ACCT 212 Midterm Exam Solution
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1. Which of the following is not an advantage of the corporate form of business organization? (Points : 3)
No personal liability
Easy to transfer ownership
Favorable tax treatment
Easy to raise funds
Question 2. 2. External users want answers to all of the following questions except (Points : 3)
Is the company earning satisfactory income?
Will the company be able to pay its debts as they come due?
Will the company be able to afford employee pay raises this year?
How does the company compare in profitability with competitors?
Question 3. 3. Issuing shares of stock in exchange for cash is an example of a(n) (Points : 3)
delivering activity.
investing activity.
financing activity.
operating activity.
Question 4. 4. Buying and selling products are examples of (Points : 3)
operating activities.
investing activities.
financing activities.
delivering activities.
Question 5. 5. Debt and obligations of a business are referred to as (Points : 3)
assets.
equities.
liabilities.
expenses.
Question 6. 6. Dividends paid (Points : 3)
increase assets.
increase expenses.
decrease revenues.
decrease retained earnings.
Question 7. 7. Net income results when (Points : 3)
Assets > Liabilities.
Revenues = Expenses.
Revenues > Expenses.
Revenues < Expenses.
Question 8. 8. 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? (Points : 3)
$15,000
$35,000
$25,000
$45,000
Question 9. 9. Payments to stockholders are called (Points : 3)
expenses.
liabilities.
dividends.
distributions.
Question 10. 10. Stockholders’ equity is increased by (Points : 3)
dividends.
revenues.
expenses.
liabilities.
Question...