Fin621 Quiz 5 July 2010

Question # 1 of 15 ( Start time: 03:06:44 PM )  Total Marks: 1 

Which of the following is NOT the part of the stockholder’s equity? 

Select correct option:  

1.      Paid-in-Capital

2.      Additional Paid-in-Capital

3.      Gross profit      

4.      Retained Earnings

Question # 2 of 15 ( Start time: 03:07:31 PM )  Total Marks: 1 

Which of the following would NOT represent the cash outflows for the business? 

Select correct option:  

1.      Purchase of building for cash

2.      The sale of land for cash 

3.      Retirement of long term debt

4.      The payment of cash for dividends

Question # 3 of 15 ( Start time: 03:08:13 PM )  Total Marks: 1 

Which of the following statement is NOT true? 

Select correct option:  

1.      Financial statements may be prepared soon after the adjusted trail balance

2.      The owner’s equity is not up to the date until the closing entries are posted

3.      Adjusting entries are prepared before the financial statements are prepared

4.      In the accounting cycle, closing entries are made before the adjusting entries  page#36

Question # 4 of 15 ( Start time: 03:09:40 PM )  Total Marks: 1 

Current assets are those assets which management intends to convert into cash or consume within: 

Select correct option:  

1.      The operating cycle

2.      One year

3.      The longer of operating cycle or one year

4.      The shorter of operating cycle or one year

Question # 5 of 15 ( Start time: 03:09:59 PM )  Total Marks: 1 

Adjusting entries are required for which of the following accounts? 

Select correct option:  

1.      Income Summary accounts

2.      Revenue and expense accounts

3.      All types of accounts

4.      Assets and liabilities accounts

Question # 6 of 15 ( Start time: 03:10:22 PM )  Total Marks: 1 

Which of the following is the proper journal entry to record Ransom Company's billing of clients for Rs. 500 of services rendered? 

Select correct option:  

1.      Debit Cash 500; Credit Accounts Receivable 500

2.      Debit Accounts Receivable 500; Service Revenue 500

3.      Debit Accounts Receivable 500; Credit Capital Stock 500

4.      Cash 500; Credit Service Revenue 500

Question # 7 of 15 ( Start time: 03:10:54 PM )  Total Marks: 1 

How many types of audit certificate are there? 

Select correct option:  

1.      Two

2.      Three

3.      Four 

4.      Five

Question # 8 of 15 ( Start time: 03:12:16 PM )  Total Marks: 1 

Inventory accounts should be classified in which section of a balance sheet? 

Select correct option:  

1.      Current assets

2.      Investments

3.      Property, plant, and equipment

4.      Intangible assets

Question # 9 of 15 ( Start time: 03:12:49 PM )  Total Marks: 1 

Which of the following is not true about the “Account”? 

Select correct option:  

1.      Accounts are only prepared by the business entities

2.      Account always reflects the amount of the single transaction only

3.      Account is effected both by economic and non economic events

4.      All of the given options

Question # 10 of 15 ( Start time: 03:13:30 PM )  Total Marks: 1 

In simple words book value would be the amount of money that a holder of a common share would get if a company were to: 

Select correct option:  

1.      Consolidate

2.      Merged with another company

3.      Acquired by another company

4.      Liquidate

Question # 11 of 15 ( Start time: 03:14:32 PM )  Total Marks: 1 

Which of the following is NOT the part of annual report? 

Select correct option:  

1.      Financial statements

2.      Auditor’s report

3.      Five year summary

4.      Future investments report 

Question # 12 of 15 ( Start time: 03:15:18 PM )  Total Marks: 1 

Equipment costing Rs. 3,000 with accumulated depreciation of Rs. 2,125 is exchanged for another asset with a fair value of Rs. 625. The exchange has commercial substance. How much is the gain or loss on this transaction? 

Select correct option:  

1.      A gain of Rs. 250 should be recognized

2.      A loss of Rs. 250 should be recognized

3.      A loss of Rs. 500 should be recognized

4.      No gain or loss should be recognized.

Question # 13 of 15 ( Start time: 03:15:50 PM )  Total Marks: 1 

Which of the following is NOT a financial asset? 

Select correct option: 

1.      Marketable securities

2.      Receivables 

3.      Inventory 

4.      Short-term investments

Question # 14 of 15 ( Start time: 03:16:39 PM )  Total Marks: 1 

The basic purpose of financial statements is to assist users in evaluating the________ 

Select correct option:  

1.      Financial position

2.      Profitability of an organization

3.      Future prospects 

4.      All of the given options 

Question # 15 of 15 ( Start time: 03:17:03 PM )  Total Marks: 1 

Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings? 

Select correct option:  

1.      Net loss

2.      Net income

3.      Dividends

4.      Investments by stockholders