- Which of the following is the most appropriate and modern definition of accounting?
- The interconnected network of subsystems necessary to operate a business.
- The information system that identifies, records, and communicates the economic events of an organization to interested users.
- A means of collecting information.
- Electronic collection, organization, and communication of vast amounts of information.
2. Which of the following external groups uses accounting information to determine whether the company can pay its obligations?
- Marketing managers
- Investors in common stock
- Chief Financial Officer
- Creditors
3. Which of the following groups uses accounting information to determine whether the company’s net income will result in a stock price increase?
- Marketing managers
- Chief Financial Officer
- Investors in common stock
- Creditors
4. Wildhorse Co. began the year by issuing $107000 of common stock for cash. The company recorded revenues of $1177000, expenses of $963000, and paid dividends of $72000. What was Wildhorse’s net income for the year?
- $321000
- $142000
- $214000
- $249000
5. If total liabilities decreased by $69000 and stockholders’ equity increased by $10000 during a period of time, then total assets must change by what amount and direction during that same period?
- $69000 increase
- $59000 decrease
- $59000 increase
- $79000 increase
6. The balance sheet
- reports the assets, liabilities, and stockholders’ equity at a specific date.
- presents the revenues and expenses for a specific period of time.
- summarizes the changes in retained earnings for a specific period of time.
- reports the changes in assets, liabilities, and stockholders’ equity over a period of time.
7. In a classified balance sheet, assets are usually classified as
- current assets; long-term assets; property, plant, and equipment; and intangible assets.
- current assets; long-term investments; property, plant, and equipment; and common stocks.
- current assets; long-term investments; tangible assets; and intangible assets.
- current assets; long-term investments; property, plant, and equipment; and intangible assets.
8. Liabilities are generally classified on a balance sheet as
- present liabilities and future liabilities.
- small liabilities and large liabilities.
- tangible liabilities and intangible liabilities.
- current liabilities and long-term liabilities.
- Use the following data to determine the total dollar amount of assets to be classified as current assets.
- Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.