Exam1review (ACCT 512 MIDTERM TOOL)

Accounting 220 Section 7 Exam 1 Fall 2011 Review session for Exam 1.In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is yourbestresponse to this statement? a.I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets. b.You are right. Revenues and expenses are shown on the income statement. Dividends are a cost of generating revenues and that makes them an expense. Why else would a corporation pay dividends? c.Dividends represent a portion of corporate profits that are paid to the shareholders. They belong on the retained earnings statement. d.Dividends are deducted from retained earnings on the balance sheet. 2.Henson Company began the year with retained earnings of $350,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year? a.$510,000 b.$430,000 c.$810,000 d.$470,000 3.Pinson Company began the year with retained earnings of $550,000. During the year, the company recorded revenues of $600,000, expenses of $380,000, and paid dividends of $140,000. What was Pinson's retained earnings at the end of the year? a.$910,000 b.$630,000 c.$1,010,000 d.$480,000 4.Finney Company began the year by issuing $20,000 of common stock for cash. The company recorded revenues of $185,000, expenses of $160,000, and paid dividends of $10,000. What was Finney's net income for the year? a.$15,000 b.$35,000 c.$25,000 d.$45,000 5.A balance sheet shows a.revenues, liabilities, and stockholders' equity. b.expenses, dividends, and stockholders' equity. c.revenues, expenses, and dividends. d.assets, liabilities, and stockholders' equity. 6.The accounting equation may be expressed as: a.Assets = Stockholders' Equity - Liabilities. b.Assets = Liabilities + Stockholders' Equity. c.Assets + Liabilities = Stockholders' Equity. d.Assets + Stockholders' Equity = Liabilities.7.Jimmy's Repair Shop started the year with total assets of $150,000 and total liabilities of $120,000. During the year the business recorded $315,000 in revenues, $165,000 in expenses, and dividends of $30,000. The net income reported by Jimmy's Repair Shop for the year was a.$120,000. b.$150,000. c.$90,000. d.$285,000. 8.If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a.$20,000 decrease b.$20,000 increase c.$25,000 increase d.$30,000 increase 9.Liabilities a.are future economic benefits. b.are debts and obligations. c.possess service potential. d.are things of value owned by a business. 10.Retained earnings is a.the stockholders' claim on total assets. b.equal to cash. c.equal to revenues. d.the amount of net income kept in the corporation for future use. 11.Elston Company compiled the following financial information as of December 31, 2012: Revenues$420,000 Common stock90,000 Equipment120,000 Expenses375,000 Cash105,000 Dividends30,000 Supplies15,000 Accounts payable60,000 Accounts receivable45,000 Retained earnings, 1/1/12225,000 Elston's assets on December 31, 2012 are: a.$705,000 b.$510,000 c.$240,000 d.$285,000