ACC 290 Week 2 Chapter 1,2,3 Orion

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ACC 290 Chapter 1 Orion WileyPlus Build your Proficiency

Q 1.1: What is the primary purpose of the statement of cash flows?

Q 1.2: Which financial statement summarizes the financial position
of a company?
Q 1.3: Which financial statement provides information for a specific
point in time?
Q 1.4: The reports revenues and expenses and resulting net income
or less for a period in time.
Q 1.5: The income statement does not report cash received from the
sale of stock because it is not considered revenue.
Q 1.6: Torres Travels stockholders' equity at the beginning of March
2014 was $200,000. During the month, the company earned net
income of $50,000 and paid dividends of $10,000. At the end of
March 2014, what is the amount of stockholders' equity?
Q 1.7: According to the basic accounting equation, must equal
liabilities plus stockholders' equity on the balance sheet.
Q 1.8: Tonelli Trucking buys a $65,000 truck on credit. Which
financial statement will be affected by this transaction?
Q 1.9: Which of the following financial statements would be included
in an annual report?Q 1.10: An independent audit of an annual
report must be completed by a
Q 1.11: An owner who wants to have limited liability should form
which type of business enterprise?
Q 1.12: Which of the following statements about accounting
information is true?
Q 1.13: Which of the following would NOT be considered internal
users of accounting information for a company?
Q 1.14: Ethics are the principles of conduct that are used to judge
whether decisions are
Q 1.15: When a company borrows money from a bank to purchase
equipment, this action is called
Q 1.16: Companies can borrow money if they need a source of
outside funds. Borrowing money is
Q 1.17: Purchasing plant assets that a company needs in order to
operate is called
Q 1.18: The main purpose of operating activities is to
Q 1.19: Which of the following components supplement the financial
statements in an annual report?
Q 1.20: Which of the following is true of a partnership?

ACC 290 Chapter 1 Orion

Question 1 Corporations generally receive more favorable tax

treatment than sole proprietorships and partnerships.
Question 2 In which forms of business organization are the owners
personally liable for all the debts of the business?
Question 3 Which of the following is not an external user of
accounting data?
Question 4 Which of the following is required as a result of SOX?
Question 5 Which of the following is not one of the three primary
business activities?
Question 6 In terms of the principal types of business activities,
paying salaries expense is an example of
Question 7 How much was Harolds net income?
Question 8 In which of the following sequences are the financial
statements usually prepared?
Question 9 What section of a cash flow statement shows the cash
spent on new equipment during the past accounting period?
Question 10 Which of the following are not considered to be
primary users of financial statements in countries outside the U.S.?

ACC 290 Chapter 2 Orion WileyPlus Build your Proficiency

Q 2.1: Which of the following are current liabilities? Select all that
apply.
Q 2.2: Long-term investments include which of the following? Select
all that apply.
Q 2.3: The operating cycle of a company is
Q 2.4: ________ measure the ability of a company to survive over a
long period of time.
Q 2.5: measures the net income earned on each share of common
stock.
Q 2.6: Earnings per share is considered a measure of a company's
Q 2.7: A company is more likely to
Q 2.8: The difference between current assets and current liabilities
Q 2.9: The debt to assets ratio measures the percentage of total
financing provided by
Q 2.10: Because is a measure of a company's ability to turn assets
into cash, it is of particular interest to short-term creditors
Q 2.11: Free cash flow describes the net cash
Q 2.12: A company reported $50,000 net cash provided by operating
activities. It invested $1,000 in equipment and paid $1,000 in
dividends. Its free cash flow is
Q 2.13: Which of the following questions would be answered by
generally accepted accounting principles? Select all that apply.
Q 2.14: means that information that is presented is complete,
neutral, and free from error.
Q 2.15: Which principle would a company be violating if it withheld
information that would make a difference to users of financial
statements?
Q 2.16: According to the historical cost principle, if an asset costs
$50,000 when it was purchased, it would be recorded at its ________
over the time the asset is held.
Q 2.17: Which of the following can affect stockholders' equity?
Select all that apply.
Q 2.18: Which of the following statements is true?
Q 2.19: What does a current ratio of 1.20:1 mean?
Q 2.20: Earnings per share measures the net income earned

