Grading Summary These are the automatically computed results of your exam Grades for essay questions and comments from your instructor are in the Details section below Date Taken Time Spent Points Received Question Type Multiple Choice Essay Grade Details All Questions Page 1 2 3 1 Question 150 150 100 Of Questions Correct 30 2 30 N A TCO A B C External users want answers to all of the following questions except Student Answer Is the company earning satisfactory income Will the company be able to pay its debts as they come due Did the company use a budget to plan its expenses How does the company compare in profitability with competitors Instructor Explanation Chapter 1 page 6 Points Received 3 of 3 Comments 2 Question Student Answer TCO C Debt securities sold to investors that must be repaid at a particular date some years in the future are called accounts payable notes receivable taxes payable bonds payable Instructor Explanation Chapter 1 page 9 Points Received 3 of 3 Comments 3 Question TCO C Which activities involve putting the resources of the business into action to generate a profit Student Answer Instructor Explanation Chapter 1 page 10 Points Received 3 of 3 Comments Delivering Financing Investing Operating a revenue an expense a liability an asset Instructor Explanation Chapter 1 page 10 Points Received 3 of 3 Comments 4 Question Student Answer TCO A The cost of assets consumed or services used is also known as 5 Question TCO C Finley Company recorded the following cash transactions for the year Paid 90 000 for salaries Paid 40 000 to purchase office equipment Paid 10 000 for utilities Paid 4 000 in dividends Collected 150 000 from customers What was Finley s net cash provided by operating activities Student Answer 50 000 10 000 60 000 46 000 Instructor Explanation 150 000 90 000 10 000 50 000 Chapter 1 page 10 Points Received 3 of 3 Comments 6 Question Student Answer TCO A In a classified balance sheet assets are usually classified as current assets long term assets property plant and equipment and tangible assets current assets long term investments property plant and equipment and common stocks current assets long term investments and tangible assets current assets long term investments property plant and equipment and intangible assets Instructor Explanation Chapter 2 page 49 Points Received 3 of 3 Comments 7 Question TCO A An intangible asset Student Answer may have the capacity to earn revenue for its owner is worthless because it has no physical substance is converted into a tangible asset during the operating cycle cannot be reported on the balance sheet because it lacks physical substance Instructor Explanation Chapter 2 page 51 Points Received 3 of 3 Comments 8 Question TCO A These are selected account balances on December 31 2007 Land location of the corporation s office building 200 000 Land held for future use 300 000 Corporate Office Building 1 200 000 Inventory 400 000 Equipment 900 000 Office Furniture 200 000 Accumulated Depreciation 600 000 What is the total NET amount of property plant and equipment that will appear on the balance sheet Student Answer 1 900 000 2 600 000 2 200 000 Instructor Explanation Gross cost of plant assets utilized accumulated depreciation Chapter 2 page 51 3 200 000 Points Received 3 of 3 Comments 9 Question Student Answer TCO B For 2010 Ford Corporation reported net income of 15 000 net sales 200 000 and average share outstanding 6 000 There were no preferred stock dividends What was the 2010 earnings per share 2 33 0 10 2 50 33 34 207 000 66 000 348 000 273 000 Instructor Explanation 15 000 6 000 2 50 Chapter 2 page 56 Points Received 3 of 3 Comments 10 Question Student Answer TCO B Liondale Corporation had beginning retained earnings of 2 292 000 and ending retained earnings of 2 499 000 During the year they issued common stock totaling 141 000 There were no dividends issued What was their net income for the year Instructor Explanation 2 499 000 2 292 000 207 000 Chapter 2 page 57 Points Received 3 of 3 Comments 11 Question TCO D Is the purchase of equipment treated as an expense at the time of purchase Why or why not Student Answer No GAAP requires that 10 of the cost be expensed each year This minimizes attempts to mislead financial statement users Yes the matching principle requires that the cost be expensed in the period of purchase No the cost needs to be allocated to the years of expected use Yes the actual life of the asset is not known thus there is no acceptable way to allocate the cost Instructor Explanation Chapter 3 page 105 Points Received 3 of 3 Comments 12 Question TCO D The left side of an account is Student Answer blank a description of the account the debit side the balance of the account Instructor Explanation Chapter 3 page 111 Points Received 3 of 3 Comments 13 Question Student Answer TCO D The classification and normal balance of the dividend account is a revenue with a credit balance an expense with a debit balance a liability with a credit balance under stockholders equity with a debit balance Instructor Explanation Chapter 3 page 116 Points Received 3 of 3 Comments 14 Question TCO D In recording an accounting transaction in a double entry system Student Answer the number of debit accounts must equal the number of credit accounts there must always be entries made on both sides of the accounting equation the amount of the debits must equal the amount of the credits there must only be two accounts affected by any transaction Instructor Explanation Chapter 3 page 103 Points Received 3 of 3 Comments 15 Question Student Answer TCO D Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner Dividends payable and rent expense Repair expense and notes payable Prepaid insurance and advertising expense Service revenues and equipment Instructor Explanation Chapter 3 page 116 Points Received 3 of 3 Comments Page 1 2 3 Page 1 2 3 1 Question Student Answer TCO E The time period assumption states that a transaction can only affect one period of time estimates should not be made if a transaction affects more than one time period adjustments to the enterprise s accounts can only be made in the time period when the business terminates its operations the economic life of a business can be divided into artificial time Instructor Explanation Chapter 4 page 164 periods Points Received 3 of 3 Comments 2 Question Student Answer TCO E In a merchandising business