Accounting Notes Essay

685 words - 3 pages


8. Which of the following statements are true regarding the balance sheet?
1. One cannot determine the true fair market value of a company by reviewing its balance sheet.
2. Certain internally generated assets, such as a trademark, are not reported on a company's balance sheet.
3. A balance sheet shows only the ending balances, in a summarized format, of all balance sheet accounts in the accounting system as of a particular date.
a. None are true.
b. Statements 1 and 2 only are true.
c. Statements 2 and 3 only are true.
d. All statements are true.

10. Which of the following is not a financing activity on the statement of cash flows?
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Transaction analysis of operating expenses for 2011 should reflect only the following:
a. Decrease stockholders' equity, $150,000; decrease assets, $150,000.
b. Decrease assets, $200,000; decrease stockholders' equity, $200,000.
c. Decrease stockholders' equity, $200,000; decrease assets, $150,000; increase liabilities, $50,000.
d. Decrease assets, $200,000; increase liabilities, $50,000; decrease stockholders' equity, $150,000.
e. None of the above is correct.

7. Which of the following is the entry to be recorded by a law firm when it receives a $2,000 retainer from a new client at the initial client meeting?
a. Debit to Cash, $2,000; credit to Legal Fees Revenue, $2,000.
b. Debit to Accounts Receivable, $2,000; credit to Legal Fees Revenue, $2,000.
c. Debit to Unearned Revenue, $2,000; credit to Legal Fees Revenue, $2,000.
d. Debit to Cash, $2,000; credit to Unearned Revenue, $2,000.
e. Debit to Unearned Revenue, $2,000; credit to Cash, $2,000.

8. You have observed that the total asset turnover ratio for a retail...

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