Question 1

Faithful representation is a characteristic of external financial reporting that means:

Accepted Answer

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

Question 2

The Publish or Perish Printing Company paid a dividend to stockholders.This will be reported on the:

Accepted Answer

A)  audit report. 
B)  income statement. 
C)  balance sheet. 
D)  statement of retained earnings. 
A)  audit report. 
B)  income statement. 
C)  balance sheet. 
D)  statement of retained earnings.

Question 3

A company started the current year with assets of $700,000, liabilities of $350,000 and common stock of $200,000.During the current year, assets increased by $400,000, liabilities decreased by $50,000 and common stock increased by $275,000.There was no payment of dividends to owners during the year.
-Use the information above to answer the following question.What was the amount of the change in total stockholders' equity during the year?

Accepted Answer

A)  $350,000 increase 
B)  $450,000 increase 
C)  $250,000 increase 
D)  $200,000 increase 
A)  $350,000 increase 
B)  $450,000 increase 
C)  $250,000 increase 
D)  $200,000 increase

Question 4

The Statement of Cash Flows for the current year contained the following:
   
The change in cash for the current year was an increase of $14,000.
-Use the information above to answer the following question.What was the amount of cash flows from (used in)operating activities?

Accepted Answer

A)  $5,000. 
B)  $35,000. 
C)  $25,000. 
D)  $4,000. 
A)  $5,000. 
B)  $35,000. 
C)  $25,000. 
D)  $4,000.

Question 5

Which one of the following is not likely to be a consequence of fraudulent financial reporting?

Accepted Answer

A)  The company's stock price drops once the fraud is discovered. 
B)  Innocent accountants who work for the company's CPA firm lose their jobs. 
C)  Creditors recover 100% of amounts owed to them. 
D)  Employees lose their retirement savings. 
A)  The company's stock price drops once the fraud is discovered. 
B)  Innocent accountants who work for the company's CPA firm lose their jobs. 
C)  Creditors recover 100% of amounts owed to them. 
D)  Employees lose their retirement savings.

Question 6

Choose the appropriate letter to match the terms to the blanks below to complete the relevant equation for each financial statement.
FINANCIAL STATEMENT EQUATION
   
TERM
A.Cash at beginning of year
B.Net cash flow from operating activities
C.Balance of retained earnings from previous year
D.Net cash flow from investing activities
E.Liabilities
F.Net cash flow from financing activities
G.Balance of retained earnings at end of year
H.Net income
I.Revenue
J.Assets
K.Stockholders' equity
L.Expenses
M.Cash at end of year
N.Dividends paid

Accepted Answer

Balance Sheet: J = E + K
Incom

Question 7

Which of the following statements is prepared as of a point in time?

Accepted Answer

A)  Income statement 
B)  Statement of Retained Earnings 
C)  Balance sheet 
D)  Statement of cash flows 
A)  Income statement 
B)  Statement of Retained Earnings 
C)  Balance sheet 
D)  Statement of cash flows

Question 8

Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?

Accepted Answer

A)  Investors: Dividends; Creditors: Sufficient cash to make loan payments 
B)  Investors: Cash flows from investing activities; Creditors: Dividends 
C)  Investors: Sufficient cash to make loan payments; Creditors: Cash flows from investing activities 
D)  Investors: Sufficient cash to make loan payments; Creditors: Stock prices 
A)  Investors: Dividends; Creditors: Sufficient cash to make loan payments 
B)  Investors: Cash flows from investing activities; Creditors: Dividends 
C)  Investors: Sufficient cash to make loan payments; Creditors: Cash flows from investing activities 
D)  Investors: Sufficient cash to make loan payments; Creditors: Stock prices

Question 9

Common Stock is reported as an asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

The purpose of a statement of retained earnings is to:

Accepted Answer

A)  estimate the current value of a company's assets. 
B)  report the way that net income and dividends affected the financial position of the company during the period. 
C)  show where the cash is flowing into and out of a company. 
D)  report the specific revenues and expenses arising during the period. 
A)  estimate the current value of a company's assets. 
B)  report the way that net income and dividends affected the financial position of the company during the period. 
C)  show where the cash is flowing into and out of a company. 
D)  report the specific revenues and expenses arising during the period.

Question 11

Accounts receivable are:

Accepted Answer

A)  amounts the company expects to pay for previous credit sales. 
B)  amounts the company expects to collect for previous credit sales. 
C)  always less than the company's cash. 
D)  reported in the liabilities section of the balance sheet. 
E)  reported on the income statement. 
A)  amounts the company expects to pay for previous credit sales. 
B)  amounts the company expects to collect for previous credit sales. 
C)  always less than the company's cash. 
D)  reported in the liabilities section of the balance sheet. 
E)  reported on the income statement.

Question 12

Ace Electronics received $200 of copy paper from its supplier and promised to pay for it next month.Ace should report:

Accepted Answer

A)  Accounts payable of $200 on its balance sheet. 
B)  Accounts payable of $200 on its income statement. 
C)  Accounts receivable of $200 on its balance sheet. 
D)  Accounts receivable of $200 on its income statement. 
E)  Cash of $(200) on its balance sheet. F) nothing, because cash hasn't been paid yet. 
A)  Accounts payable of $200 on its balance sheet. 
B)  Accounts payable of $200 on its income statement. 
C)  Accounts receivable of $200 on its balance sheet. 
D)  Accounts receivable of $200 on its income statement. 
E)  Cash of $(200) on its balance sheet. F) nothing, because cash hasn't been paid yet.

Question 13

Every financial statement should have "who,what,and when" in its heading.These include the:

Accepted Answer

A)  name of the person preparing the statement, the type of financial statement, and when the financial statement was reported to the SEC. 
B)  name of the person preparing the statement, the name of the company, and the date the statement was prepared. 
C)  name of the company, the type of financial statement, and the time period or date from which the data were taken. 
D)  name of the company, the purpose of the statement, and when the financial statement was reported to the IRS. 
A)  name of the person preparing the statement, the type of financial statement, and when the financial statement was reported to the SEC. 
B)  name of the person preparing the statement, the name of the company, and the date the statement was prepared. 
C)  name of the company, the type of financial statement, and the time period or date from which the data were taken. 
D)  name of the company, the purpose of the statement, and when the financial statement was reported to the IRS.

Question 14

A company began the year with assets of $100,000 and liabilities of $75,000.During the year assets increased by $12,000 and liabilities decreased by $9,000.
-Use the information above to answer the following question.What is the amount of stockholders' equity at the beginning of the year?

Accepted Answer

A)  $0 
B)  $25,000. 
C)  $175,000. 
D)  $100,000. 
A)  $0 
B)  $25,000. 
C)  $175,000. 
D)  $100,000.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during that same time period?

Accepted Answer

A)  $20,000 increase 
B)  $20,000 decrease 
C)  $30,000 increase 
D)  $30,000 decrease 
A)  $20,000 increase 
B)  $20,000 decrease 
C)  $30,000 increase 
D)  $30,000 decrease

Question 17

The following accounts are taken from the December 31, Year 4 financial statements of a company.
  
-Use the information above to answer the following question.What is the amount of net income for Year 4?

Accepted Answer

A)  $3,825. 
B)  $1,825. 
C)  $10,300. 
D)  $5,625. 
A)  $3,825. 
B)  $1,825. 
C)  $10,300. 
D)  $5,625.

Question 18

Cash flows from (used in)investing activities includes amounts:

Accepted Answer

A)  received from a company's stockholders for the sale of stock. 
B)  received from the sale of the company's office building. 
C)  paid for dividends to the company's stockholders. 
D)  paid for salaries of employees. 
A)  received from a company's stockholders for the sale of stock. 
B)  received from the sale of the company's office building. 
C)  paid for dividends to the company's stockholders. 
D)  paid for salaries of employees.

Question 19

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 20

According to Generally Accepted Accounting Principles,which of the following is not a characteristic of useful financial information?

Accepted Answer

A)  comparable 
B)  verifiable 
C)  timely 
D)  ethical 
A)  comparable 
B)  verifiable 
C)  timely 
D)  ethical

Faithful representation is a characteristic of external financial reporting that means:

The Publish or Perish Printing Company paid a dividend to stockholders.This will be reported on the:

The Statement of Cash Flows for the current year contained the following: The change in cash for the current year was an increase of $14,000. -Use the information above to answer the following question.What was the amount of cash flows from (used in)operating activities?

Which one of the following is not likely to be a consequence of fraudulent financial reporting?

Which of the following statements is prepared as of a point in time?

Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?

Common Stock is reported as an asset on the balance sheet.

The purpose of a statement of retained earnings is to:

Accounts receivable are:

Ace Electronics received $200 of copy paper from its supplier and promised to pay for it next month.Ace should report:

Every financial statement should have "who,what,and when" in its heading.These include the:

A company began the year with assets of $100,000 and liabilities of $75,000.During the year assets increased by $12,000 and liabilities decreased by $9,000. -Use the information above to answer the following question.What is the amount of stockholders' equity at the beginning of the year?

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

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during that same time period?

The following accounts are taken from the December 31, Year 4 financial statements of a company. -Use the information above to answer the following question.What is the amount of net income for Year 4?

Cash flows from (used in)investing activities includes amounts:

The Sarbanes-Oxley Act (SOX):

According to Generally Accepted Accounting Principles,which of the following is not a characteristic of useful financial information?

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

Faithful representation is a characteristic of external financial reporting that means:

The Publish or Perish Printing Company paid a dividend to stockholders.This will be reported on the:

The Statement of Cash Flows for the current year contained the following: The change in cash for the current year was an increase of $14,000. -Use the information above to answer the following question.What was the amount of cash flows from (used in)operating activities?

Which one of the following is not likely to be a consequence of fraudulent financial reporting?

Which of the following statements is prepared as of a point in time?

Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?

Common Stock is reported as an asset on the balance sheet.

The purpose of a statement of retained earnings is to:

Accounts receivable are:

Ace Electronics received $200 of copy paper from its supplier and promised to pay for it next month.Ace should report:

Every financial statement should have "who,what,and when" in its heading.These include the:

A company began the year with assets of $100,000 and liabilities of $75,000.During the year assets increased by $12,000 and liabilities decreased by $9,000. -Use the information above to answer the following question.What is the amount of stockholders' equity at the beginning of the year?

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

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during that same time period?

The following accounts are taken from the December 31, Year 4 financial statements of a company. -Use the information above to answer the following question.What is the amount of net income for Year 4?

Cash flows from (used in)investing activities includes amounts:

The Sarbanes-Oxley Act (SOX):

According to Generally Accepted Accounting Principles,which of the following is not a characteristic of useful financial information?

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