PAGE PAGE 2 ACC 501 ? SECTION 451 Review Questions January 24, 2006 Circle the letter of the correct answer for each question. 1. The change statements explain changes in important elements of the balance sheet from one date to another. Which of the following are the change statements? a. Statement of operations, statement of retained earnings, and statement of cash flows. b. Statement of financial condition, income statement, and statement of retained earnings. c. Income statement, balance sheet, and statement of cash flows. d. Statement of retained earnings, statement of cash flows, and statement of financial position. 2. Assets increased $52,000 from the beginning of the year. For the year, revenues were $295,000, expenses were $197,700, and dividends were $109,500. In addition, $25,500 in common stock was issued during the year. What was the increase in liabilities from the beginning of the year? a. $65,300 b. $38,700 c. $64,200 d. $13,300 3. At the beginning of the year, Accounts Payable had a balance of $26,700. During the year, supplies totaling $986,300 were purchased on account. Accounts Payable had a balance of $34,100 at year-end. What amount of cash was paid to suppliers on account during the year? a. $986,300 b. $993,700 c. $978,900 d. $1,013,000 4. On September 15, 2002, a consulting firm signed a contract to provide $360,000 of services to a client over the period September 15, 2002 to March 15, 2003. One-third of the work was completed by December 31, 2002. Payment terms for the services were 25% down on October 15, 2002, 25% on November 15, 25% on December 15, and 25% on January 15, 2003. What amount of accrual-basis revenue was recognized for the year ended December 31, 2002? a. $180,000 b. $270,000 c. $120,000 d. $360,000 5. Retained Earnings had a beginning balance of $3,536,000 and an ending balance of $3,369,600. For the year, revenues were $4,992,000 and during the year $2,080,000 in dividends were declared and paid. Which of the following is true? a. The net loss for the year was $166,400. b. Net income for the year was $1,913,600. c. Total expenses for the year were $2,745,600. d. Unearned revenues for the year were $2,745,600. PAGE 7
