Candace manages a popular, urban hair salon. During the day-to-day operations of the salon, Candace has to pay her staff and the costs of maintaining…

1.Candace manages a popular, urban hair salon. During the day-to-day operations of the salon, Candace has to pay her staff and the costs of maintaining the salon. Which of the following types of expenses does this scenario best describe?

Multiple Choice

  • selling expenses
  • research and development expenses
  • interest expenses
  • marketing expenses
  • general and administrative expenses

All of the following are true regarding balance sheets EXCEPT they

Multiple Choice

  • include assets, liabilities, and owners’ equity.
  • include a statement of cash flows.
  • take their name from their reliance on the accounting equation.
  • list items on the basis of their original cost less accumulated depreciation.
  • include all financial transactions conducted by an organization since its founding.

3.Sean, the manager at Shield Corp., intends to examine his company’s financial position at the moment. He is interested in what the organization owns or controls and the various sources of the funds used to pay for these assets. In this case, which of the following financial statements is Sean most likely to use?

Multiple Choice

  • the dividend report
  • the statement of cash flows
  • the balance sheet
  • the income statement
  • the statement of retained earnings

Sigma Corp. has recently received patent rights for its new application in the software industry. On the balance sheet, the patent rights received by Sigma Corp. is a(n)

Multiple Choice

  • return on asset.
  • current asset.
  • liquid asset.
  • fixed asset.
  • asset turnover.

4.Computech is paying its stockholders dividends for each share of stock they own. Which of the following is true regarding the way these dividend payments are taxed?

Multiple Choice

  • Computech pays taxes on this money, so the stockholders don’t have to pay any taxes.
  • The stockholders pay taxes on this money, so Computech doesn’t have to pay any taxes.
  • Neither Computech nor the stockholders have to pay taxes on this money.
  • The government waives the taxes on this money to encourage companies to pay dividends.
  • Both Computech and the stockholders must pay taxes on this money.

5.Clara’s Candles buys $500 worth of candles on credit to sell in its retail store. When Clara records this transaction, how should she list this $500?

Multiple Choice

  • as just a liability
  • as just an asset
  • as her owners’ equity
  • in separate accounts as both a liability and an asset
  • as a cash asset