Week 1 questions
1 In which forms of business organization are the owners personally liable for all the debts of the business?
Sole proprietorships and corporationsSole proprietorships and partnershipsPartnership and corporationAll of the answer choices are correct
2 Which of the following is not an external user of accounting data?
CustomersEconomic plannersChief Financial OfficerLabor unions
3 The financial statements for Harold Corporation contained the following information:
Accounts receivable$ 5,000Sales revenue75,000Cash15,000Salaries and wages expense20,000Rent expense10,000
How much was Harold’s net income?
$45,000$15,000$65,000$60,000
4 In which of the following sequences are the financial statements usually prepared?
Balance sheet, statement of cash flows, income statement and retained earnings statement.Income statement, retained earnings statement, balance sheet, and statement of cash flows.Income statement, balance sheet, retained earnings statement, and statement of cash flows.Balance sheet, retained earnings statement, statement of cash flows, and income statement.
5 Which of the following are not considered to be primary users of financial statements in countries outside the U.S.?
Central government plannersTax authoritiesEconomic advisorsPrivate investors
6 For 2017, Stoneland Corporation reported net income, $24,000; net sales, $400,000; and average shares outstanding, 6,000. There were no preferred stock dividends. How much was the 2017 earnings per share
$4.00$0.06$16.67$66.67
7 The following ratios are available for Leer Inc. and Stable Inc.
Current RatioDebt to Assets RatioEarnings per ShareLeer Inc.2:175%$3.50Stable Inc.1.5:140%$2.75
Compared to Stable Inc., Leer Inc. has
lower liquidity, higher solvency, and higher profitability.higher liquidity, lower solvency, and higher profitability.higher liquidity, higher solvency, but profitability cannot be compared based on information provided.higher liquidity and lower solvency, but profitability cannot be compared based on information provided.
8 At December 31, 2017, Shorts Company had retained earnings of $2,184,000. During 2017, the company issued stock for $98,000, and paid dividends of $34,000. Net income for 2017 was $402,000. How much was the retained earnings balance at the beginning of 2017?
$1,816,000$2,454,000$1,914,000$2,552,000
9Which of the following ratios measures the ability of the company to survive over a long period of time?
Current ratiosLiquidity ratiosProfitability ratiosSolvency ratios
10 What are the accounting rules that have substantial authoritative support and are recognized as a general guide for financial reporting purposes in the U. S.?
Generally accepted accounting standardsGenerally accepted accounting principlesGenerally accepted auditing principlesGeneral accounting principles