Question 1

The cost of assets consumed or services used is also known as

Accepted Answer

A) a revenue. 
B) an expense. 
C) a liability. 
D) an asset. 
A) a revenue. 
B) an expense. 
C) a liability. 
D) an asset.

Question 2

Which activities involve acquiring the resources to run the business?

Accepted Answer

A) Delivering 
B) Financing 
C) Investing 
D) Operating 
A) Delivering 
B) Financing 
C) Investing 
D) Operating

Question 3

An income statement

Accepted Answer

A) summarizes the changes in retained earnings for a specific period of time. 
B) reports the changes in assets, liabilities, and stockholders' equity over a period of time. 
C) reports the assets, liabilities, and stockholders' equity at a specific date. 
D) presents the revenues and expenses for a specific period of time. 
A) summarizes the changes in retained earnings for a specific period of time. 
B) reports the changes in assets, liabilities, and stockholders' equity over a period of time. 
C) reports the assets, liabilities, and stockholders' equity at a specific date. 
D) presents the revenues and expenses for a specific period of time.

Question 4

If total liabilities decreased by $90,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?

Accepted Answer

A) $120,000 increase 
B) $60,000 decrease 
C) $60,000 increase 
D) $90,000 decrease 
A) $120,000 increase 
B) $60,000 decrease 
C) $60,000 increase 
D) $90,000 decrease

Question 5

In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results?

Accepted Answer

A) Notes to the financial statements 
B) Management discussion and analysis section 
C) Balance sheet 
D) Auditor's report 
A) Notes to the financial statements 
B) Management discussion and analysis section 
C) Balance sheet 
D) Auditor's report

Question 6

Which of the following is not an advantage of the corporate form of business organization?

Accepted Answer

A) No personal liability 
B) Easy to transfer ownership 
C) Favorable tax treatment 
D) Easy to raise funds 
A) No personal liability 
B) Easy to transfer ownership 
C) Favorable tax treatment 
D) Easy to raise funds

Question 7

One way of stating the accounting equation is: Assets + Liabilities = Stockholders' Equity.

Accepted Answer

A) True 
 B)False

Question 8

The partnership form of business organization

Accepted Answer

A) is a separate legal entity. 
B) is a common form of organization for service-type businesses. 
C) enjoys an unlimited life. 
D) has limited liability. 
A) is a separate legal entity. 
B) is a common form of organization for service-type businesses. 
C) enjoys an unlimited life. 
D) has limited liability.

Question 9

Proprietorships in the United States generate more revenue than the other two forms of business enterprise.

Accepted Answer

A) True 
 B)False

Question 10

The retained earnings statement

Accepted Answer

A) summarizes the changes in retained earnings for a specific period of time. 
B) reports the changes in assets, liabilities, and stockholders' equity over a period of time. 
C) reports the assets, liabilities, and stockholders' equity at a specific date. 
D) presents the revenues and expenses for a specific period of time. 
A) summarizes the changes in retained earnings for a specific period of time. 
B) reports the changes in assets, liabilities, and stockholders' equity over a period of time. 
C) reports the assets, liabilities, and stockholders' equity at a specific date. 
D) presents the revenues and expenses for a specific period of time.

Question 11

When expenses exceed revenues, which of the following is true?

Accepted Answer

A) a net loss results 
B) a net income results 
C) assets equal liabilities 
D) assets are increased 
A) a net loss results 
B) a net income results 
C) assets equal liabilities 
D) assets are increased

Question 12

If total liabilities decreased by $75,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?

Accepted Answer

A) $60,000 decrease 
B) $60,000 increase 
C) $75,000 increase 
D) $90,000 increase 
A) $60,000 decrease 
B) $60,000 increase 
C) $75,000 increase 
D) $90,000 increase

Question 13

The information needs and questions of external users vary considerably.

Accepted Answer

A) True 
 B)False

Question 14

Accounting communicates financial information about a business to both internal and external users.

Accepted Answer

A) True 
 B)False

Question 15

The group of users of accounting information charged with achieving the goals of the business is its

Accepted Answer

A) auditors. 
B) investors. 
C) managers. 
D) creditors. 
A) auditors. 
B) investors. 
C) managers. 
D) creditors.

Question 16

Most business enterprises in the United States are

Accepted Answer

A) proprietorships and partnerships. 
B) partnerships. 
C) corporations. 
D) government units. 
A) proprietorships and partnerships. 
B) partnerships. 
C) corporations. 
D) government units.

Question 17

Which of the following statements is not true regarding the Sarbanes-Oxley Act (SOX)?

Accepted Answer

A) The Act calls for increased oversight responsibilities for boards of directors. 
B) The Act has resulted in increased penalties for financial fraud by top management. 
C) The Act calls for decreased independence of outside auditors reviewing corporate financial statements. 
D) The Act is meant to decrease the likelihood of unethical corporate behavior. 
A) The Act calls for increased oversight responsibilities for boards of directors. 
B) The Act has resulted in increased penalties for financial fraud by top management. 
C) The Act calls for decreased independence of outside auditors reviewing corporate financial statements. 
D) The Act is meant to decrease the likelihood of unethical corporate behavior.

Question 18

The internal control standards applicable to Sarbanes-Oxley apply to?

Accepted Answer

A) all U.S.and international companies. 
B) U.S.and international companies listed on U.S.exchange. 
C) International companies listed on U.S.exchange. 
D) U.S.companies listed on U.S.exchange. 
A) all U.S.and international companies. 
B) U.S.and international companies listed on U.S.exchange. 
C) International companies listed on U.S.exchange. 
D) U.S.companies listed on U.S.exchange.

Question 19

Which of the following is not a step for solving an ethical dilemma?

Accepted Answer

A) Identifying the alternatives and weighing the impact of each alternative on various stakeholders. 
B) Certifying the ethical accuracy of the financial information. 
C) Identifying and analyzing the principal elements in the situation. 
D) Recognizing the ethical situation and issues involved. 
A) Identifying the alternatives and weighing the impact of each alternative on various stakeholders. 
B) Certifying the ethical accuracy of the financial information. 
C) Identifying and analyzing the principal elements in the situation. 
D) Recognizing the ethical situation and issues involved.

Question 20

If the retained earnings account increases from the beginning of the year to the end of the year, then

Accepted Answer

A) net income is less than dividends. 
B) a net loss is less than dividends. 
C) additional investments are less than net losses. 
D) net income is greater than dividends. 
A) net income is less than dividends. 
B) a net loss is less than dividends. 
C) additional investments are less than net losses. 
D) net income is greater than dividends.

Exam 1: Introduction to Financial Statements

The cost of assets consumed or services used is also known as

Which activities involve acquiring the resources to run the business?

An income statement

If total liabilities decreased by $90,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?

In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results?

Which of the following is not an advantage of the corporate form of business organization?

One way of stating the accounting equation is: Assets + Liabilities = Stockholders' Equity.

The partnership form of business organization

Proprietorships in the United States generate more revenue than the other two forms of business enterprise.

The retained earnings statement

When expenses exceed revenues, which of the following is true?

If total liabilities decreased by $75,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?

The information needs and questions of external users vary considerably.

Accounting communicates financial information about a business to both internal and external users.

The group of users of accounting information charged with achieving the goals of the business is its

Most business enterprises in the United States are

Which of the following statements is not true regarding the Sarbanes-Oxley Act (SOX)?

The internal control standards applicable to Sarbanes-Oxley apply to?

Which of the following is not a step for solving an ethical dilemma?

If the retained earnings account increases from the beginning of the year to the end of the year, then

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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