Question 1

With respect to the audience targeted for financial accounting reports,which of the parties below is not an external user?

Accepted Answer

A) Customers of the company issuing the reports 
B) Creditors of the company issuing the reports 
C) Managers of the company issuing the reports 
D) Stockholders of the company issuing the reports 
A) Customers of the company issuing the reports 
B) Creditors of the company issuing the reports 
C) Managers of the company issuing the reports 
D) Stockholders of the company issuing the reports C

Question 2

Alpha sold $2,000 of services to Beta on credit.Beta promised to pay for it next month.Alpha will report a $2,000:

Accepted Answer

A) Accounts Receivable. 
B) Account Payable. 
C) increase in Cash,since Beta is sure to pay next month. 
D) net loss. 
A) Accounts Receivable. 
B) Account Payable. 
C) increase in Cash,since Beta is sure to pay next month. 
D) net loss. A

Question 3

Stockholders' equity is:

Accepted Answer

A) a liability of the business. 
B) an economic resource controlled by the business. 
C) the owners' claims on the business. 
D) the profit generated by the business. 
A) a liability of the business. 
B) an economic resource controlled by the business. 
C) the owners' claims on the business. 
D) the profit generated by the business. C

Question 4

If revenues are less than expenses,the company's Retained Earnings:

Accepted Answer

A) decrease. 
B) increase. 
C) must be replenished by stockholders. 
D) are paid to stockholders. 
A) decrease. 
B) increase. 
C) must be replenished by stockholders. 
D) are paid to stockholders.

Question 5

The daily activities involved in running a business,such as buying supplies and paying salaries and wages,are classified as operating activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 6

The income statement reports:

Accepted Answer

A) the assets,liabilities,and stockholders' equity of a company. 
B) cumulative earnings that have not been distributed to stockholders. 
C) the amount of profit distributed to owners during the period. 
D) the amount of revenues earned and expenses incurred during the period. 
A) the assets,liabilities,and stockholders' equity of a company. 
B) cumulative earnings that have not been distributed to stockholders. 
C) the amount of profit distributed to owners during the period. 
D) the amount of revenues earned and expenses incurred during the period.

Question 7

Accounts Payable,Notes Payable,and Salaries and Wages Payable are examples of liabilities.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements below is correct about a corporation and a partnership?

Accepted Answer

A) A partnership is comprised of two or more owners,whereas a corporation must have only one owner. 
B) A corporation is legally responsible for its own taxes and debts. 
C) Owners of both entities are legally responsible for the taxes and debts of the business. 
D) Both entities issue shares of stock to owners. 
A) A partnership is comprised of two or more owners,whereas a corporation must have only one owner. 
B) A corporation is legally responsible for its own taxes and debts. 
C) Owners of both entities are legally responsible for the taxes and debts of the business. 
D) Both entities issue shares of stock to owners.

Question 9

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. )
-FASB

Accepted Answer

A) The U.S.agency that must approve mergers between very large publicly owned corporations. 
B) The U.S.Board that approves the rules for auditing publicly owned companies. 
C) The organization that establishes business laws in the U.S. 
D) The Board that establishes the accounting rules that govern American owned corporations. 
E) This organization regulates activities associated with the stock market such as the reporting of financial data by publicly owned companies.
F)The national professional organization of accountants.
G)Rules of financial accounting created by the FASB for use in the United States.
H)A set of laws established to strengthen corporate reporting in the United States.
I)The Board that establishes international accounting standards.
J)The U.S.agency that certifies foreign accounting firms to practice in the U.S. 
A) The U.S.agency that must approve mergers between very large publicly owned corporations. 
B) The U.S.Board that approves the rules for auditing publicly owned companies. 
C) The organization that establishes business laws in the U.S. 
D) The Board that establishes the accounting rules that govern American owned corporations. 
E) This organization regulates activities associated with the stock market such as the reporting of financial data by publicly owned companies.
F)The national professional organization of accountants.
G)Rules of financial accounting created by the FASB for use in the United States.
H)A set of laws established to strengthen corporate reporting in the United States.
I)The Board that establishes international accounting standards.
J)The U.S.agency that certifies foreign accounting firms to practice in the U.S.

Question 10

Creditors look at the balance sheet to see whether the company:

Accepted Answer

A) is profitable. 
B) owns enough assets to pay what it owes to creditors. 
C) has had a positive cash flow from operations. 
D) is paying sufficient dividends to stockholders. 
A) is profitable. 
B) owns enough assets to pay what it owes to creditors. 
C) has had a positive cash flow from operations. 
D) is paying sufficient dividends to stockholders.

Question 11

The Securities and Exchange Commission (SEC)is the government agency that has primary responsibility for setting accounting standards in the U.S.

Accepted Answer

A) True 
 B)False

Question 12

The Sarbanes-Oxley Act (SOX):

Accepted Answer

A) outlines the code of professional ethics for accountants. 
B) is a set of laws established to strengthen corporate reporting. 
C) requires all publicly-traded corporations to pay annual dividends. 
A) outlines the code of professional ethics for accountants. 
B) is a set of laws established to strengthen corporate reporting. 
C) requires all publicly-traded corporations to pay annual dividends.

Question 13

A legal document called a stock certificate is used to indicate ownership in a:

Accepted Answer

A) corporation. 
B) sole proprietorship. 
C) partnership. 
D) both sole proprietorship and partnership. 
A) corporation. 
B) sole proprietorship. 
C) partnership. 
D) both sole proprietorship and partnership.

Question 14

Match the business activity to the appropriate category.
-The building of a new factory

Accepted Answer

A) Financing activity 
B) Operating activity 
C) Investing activity 
A) Financing activity 
B) Operating activity 
C) Investing activity

Question 15

Financial statements are a key source of information useful to external users.The quality of relevance in financial information contributes to its usefulness.Along with relevance which of the following attributes is a primary element of useful financial information?