ACC 290 Chapter 2 Orion

 Question 1 Current assets are economic resources that are expected
to be converted to cash or used up by the business within one year or
the normal operating cycle, whichever is shorter.
Question 2 A company purchased a tract of land on which it expects
to build a production plant on in approximately five years. During the
five years before construction, the land will be idle. In what
classification should the land be reported?
Question 3 Current liabilities are $10,000, long-term liabilities are
$20,000, common stock is $50,000, and retained earnings totals
$70,000. How much is total stockholders' equity?
Question 4 For 2014, 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 2014
earnings per share?
Question 5 in millions
2011 2010
Net income
$1,277 $1,317
Preferred dividends
-0- -0-
Shares outstanding at beginning
of year 419 414
Shares outstanding at end of
year 393 419
At December 31, 2014, Shorts Company had retained earnings of
$2,184,000. During 2014, the company issued stock for $98,000, and
paid dividends of $34,000. Net income for 2014 was $402,000. How
much was the retained earnings balance at the beginning of 2014?

Question 6 The current ratio measures liquidity. The debt to assets

ratio measures solvency. We dont know how many outstanding shares
each company has, so we cannot compare profitability.

Current Ratio Debt to Assets Ratio Earnings per Share

Leer Inc. 2:1 75% $3.50
Stable Inc. 1.5:1 40% $2.75

Compared to Stable Inc., Leer Inc. has

Lllustation 2-15

Question 1 Which of the following ratios measures the ability of the

company to survive over a long period of time?
Question 2 For what purpose might a company use free cash flow?
Question 3 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.?
Question 4 A company can change to a new method of accounting if
management can justify that the new method results in terms of

ACC 290 Chapter 3 Orion WileyPlus Build your Proficiency

Q 3.1: Which of the following would be considered an economic

event that requires an accounting transaction?
Q 3.2: If an asset is increased, there must be a corresponding in
another asset.
Q 3.3: What is a T-account?
Q 3.4: Which of the following statements about credits is true?
Q 3.5: Increases in liabilities must be entered on the right or
Q 3.6: An account shows a balance if the total of the debit amounts
exceeds the credits.
Q 3.7: How must each transaction be recorded in the double-entry
system?
Q 3.8: The recording process in a journal is useful because
________. Select all that apply.
Q 3.9: Which of the following describes the standard form of a
journal entry?
Q 3.10: Which of the following is true in journalizing?
Q 3.11: What is the entire group of accounts maintained by a
company called?
Q 3.12: What is the usual order of accounts in the general ledger?
Q 3.13: The process of transferring journal entry amounts to ledger
accounts is called.
Q 3.14: The first step in transferring journal entry amounts to ledger
accounts involves
Q 3.15: On January 14, Welsford Agency purchased supplies of $500
on account. The entry to record the purchase will include
Q 3.16: What is a list of accounts and their balances at a given time
called?
Q 3.17: Which of the following steps is NOT included in preparing a
trial balance?
Q 3.18: Journalizing with analyzing source documents to determine
the effect of the transaction on the journal.
Q 3.19: A trial balance may balance even when which of the
following occurs? Select all that apply.
Q 3.20: When a company performs a service, even if it has not been
paid for this service, it still creates

ACC 290 Chapter 3 Orion

Question 1 Correct! The costs that a firm incurs when operating its
business cause retained earnings to decrease.Expenses decrease
retained earnings.
Question 2 Correct! Since assets only decreased $50,000, and
liabilities decreased by $90,000, stockholders equity has to increase
by $40,000 to keep the accounting equation balanced.During 2014,
Gibson Company assets decreased $50,000 and its liabilities
decreased $90,000. Its stockholders equity
Question 3 Correct! Payment of dividends reduces both cash and
retained earnings. Payment of a dividend
 Question 4 An account is a part of the financial information system
and is described by all except which one of the following?
Question 5 Which accounts normally have debit balances?
Question 6 Which of the following is the correct sequence of
events?
Question 7 Where is the first place every transaction is recorded?
Question 8 What type of account is unearned revenue?
Question 9 Correct! Accounts will appear in the trial balance in the
same order that they appear in the ledger.Accounts are listed on the
trial balance in

Practice Question 51

Question 1 Which of the following is not one of the primary types of

the financing activities in the statement of cash flows?