Question 1

The accrual basis needs numerous adjustments at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 2

Smith Company had retained earnings of $60,000 at the end of the current year.For the current year, income was $30,000 and dividends $10,000.What was the balance in retained earnings at the end of the prior year?

Accepted Answer

A)  $30,000 
B)  $40,000 
C)  $60,000 
D)  $30,000. 
E)  $70,000 
A)  $30,000 
B)  $40,000 
C)  $60,000 
D)  $30,000. 
E)  $70,000

Question 3

A company must have majority voting shares of the other company in order to consolidate.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a temporary account?

Accepted Answer

A)  advertising expense 
B)  land 
C)  building 
D)  accounts payable 
E)  bonds payable 
A)  advertising expense 
B)  land 
C)  building 
D)  accounts payable 
E)  bonds payable

Question 5

A corporation is considered to be a legal entity separate and distinct from the stockholders.

Accepted Answer

A) True 
 B)False

Question 6

Sometimes financial statements are presented without an accompanying accountant's report.

Accepted Answer

A) True 
 B)False

Question 7

A review has substantially less scope than an examination in accordance with generally accepted auditing standards.

Accepted Answer

A) True 
 B)False

Question 8

In terms of debits and credits, which of the following accounts have the same normal balances?

Accepted Answer

A)  accounts payable, accounts receivable, notes payable 
B)  dividends, accounts receivable, notes payable 
C)  advertising expense, selling expense, accounts receivable 
D)  land, building, accounts payable 
E)  common stock, notes payable, land 
A)  accounts payable, accounts receivable, notes payable 
B)  dividends, accounts receivable, notes payable 
C)  advertising expense, selling expense, accounts receivable 
D)  land, building, accounts payable 
E)  common stock, notes payable, land

Question 9

Which of the following is a permanent account?

Accepted Answer

A)  dividends 
B)  advertising expense 
C)  building 
D)  selling expense 
E)  insurance expense 
A)  dividends 
B)  advertising expense 
C)  building 
D)  selling expense 
E)  insurance expense

Question 10

A disclaimer of opinion is necessary when the exceptions to fair presentation are so material that a qualified opinion is not justified.

Accepted Answer

A) True 
 B)False

Question 11

It is generally recognized that the market is more efficient when dealing with small firms that are not trading on large organized stock markets.

Accepted Answer

A) True 
 B)False

Question 12

At any point in time, assets must equal the contribution of the creditors only.

Accepted Answer

A) True 
 B)False

Question 13

A summary annual report generally has more nonfinancial pages than financial pages.

Accepted Answer

A) True 
 B)False

Question 14

The audit opinion of a public company is similar to an opinion for a private company except for the public company comments will be added as to the effectiveness of internal control over financial reporting.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a type of audit opinion?

Accepted Answer

A)  unqualified opinion 
B)  qualified opinion 
C)  adverse opinion 
D)  clean opinion 
E)  disclaimer of opinion 
A)  unqualified opinion 
B)  qualified opinion 
C)  adverse opinion 
D)  clean opinion 
E)  disclaimer of opinion

Question 16

For a business combination, the purchase method views the business combination as the acquisition of one entity by another.The firm doing the acquiring records the identifiable assets and liabilities at fair value at the date of acquisition.

Accepted Answer

A) True 
 B)False

Question 17

For public companies reporting under Sarbanes-Oxley, the auditor reports on the firm's internal controls in addition to the audit report.

Accepted Answer

A) True 
 B)False

Question 18

Which of these statements is not true?

Accepted Answer

A)  Asset, liability, and stockholders' equity accounts are referred to as permanent accounts. 
B)  Revenue, expense, and dividend accounts are described as temporary accounts. 
C)  Temporary accounts are closed at the end of the period to retained earnings. 
D)  The balance sheet will not balance until the temporary accounts are closed to retained earnings. 
E)  With double-entry, each transaction is recorded twice. 
A)  Asset, liability, and stockholders' equity accounts are referred to as permanent accounts. 
B)  Revenue, expense, and dividend accounts are described as temporary accounts. 
C)  Temporary accounts are closed at the end of the period to retained earnings. 
D)  The balance sheet will not balance until the temporary accounts are closed to retained earnings. 
E)  With double-entry, each transaction is recorded twice.