Accepted Answer

A) Eloquence 
B) Assets 
C) Ethicality 
D) Faithful representation 
A) Eloquence 
B) Assets 
C) Ethicality 
D) Faithful representation

Question 16

If a company reports a negative dollar amount under cash flows from investing activities,a possible explanation is that:

Accepted Answer

A) it has purchased a significant amount of equipment. 
B) its expenses are greater than its revenues. 
C) the market value of its stock has gone down. 
D) it has paid a large cash dividend to its stockholders. 
A) it has purchased a significant amount of equipment. 
B) its expenses are greater than its revenues. 
C) the market value of its stock has gone down. 
D) it has paid a large cash dividend to its stockholders.

Question 17

Accounting systems:

Accepted Answer

A) are summarized in publicly published reports. 
B) analyze,record,and summarize the activities affecting its financial condition and performance. 
C) monitor business activities only in financial terms. 
D) capture only the information that is needed by the owners of the company. 
A) are summarized in publicly published reports. 
B) analyze,record,and summarize the activities affecting its financial condition and performance. 
C) monitor business activities only in financial terms. 
D) capture only the information that is needed by the owners of the company.

Question 18

Match between columns
                        Premises: ________ Retained earnings,December 31,Year 3
________ Net income for Year 3
________ Retained earnings,January 1,Year 3
________ Dividends for Year 3

Accepted Answer

The Answer of Balance Sheet at end of Year 2 is...

Question 19

Choose the appropriate letter to match the characteristics with the type of company.A given characteristic may match more than one type of company.
CHARACTERISTIC
1.________ Issues shares of stock that are traded on a stock exchange such as the NYSE
2.________ The owner(s)of the business are personally liable for the debts of the company
3.________ Shares of stock must be purchased directly from current owners
4.________ Can raise more financial capital by selling stock to the greatest number of investors
5.________ The easiest form of business to start
6.________ The business ceases to exist upon the departure of one of the owners
7.________ The owner(s)pay taxes on the profits of the business
TYPE OF COMPANY
A.Partnership
B.Publicly traded corporation
C.Privately traded corporation
D.Sole Proprietorship

Accepted Answer

1.B,2.A an

Question 20

A company incurred $10,000 in wages for employees during the year.Of these wages,$9,000 was paid by the end of the year.Which of the following statements is correct?

Accepted Answer

A) Salaries and Wages Payable on the income statement will be $9,000. 
B) Salaries and Wages Expense on the income statement will be $1,000. 
C) Salaries and Wages Expense on the balance sheet will be $10,000. 
D) Salaries and Wages Payable on the balance sheet will be $1,000. 
A) Salaries and Wages Payable on the income statement will be $9,000. 
B) Salaries and Wages Expense on the income statement will be $1,000. 
C) Salaries and Wages Expense on the balance sheet will be $10,000. 
D) Salaries and Wages Payable on the balance sheet will be $1,000.

With respect to the audience targeted for financial accounting reports,which of the parties below is not an external user?

Alpha sold $2,000 of services to Beta on credit.Beta promised to pay for it next month.Alpha will report a $2,000:

Stockholders' equity is:

If revenues are less than expenses,the company's Retained Earnings:

The daily activities involved in running a business,such as buying supplies and paying salaries and wages,are classified as operating activities on the statement of cash flows.

The income statement reports:

Accounts Payable,Notes Payable,and Salaries and Wages Payable are examples of liabilities.

Which of the following statements below is correct about a corporation and a partnership?

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) -FASB

Creditors look at the balance sheet to see whether the company:

The Securities and Exchange Commission (SEC)is the government agency that has primary responsibility for setting accounting standards in the U.S.

The Sarbanes-Oxley Act (SOX):

A legal document called a stock certificate is used to indicate ownership in a:

Match the business activity to the appropriate category. -The building of a new factory

Financial statements are a key source of information useful to external users.The quality of relevance in financial information contributes to its usefulness.Along with relevance which of the following attributes is a primary element of useful financial information?

If a company reports a negative dollar amount under cash flows from investing activities,a possible explanation is that:

Accounting systems:

A company incurred $10,000 in wages for employees during the year.Of these wages,$9,000 was paid by the end of the year.Which of the following statements is correct?

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 1: Business Decisions and Financial Accounting

With respect to the audience targeted for financial accounting reports,which of the parties below is not an external user?

Alpha sold $2,000 of services to Beta on credit.Beta promised to pay for it next month.Alpha will report a $2,000:

Stockholders' equity is:

If revenues are less than expenses,the company's Retained Earnings:

The daily activities involved in running a business,such as buying supplies and paying salaries and wages,are classified as operating activities on the statement of cash flows.

The income statement reports:

Accounts Payable,Notes Payable,and Salaries and Wages Payable are examples of liabilities.

Which of the following statements below is correct about a corporation and a partnership?

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) -FASB

Creditors look at the balance sheet to see whether the company:

The Securities and Exchange Commission (SEC)is the government agency that has primary responsibility for setting accounting standards in the U.S.

The Sarbanes-Oxley Act (SOX):

A legal document called a stock certificate is used to indicate ownership in a:

Match the business activity to the appropriate category. -The building of a new factory

Financial statements are a key source of information useful to external users.The quality of relevance in financial information contributes to its usefulness.Along with relevance which of the following attributes is a primary element of useful financial information?

If a company reports a negative dollar amount under cash flows from investing activities,a possible explanation is that:

Accounting systems:

A company incurred $10,000 in wages for employees during the year.Of these wages,$9,000 was paid by the end of the year.Which of the following statements is correct?

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters