11.Which account is associated with the sale of inventory?
a.Cost of goods sold.
b.Depreciation.
c.Inventory expense.
d.Equipment.
12.Which account is associated with borrowing money?
a.Interest expense.
b.Goodwill.
c.Cost of goods sold.
d.Depreciation.
13.Which expense is associated with long-term assets?
a.Dividends.
b.Depreciation.
c.Cost of goods sold.
d.Interest.
14.Which expense is associated with the use of patents?
a.Interest.
b.Amortization.
c.Cost of goods sold.
d.Depreciation.
15.The major accounting difference between interest expenses for creditors and dividendsdeclared and paid to shareholders is that interest expenses:
a.decrease retained earnings and dividends increase retained earnings.
b.impact cash flows, while dividends do not.
c.are not on the income statement while dividends declared and paid are.
d.are on the income statement and dividends declared and paid are not.
16.Desert Company has retained earnings of $12,000, total assets totaling $39,000, and total liabilities of $20,000. How much is
total shareholders’ equity?
a.$6,000
b.$17,000
c.$19,000
d.$27,000
17.Valley Company has cash, current liabilities, and long-term liabilities of $110,000, $20,000, and $31,000, respectively. Valley has no current assets other than cash. How much cash can Valley use to acquire equipment so that amount of current assets is double the amount of current liabilities?
a.$10,000
b.$70,000
c.$91,000
d.$60,000
18.Favre Company has current assets, shareholders’ equity, current liabilities, and long-term liabilities of $8,000, $26,000, $4,000, and $8,000, respectively. How much are long-term assets?
a.$12,000
b.$30,000
c.$32,000
d.$46,000
19.Which one of the following equations represents retained earnings activity for a year?
a.Beginning balance + expenses – dividends = ending balance.
b.Beginning balance + cash receipts – cash payments = ending balance.
c.Beginning balance + dividends – net income = ending balance.
d.Beginning balance + net income – dividends = ending balance.
20.Which one of the following appears on the income statement?
a.Inventory.
b.Retained earnings.
c.Dividends.
d.Interest revenue.