95. Gibson Company recorded the following cash transactions for the year:
Paid $180,000 for salaries.
Paid $80,000 to purchase office equipment.
Paid $20,000 for utilities.
Paid $8,000 in dividends.
Collected $350,000 from customers.
What was Gibson’s net cash provided by operating activities?
a. $150,000
b. $70,000
c. $170,000
d. $142,000
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution: $350,000 - $180,000 - $20,000 = $150,000
(Cash coll. – sal. paid – util. paid)
96. When expenses exceed revenues, which of the following is true?
a. a net loss results
b. a net income results
c. assets equal liabilities
d. assets are increased
Ans: A, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
97. Which of the following is an asset?
a. Mortgage payable
b. Investments
c. Common stock
d. Retained earnings
Ans: B, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
98. Which of the following is not a liability?
a. Unearned Service Revenue
b. Accounts Payable
c. Accounts Receivable
d. Interest Payable
Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
99. Which of the following financial statements is divided into major categories of operating, investing, and financing activities?
a. The income statement.
b. The balance sheet.
c. The retained earnings statement.
d. The statement of cash flows.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
100. The retained earnings statement shows all of the following except
a. the amounts of changes in retained earnings during the period.
b. the causes of changes in retained earnings during the period.
c. the time period following the one shown for the income statement.
d. beginning retained earnings on the first line of the statement.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
101. Ending retained earnings for a period is equal to beginning
a. Retained earnings + Net income + Dividends
b. Retained earnings – Net income – Dividends
c. Retained earnings + Net income – Dividends
d. Retained earnings – Net income + Dividends
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: Business Economics
102. Which of the following statements is true?
a. Amounts received from issuing stock are revenues.
b. Amounts paid out as dividends are not expenses.
c. Amounts paid out as dividends are reported on the income statement.
d. Amounts received from issued stock are reported on the income statement.
Ans: B, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
103. Dividends are reported on the
a. income statement.
b. retained earnings statement.
c. balance sheet.
d. income statement and balance sheet.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting