Question 1

Generally Accepted Accounting Principles (GAAP)require profitable companies to distribute some of their earnings to their stockholders.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements concerning financial reporting is not correct?

Accepted Answer

A)  Accounting rules in the U.S. are called GAAP. 
B)  Accounting rules developed by the IASB are called IFRS. 
C)  Both GAAP and IFRS share the same goal, which is to ensure useful information to users of financial statements. 
D)  There are no differences between the accounting rules developed by FASB and those developed by IASB. 
A)  Accounting rules in the U.S. are called GAAP. 
B)  Accounting rules developed by the IASB are called IFRS. 
C)  Both GAAP and IFRS share the same goal, which is to ensure useful information to users of financial statements. 
D)  There are no differences between the accounting rules developed by FASB and those developed by IASB.

Question 3

Investors and creditors look at the balance sheet to see whether the company:

Accepted Answer

A)  is profitable. 
B)  can maintain its existing product line. 
C)  owns enough assets to pay all that it owes to creditors. 
D)  has had a positive cash flows from operating activities. 
A)  is profitable. 
B)  can maintain its existing product line. 
C)  owns enough assets to pay all that it owes to creditors. 
D)  has had a positive cash flows from operating activities.

Question 4

Dividends are subtracted from revenues on the income statement.

Accepted Answer

A) True 
 B)False

Question 5

Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period.Ace Electronics should report Salaries and Wages Expense of ______ on the income statement,Salaries and Wages Payable of ______ on the balance sheet,and a reduction in Cash of ______.

Accepted Answer

A)  $0; $5,000; $0 
B)  $4,000; $1,000; $0 
C)  $1,000; $1,000; $0 
D)  $5,000; $1,000; $4,000 
A)  $0; $5,000; $0 
B)  $4,000; $1,000; $0 
C)  $1,000; $1,000; $0 
D)  $5,000; $1,000; $4,000

Question 6

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 total assets at the end of Year 4?

Accepted Answer

A)  $16,800. 
B)  $16,500. 
C)  $21,600. 
D)  $23,500. 
A)  $16,800. 
B)  $16,500. 
C)  $21,600. 
D)  $23,500.

Question 7

Creditors are:

Accepted Answer

A)  people or organizations who owe money to a business. 
B)  people or organizations to whom a business owes money. 
C)  stockholders of a business. 
D)  customers of a business. 
A)  people or organizations who owe money to a business. 
B)  people or organizations to whom a business owes money. 
C)  stockholders of a business. 
D)  customers of a business.

Question 8

The first year of operations for a company was Year 1.The net income for the year Year 1 was $20,000 and dividends of $12,000 were paid.In Year 2, the company reported net income of $34,000 and paid dividends of $5,000.At the end of Year 1, the company had total assets of $150,000.At the end of Year 2, the company had total assets of $240,000.
-Use the information above to answer the following question.What was the amount of retained earnings at the end of Year 1?

Accepted Answer

A)  $20,000. 
B)  $8,000. 
C)  $150,000. 
D)  $155,000. 
A)  $20,000. 
B)  $8,000. 
C)  $150,000. 
D)  $155,000.

Question 9

In this period,a company recorded Sales Revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Which of the following statements is correct?.

Accepted Answer

A)  Revenue for this period is $45,000. 
B)  Accounts Receivable at the end of this period is $50,000. 
C)  Accounts Payable at the end of this period is $5,000 (or $50,000 - $45,000). 
D)  Expenses for next period will increase by $5,000 (or $50,000 - $45,000). 
A)  Revenue for this period is $45,000. 
B)  Accounts Receivable at the end of this period is $50,000. 
C)  Accounts Payable at the end of this period is $5,000 (or $50,000 - $45,000). 
D)  Expenses for next period will increase by $5,000 (or $50,000 - $45,000).

Question 10

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

Accepted Answer

A)  The "change in cash" reported on the statement of cash flows is also reported on the statement of retained earnings. 
B)  Both the income statement and the statement of cash flows show the result of a company's operating activities. 
C)  The statement of cash flows is for a period of time while the income statement is at a point in time. 
D)  The statement of cash flows is at a point of time while the income statement is for a period of time. 
A)  The "change in cash" reported on the statement of cash flows is also reported on the statement of retained earnings. 
B)  Both the income statement and the statement of cash flows show the result of a company's operating activities. 
C)  The statement of cash flows is for a period of time while the income statement is at a point in time. 
D)  The statement of cash flows is at a point of time while the income statement is for a period of time.

Question 11

During the first year of operations,a company sold $100,000 of goods to customers and received $90,000 in cash from customers.The remainder is owed to the company at the end of the year.The company incurred $70,000 in expenses for the year and paid $65,000 in cash for these expenses.The remainder is owed by the company at the end of the year.Based on this information,what is the amount of net income for the year?

Accepted Answer

A)  $25,000 
B)  $35,000 
C)  $20,000 
D)  $30,000 
A)  $25,000 
B)  $35,000 
C)  $20,000 
D)  $30,000

Question 12

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 owners 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 owners 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 13

-Use the information above to answer the following question.What amount is represented by letter C in the statement of cash flows?

Accepted Answer

A)  $14,000 
B)  $10,000 
C)  ($14,000) 
D)  $0 
A)  $14,000 
B)  $10,000 
C)  ($14,000) 
D)  $0

Question 14

Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected.Ace Electronics should report revenues of:

Accepted Answer

A)  $5,000. 
B)  $3,000. 
C)  $2,000. 
D)  $0. 
A)  $5,000. 
B)  $3,000. 
C)  $2,000. 
D)  $0.

Question 15

Each item in the statement of retained earnings can appear on another financial statement.Choose the appropriate letter to match the item in the statement of retained earnings with the related financial statement.
ITEM ON STATEMENT OF RETAINED EARNINGS
1.____ Retained earnings,January 1,Year 3
2.____ Net income for Year 3
3.____ Dividends for Year 3
4.____ Retained earnings,December 31,Year 3
FINANCIAL STATEMENT
A.Balance sheet at end of Year 3
B.Statement of cash flows for Year 3
C.Income statement for Year 2
D.Balance sheet at end of Year 2
E.Income statement for Year 3

Accepted Answer

The answer of Each item in the statement of retained...

Question 16

Choose the appropriate letter to match the description of the business activity with the category.
BUSINESS ACTIVITY
1.____ The purchase of a new line of assembly equipment
2.____ Company payment of a dividend
3.____ The purchase of office supplies
4.____ The purchase of advertising time by the company
5.____ The building of a new factory
6.____ Company repayment of a bank loan
CATEGORY
A.Operating activity
B.Investing activity
C.Financing activity

Accepted Answer

1.B
2.C
3.

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 retained earnings on the Balance Sheet at the end of Year 4?

Accepted Answer

A)  $7,725. 
B)  $6,725. 
C)  $4,800. 
D)  $4,725. 
A)  $7,725. 
B)  $6,725. 
C)  $4,800. 
D)  $4,725.

Question 18

The unit of measure assumption states that:

Accepted Answer

A)  results of business activities should be reported in an appropriate monetary unit. 
B)  assets should be recorded at cost. 
C)  a business's financial reports include only the activities of the business. 
D)  assets equal liabilities plus stockholder's equity. 
A)  results of business activities should be reported in an appropriate monetary unit. 
B)  assets should be recorded at cost. 
C)  a business's financial reports include only the activities of the business. 
D)  assets equal liabilities plus stockholder's equity.

Question 19

Find the missing data.

Accepted Answer

A)  Total revenues are $3,810,200, other selling and administrative expenses are $1,051,500, and net income is $364,600. 
B)  Total revenues are $2,495,300, other selling and administrative expenses are $1,051,500, and net income is ($950,300). 
C)  Total revenues are $364,600, other selling and administrative expenses are $3,081,000, and net income is $7,255,800. 
D)  Total revenues are $3,810,200, other selling and administrative expenses are $364,600, and net income is $7,255,800. 
A)  Total revenues are $3,810,200, other selling and administrative expenses are $1,051,500, and net income is $364,600. 
B)  Total revenues are $2,495,300, other selling and administrative expenses are $1,051,500, and net income is ($950,300). 
C)  Total revenues are $364,600, other selling and administrative expenses are $3,081,000, and net income is $7,255,800. 
D)  Total revenues are $3,810,200, other selling and administrative expenses are $364,600, and net income is $7,255,800.

Question 20

Investors in stock of a company increase their wealth by receiving dividends and by:

Accepted Answer

A)  receiving interest. 
B)  an increase in the market value of their stock. 
C)  studying the company's annual financial statements. 
D)  insider trading. 
A)  receiving interest. 
B)  an increase in the market value of their stock. 
C)  studying the company's annual financial statements. 
D)  insider trading.

Generally Accepted Accounting Principles (GAAP)require profitable companies to distribute some of their earnings to their stockholders.

Which of the following statements concerning financial reporting is not correct?

Investors and creditors look at the balance sheet to see whether the company:

Dividends are subtracted from revenues on the income statement.

Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period.Ace Electronics should report Salaries and Wages Expense of on the income statement,Salaries and Wages Payable of on the balance sheet,and a reduction in Cash of __.

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 total assets at the end of Year 4?

Creditors are:

In this period,a company recorded Sales Revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Which of the following statements is correct?.

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

-Use the information above to answer the following question.What amount is represented by letter C in the statement of cash flows?

Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected.Ace Electronics should report revenues of:

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 retained earnings on the Balance Sheet at the end of Year 4?

The unit of measure assumption states that:

Find the missing data.

Investors in stock of a company increase their wealth by receiving dividends and by:

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

Generally Accepted Accounting Principles (GAAP)require profitable companies to distribute some of their earnings to their stockholders.

Which of the following statements concerning financial reporting is not correct?

Investors and creditors look at the balance sheet to see whether the company:

Dividends are subtracted from revenues on the income statement.

Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period.Ace Electronics should report Salaries and Wages Expense of ______ on the income statement,Salaries and Wages Payable of ______ on the balance sheet,and a reduction in Cash of ______.

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 total assets at the end of Year 4?

Creditors are:

In this period,a company recorded Sales Revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Which of the following statements is correct?.

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

-Use the information above to answer the following question.What amount is represented by letter C in the statement of cash flows?

Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected.Ace Electronics should report revenues of:

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 retained earnings on the Balance Sheet at the end of Year 4?

The unit of measure assumption states that:

Find the missing data.

Investors in stock of a company increase their wealth by receiving dividends and by:

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

Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period.Ace Electronics should report Salaries and Wages Expense of on the income statement,Salaries and Wages Payable of on the balance sheet,and a reduction in Cash of __.