an item, a company should use the measure that avoids: a. overstating assets and liabilities.b. overstating assets and understating liabilities.c. understating assets and overstating liabilities.d. understating assets and liabilities.Which of the following is not considered to be a liability?a. accounts payable b. unearned revenuec. wages payabled. cost of goods soldCy’s Bar and Grill has $10,000 in utilities expense during the year. At the beginning of the year, Cy’s had utilities payable amounting to $520. At the end of the year, utilities payable totaled $470.What amount of cash did Cy’s pay for utilities during the year? (Hint: use a T-account of utilities payable)a. $9,950b. $10,000c. $10,050d. $10,990During 2007, Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid in January 2008. Transaction analysis of operating expenses for 2007, should reflect only the following a. decrease stockholders' equity, $75,000; decrease assets, $75,000. b. decrease assets, $100,000; decrease stockholders' equity, $100,000. c. decrease assets, $100,000; increase liabilities, $25,000; decrease stockholders' equity, $100,000. d. decrease stockholders' equity, $100,000; decrease assets, $75,000; increase liabilities, $25,000. The primary objective of financial reporting is to:a. provide accurate historical information.b. provide useful information to external decision makers.c. provide operating information to managers.d. meet legal requirements.Adjusting entries:a. always affect one balance sheet account and one income statement account.b. never involve cash.c. are necessary to get revenues and expenses into the proper time periods.d. all of the above.Primary responsibility for the information in a corporation's financial statements rests with a. the shareholders of the corporation. b. the managers of the corporation. c. the Securities and Exchange Commission. d. the certified public accountant who audited the financial statements. Failure to make an adjusting entry to recognize accrued salaries payable would cause ana. understatement of expenses and liabilities and an overstatement of stockholders' equity.b. overstatement of expenses and liabilities.c. understatement of expenses, liabilities and stockholders' equity.d. understatement of assets and stockholders' equity.One of the disadvantages of a corporation when compared to a partnership is thata. the stockholders have limited liability.b. the stockholders are treated as a separate legal entity from the corporation.c. the corporation and its stockholders are subject to double taxation of dividends.d. the corporation provides continuity of life.Brown Corporation reported the following amounts at the end of the first year of operations: contributed capital $20,000; total revenue $95,000; total assets $85,000, no dividends, and total liabilities $35,000. Stockholders’ equity and total expenses would be:Stockholders’ equity Total expensesa. $60,000 $75,000b. $80,000 $40,000c. $50,000 $65,000d. $70,000 $85,000Which of the following characteristics of accounting allows users to examine the financial results of one company over an extended period of time?a. relevanceb. reliabilityc. comparabilityd. consistencyExam 2 – Fall 20081. Cyclone Corporation reports the following on its most recent income statement:Cost of goods sold……..$800,000Operating expenses…… 150,000Pretax income…………. 250,000Assuming there are no “other revenues and expenses” and that the company faces a 30% tax rate, what is the amount of net sales and