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Exam 1: Accounting in Action

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Question 121

Multiple Choice

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Stahl Consulting started the year with total assets of $60,000 and total liabilities of $15,000. During the year, the business recorded $48,000 in catering revenues and $30,000 in expenses. Stahl issued stock of $9,000 and paid dividends of $15,000 during the year. The stockholders' equity at the end of the year was

A) $33,000.
B) $54,000.
C) $57,000.
D) $63,000.

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Question 122

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In order to increase comparability, in recent years, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

A) convergence
B) monetary unit assumption
C) the cost principle
D) the fair value principle

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Question 123

Multiple Choice

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The accounting process is correctly sequenced as

Which list below best describes the major services performed by public accountants?

Wilco Legal Eagles Company entered into the following transactions during March 2018. 1. Purchased office equipment for $23,000 from Business Equipment, Inc. on account. 2. Paid $3,000 cash for March rent on office furniture. 3. Received $15,000 cash from customers for legal work billed in February. 4. Provided legal services to Amy Construction Company for $3,500 cash. 5. Paid Northern States Power Co. $2,700 cash for electric usage in March. 6. Stockholders' invested an additional $32,000 in the business. 7. Paid Business Equipment, Inc. for the office equipment purchased in (1) above. 8. Incurred advertising expense for March of $1,900 on account. Instructions Indicate with the appropriate letter whether each of the transactions above results in: (a) an increase in assets and a decrease in assets. (b) an increase in assets and an increase in stockholders' equity. (c) an increase in assets and an increase in liabilities. (d) a decrease in assets and a decrease in stockholders' equity. (e) a decrease in assets and a decrease in liabilities. (f) an increase in liabilities and a decrease in stockholders' equity. (g) an increase in stockholders' equity and a decrease in liabilities.

Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation.

A proprietorship is a business

Dividends ________________ stockholders' equity but are not expenses.

Bright Eyes Downtown Diner received a bill of $600 from the Jronand Wine Advertising Agency. The owner, A. A. Bondy, is postponing payment of the bill until a later date. The effect on specific items in the basic accounting equation is

Interpretation of reported information involves each of the following except

Accounting communicates financial information about a business enterprise to both internal and external users.

All of the financial statements are for a period of time except the

John and Sam met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a

All of the following statements are correct except

The Constantine Company had the following assets and liabilities on the dates indicated. Constantine began business on January 1, 2017, with an investment of $100,000. Instructions From an analysis of the change in stockholders' equity during the year, compute the net income (or loss) for: (a) 2017, assuming Constantine's dividends were $45,000 for the year. (b) 2018, assuming Constantine made an additional investment of $50,000 and paid no dividends in 2018. (c) 2019, assuming Constantine made an additional investment of $15,000 and paid dividends of $40,000 in 2019.

During the year 2018, Dilego Company earned revenues of $90,000, had expenses of $56,000, purchased assets with a cost of $10,000 and paid dividends of $6,000. Net income for the year is

An analysis of the transactions made by White Stripes & Co., a law firm, for the month of July is shown below. Each increase and decrease in stockholders' equity is explained. Instructions (a) Determine how much stockholders' equity increased for the month. (b) Compute the amount of net income for the month.

The common characteristic possessed by all assets is

Owners enjoy limited liability in a

Which of the following techniques are not used by accountants to interpret and report financial information?