Question 19

In practice, some of the required information in the 10-K is incorporated by reference.

Accepted Answer

A) True 
 B)False

Question 20

From the point of view of analysis, the unqualified opinion without an explanatory paragraph or explanatory language carries the highest degree of reliability.

Accepted Answer

A) True 
 B)False

The accrual basis needs numerous adjustments at the end of the accounting period.

Smith Company had retained earnings of $60,000 at the end of the current year.For the current year, income was $30,000 and dividends $10,000.What was the balance in retained earnings at the end of the prior year?

A company must have majority voting shares of the other company in order to consolidate.

Which of the following is a temporary account?

A corporation is considered to be a legal entity separate and distinct from the stockholders.

Sometimes financial statements are presented without an accompanying accountant's report.

A review has substantially less scope than an examination in accordance with generally accepted auditing standards.

In terms of debits and credits, which of the following accounts have the same normal balances?

Which of the following is a permanent account?

A disclaimer of opinion is necessary when the exceptions to fair presentation are so material that a qualified opinion is not justified.

It is generally recognized that the market is more efficient when dealing with small firms that are not trading on large organized stock markets.

At any point in time, assets must equal the contribution of the creditors only.

A summary annual report generally has more nonfinancial pages than financial pages.

The audit opinion of a public company is similar to an opinion for a private company except for the public company comments will be added as to the effectiveness of internal control over financial reporting.

Which of the following is not a type of audit opinion?

For a business combination, the purchase method views the business combination as the acquisition of one entity by another.The firm doing the acquiring records the identifiable assets and liabilities at fair value at the date of acquisition.

For public companies reporting under Sarbanes-Oxley, the auditor reports on the firm's internal controls in addition to the audit report.

Which of these statements is not true?

In practice, some of the required information in the 10-K is incorporated by reference.

From the point of view of analysis, the unqualified opinion without an explanatory paragraph or explanatory language carries the highest degree of reliability.

Introduction to Financial Reporting

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 2: Introduction to Financial Statements and Other Financial Reporting Topics

The accrual basis needs numerous adjustments at the end of the accounting period.

Smith Company had retained earnings of $60,000 at the end of the current year.For the current year, income was $30,000 and dividends $10,000.What was the balance in retained earnings at the end of the prior year?

A company must have majority voting shares of the other company in order to consolidate.

Which of the following is a temporary account?

A corporation is considered to be a legal entity separate and distinct from the stockholders.

Sometimes financial statements are presented without an accompanying accountant's report.

A review has substantially less scope than an examination in accordance with generally accepted auditing standards.

In terms of debits and credits, which of the following accounts have the same normal balances?

Which of the following is a permanent account?

A disclaimer of opinion is necessary when the exceptions to fair presentation are so material that a qualified opinion is not justified.

It is generally recognized that the market is more efficient when dealing with small firms that are not trading on large organized stock markets.

At any point in time, assets must equal the contribution of the creditors only.

A summary annual report generally has more nonfinancial pages than financial pages.

The audit opinion of a public company is similar to an opinion for a private company except for the public company comments will be added as to the effectiveness of internal control over financial reporting.

Which of the following is not a type of audit opinion?

For a business combination, the purchase method views the business combination as the acquisition of one entity by another.The firm doing the acquiring records the identifiable assets and liabilities at fair value at the date of acquisition.

For public companies reporting under Sarbanes-Oxley, the auditor reports on the firm's internal controls in addition to the audit report.

Which of these statements is not true?

In practice, some of the required information in the 10-K is incorporated by reference.

From the point of view of analysis, the unqualified opinion without an explanatory paragraph or explanatory language carries the highest degree of reliability.

Introduction to Financial Reporting

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters