Question 1

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

Accepted Answer

A)  Account Payable. 
B)  Accounts Receivable. 
C)  Decrease in Cash, since it plans to pay for sure next month. 
D)  Net income. 
A)  Account Payable. 
B)  Accounts Receivable. 
C)  Decrease in Cash, since it plans to pay for sure next month. 
D)  Net income.

Question 2

U.S.GAAP are:

Accepted Answer

A)  another term for IFRS. 
B)  the accounting rules developed by the IASB for use in the United States. 
C)  the oversight board that supervises auditors . 
D)  the accounting rules developed by the FASB for use in the United States. 
A)  another term for IFRS. 
B)  the accounting rules developed by the IASB for use in the United States. 
C)  the oversight board that supervises auditors . 
D)  the accounting rules developed by the FASB for use in the United States.

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.

Question 4

A company incurred $2,000 for utilities for the last month of Year 2.The company paid the bill during the first month of Year 2.Which of the following statements is correct?

Accepted Answer

A)  The related $2,000 should be reported on the income statement for Year 1 as Utilities Expense. 
B)  Since it has not been paid, this utility bill would not be reported in the financial statements for Year 1. 
C)  The related $2,000 should be included in Accounts Receivable on the balance sheet at the Year 1. 
D)  The related $2,000 should be included in Utilities Expense on the balance sheet at the end Year 1. 
A)  The related $2,000 should be reported on the income statement for Year 1 as Utilities Expense. 
B)  Since it has not been paid, this utility bill would not be reported in the financial statements for Year 1. 
C)  The related $2,000 should be included in Accounts Receivable on the balance sheet at the Year 1. 
D)  The related $2,000 should be included in Utilities Expense on the balance sheet at the end Year 1.

Question 5

Maxine's Bakery recorded $220,000 in revenues, $165,000 in expenses, and $30,000 of dividends for the year.The company began the year with total assets of $190,000 and stockholder's equity of $87,000.
-Use the information above to answer the following question.Suppose that liabilities increased by $60,000 and stockholders' equity increased by $25,000.What would be the change in Maxine's assets?

Accepted Answer

A)  $112,000 increase 
B)  $85,000 increase 
C)  $103,000 increase 
D)  $35,000 increase 
A)  $112,000 increase 
B)  $85,000 increase 
C)  $103,000 increase 
D)  $35,000 increase

Question 6

Which of the following statements about the format of financial statements is correct?

Accepted Answer

A)  A double underline is drawn below the subtotal for Total Liabilities on the balance sheet. 
B)  Dollar signs are omitted if the heading states that amounts are reported in U.S. dollars. 
C)  Dividends are shown in parentheses on the statement of retained earnings. 
D)  The order of the items included in the heading of each financial statement is as follows: the name of the business, the time period covered by the financial statement, and the title of the report. 
A)  A double underline is drawn below the subtotal for Total Liabilities on the balance sheet. 
B)  Dollar signs are omitted if the heading states that amounts are reported in U.S. dollars. 
C)  Dividends are shown in parentheses on the statement of retained earnings. 
D)  The order of the items included in the heading of each financial statement is as follows: the name of the business, the time period covered by the financial statement, and the title of the report.

Question 7

A company's quarterly income statements show that in the last three quarters both Sales Revenue and net income have been falling.Given this information,which of the following conclusions drawn by users are valid?

Accepted Answer

A)  Creditors are likely to conclude that the risk of lending to the company is declining and might be willing to accept a lower interest rate on loans. 
B)  Investors are likely to conclude that the stock price is likely to rise, making the company more attractive as a potential investment. 
C)  Customers are likely to conclude that the company is struggling; therefore it is permissible to take longer to pay amounts they owe to the company. 
D)  Owners may conclude that the company will be less likely to distribute dividends. 
A)  Creditors are likely to conclude that the risk of lending to the company is declining and might be willing to accept a lower interest rate on loans. 
B)  Investors are likely to conclude that the stock price is likely to rise, making the company more attractive as a potential investment. 
C)  Customers are likely to conclude that the company is struggling; therefore it is permissible to take longer to pay amounts they owe to the company. 
D)  Owners may conclude that the company will be less likely to distribute dividends.

Question 8

Assets reported on the balance sheet include:

Accepted Answer

A)  Accounts Receivable, Sales Revenue, and Cash. 
B)  Equipment, Supplies Expense, and Cash. 
C)  Accounts Payable, Retained Earnings, and Cash. 
D)  Accounts Receivable, Equipment, and Cash. 
A)  Accounts Receivable, Sales Revenue, and Cash. 
B)  Equipment, Supplies Expense, and Cash. 
C)  Accounts Payable, Retained Earnings, and Cash. 
D)  Accounts Receivable, Equipment, and Cash.

Question 9

Able Corp.started business this year.For this year,it had revenues of $200,000,expenses of $150,000 and cash flows from operating activities of $40,000,and paid dividends of $5,000.What is the amount of Retained Earnings at the end of the company's first year of operations?

Accepted Answer

A)  $35,000 
B)  $40,000 
C)  $45,000 
D)  $95,000 
A)  $35,000 
B)  $40,000 
C)  $45,000 
D)  $95,000

Question 10

Net income is the amount:

Accepted Answer

A)  the company earned after subtracting expenses and dividends from revenue. 
B)  by which assets exceed expenses. 
C)  by which assets exceed liabilities. 
D)  by which revenues exceed expenses. 
A)  the company earned after subtracting expenses and dividends from revenue. 
B)  by which assets exceed expenses. 
C)  by which assets exceed liabilities. 
D)  by which revenues exceed expenses.

Question 11

In a sense,__________ is to accountants and auditors what the criminal code is to lawyers and the public.

Accepted Answer

A)  the SEC 
B)  faithful representation 
C)  U.S. GAAP 
D)  the basic accounting equation 
A)  the SEC 
B)  faithful representation 
C)  U.S. GAAP 
D)  the basic accounting equation

Question 12

What would a user of financial statements learn from reading the auditors' report?

Accepted Answer

A)  Whether the financial statements present a fair picture of the company's financial results and are prepared in accordance with GAAP. 
B)  Whether or not it is a good time to purchase the stock. 
C)  How much the company plans to distribute as dividends. 
D)  Whether or not the company has plans for future expansion. 
A)  Whether the financial statements present a fair picture of the company's financial results and are prepared in accordance with GAAP. 
B)  Whether or not it is a good time to purchase the stock. 
C)  How much the company plans to distribute as dividends. 
D)  Whether or not the company has plans for future expansion.

Question 13

Which of the following a characteristic of a sole proprietorship?

Accepted Answer

A)  The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business. 
B)  It is a legal entity separate from its owner. 
C)  Its income is taxed twice - once on the company's income tax return and again on the owner's individual income tax returns. 
D)  It is the only organizational form appropriate for service businesses. 
A)  The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business. 
B)  It is a legal entity separate from its owner. 
C)  Its income is taxed twice - once on the company's income tax return and again on the owner's individual income tax returns. 
D)  It is the only organizational form appropriate for service businesses.

Question 14

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 15

Which of the following would be acceptable as an alternative name for the income statement?

Accepted Answer

A)  Statement of operations 
B)  Statement of financial position 
C)  Statement of retained earnings 
D)  Statement of revenues and expenses 
A)  Statement of operations 
B)  Statement of financial position 
C)  Statement of retained earnings 
D)  Statement of revenues and expenses

Question 16

The separate entity assumption requires that:

Accepted Answer

A)  financial information depicts the economic substance of the business activities. 
B)  financial reports of a business are assumed to include the results of only that business's activities. 
C)  the results of business activities are reported in an appropriate monetary unit. 
D)  financial information can be compared across businesses because similar accounting methods have been applied. 
A)  financial information depicts the economic substance of the business activities. 
B)  financial reports of a business are assumed to include the results of only that business's activities. 
C)  the results of business activities are reported in an appropriate monetary unit. 
D)  financial information can be compared across businesses because similar accounting methods have been applied.

Question 17

Dividends paid to stockholders:

Accepted Answer

A)  are a reduction to Retained Earnings. 
B)  appear in the cash flows from operating activities section of the statement of cash flows. 
C)  appear on the income statement. 
D)  are subtracted from Common Stock. 
A)  are a reduction to Retained Earnings. 
B)  appear in the cash flows from operating activities section of the statement of cash flows. 
C)  appear on the income statement. 
D)  are subtracted from Common Stock.

Question 18

Which of the following statements about financial statements is not correct?

Accepted Answer

A)  Cash flows from financing activities would appear on the Statement of Cash Flows. 
B)  Dividends would appear on the Statement of Retained Earnings. 
C)  Assets would appear on the Income Statement. 
D)  Revenues would appear on the Income Statement. 
A)  Cash flows from financing activities would appear on the Statement of Cash Flows. 
B)  Dividends would appear on the Statement of Retained Earnings. 
C)  Assets would appear on the Income Statement. 
D)  Revenues would appear on the Income Statement.

Question 19

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 20

Which of the following would not be reported as an asset on the balance sheet?

Accepted Answer

A) Accounts Receivable 
B) Supplies 
C) Retained Earnings 
D) Cash 
A) Accounts Receivable 
B) Supplies 
C) Retained Earnings 
D) Cash

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

U.S.GAAP are:

Stockholders' equity is:

A company incurred $2,000 for utilities for the last month of Year 2.The company paid the bill during the first month of Year 2.Which of the following statements is correct?

Which of the following statements about the format of financial statements is correct?

A company's quarterly income statements show that in the last three quarters both Sales Revenue and net income have been falling.Given this information,which of the following conclusions drawn by users are valid?

Assets reported on the balance sheet include:

Able Corp.started business this year.For this year,it had revenues of $200,000,expenses of $150,000 and cash flows from operating activities of $40,000,and paid dividends of $5,000.What is the amount of Retained Earnings at the end of the company's first year of operations?

Net income is the amount:

In a sense,__________ is to accountants and auditors what the criminal code is to lawyers and the public.

What would a user of financial statements learn from reading the auditors' report?

Which of the following a characteristic of a sole proprietorship?

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

Which of the following would be acceptable as an alternative name for the income statement?

The separate entity assumption requires that:

Dividends paid to stockholders:

Which of the following statements about financial statements is not correct?

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

Which of the following would not be reported as an asset on the balance sheet?

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 1: Business Decisions and Financial Accounting

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

U.S.GAAP are:

Stockholders' equity is:

A company incurred $2,000 for utilities for the last month of Year 2.The company paid the bill during the first month of Year 2.Which of the following statements is correct?

Which of the following statements about the format of financial statements is correct?

A company's quarterly income statements show that in the last three quarters both Sales Revenue and net income have been falling.Given this information,which of the following conclusions drawn by users are valid?

Assets reported on the balance sheet include:

Able Corp.started business this year.For this year,it had revenues of $200,000,expenses of $150,000 and cash flows from operating activities of $40,000,and paid dividends of $5,000.What is the amount of Retained Earnings at the end of the company's first year of operations?

Net income is the amount:

In a sense,__________ is to accountants and auditors what the criminal code is to lawyers and the public.

What would a user of financial statements learn from reading the auditors' report?

Which of the following a characteristic of a sole proprietorship?

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

Which of the following would be acceptable as an alternative name for the income statement?

The separate entity assumption requires that:

Dividends paid to stockholders:

Which of the following statements about financial statements is not correct?

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

Which of the following would not be reported as an asset on the balance sheet?

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters