Question 1

Costs that are incurred during the normal operations of a business to generate revenues are called

Accepted Answer

A)  Losses 
B)  Liabilities 
C)  Expenses 
D)  Assets 
A)  Losses 
B)  Liabilities 
C)  Expenses 
D)  Assets

Question 2

The idea that both parties to a transaction must be rational and free to act independently is the

Accepted Answer

A)  Monetary measurement concept 
B)  Arm's-length transaction assumption 
C)  Going concern assumption 
D)  Cost principle 
A)  Monetary measurement concept 
B)  Arm's-length transaction assumption 
C)  Going concern assumption 
D)  Cost principle

Question 3

Which of the following is an example of a disclosure of information NOT recognized that would be explained in the notes to the financial statements?

Accepted Answer

A)  The description of all the individual items that comprise notes payable 
B)  The disclosure of quarterly financial information 
C)  The method used to estimate depreciation on a piece of equipment 
D)  The disclosure of the uncertain, potential outcome of a lawsuit 
A)  The description of all the individual items that comprise notes payable 
B)  The disclosure of quarterly financial information 
C)  The method used to estimate depreciation on a piece of equipment 
D)  The disclosure of the uncertain, potential outcome of a lawsuit

Question 4

Revenues cause

Accepted Answer

A)  An increase in net assets 
B)  A decrease in net assets 
C)  No change in net assets 
D)  An increase in liabilities 
A)  An increase in net assets 
B)  A decrease in net assets 
C)  No change in net assets 
D)  An increase in liabilities

Question 5

The following information was taken from the records of Tellers Corporation for the year ended December 31, 2013:   Given the above information, retained earnings on December 31, 2012 was

Accepted Answer

A)  $45,110 
B)  $40,800 
C)  $31,185 
D)  $57,860 
A)  $45,110 
B)  $40,800 
C)  $31,185 
D)  $57,860

Question 6

Which of the following is an overall measure of the performance of a business entity's activities?

Accepted Answer

A)  Revenues 
B)  Net income (or net loss) 
C)  Assets 
D)  Owners' equity 
A)  Revenues 
B)  Net income (or net loss) 
C)  Assets 
D)  Owners' equity

Question 7

The following information was taken from Hemp Corporation's books as of December 31, 2013:
  
Prepare a classified balance sheet for the year ended December 31, 2013.

Accepted Answer

Prepare a classified

Question 8

A business owned by two or more individuals or entities is called a(n)

Accepted Answer

A)  Nonprofit organization 
B)  Partnership 
C)  Institution 
D)  Sole proprietorship 
A)  Nonprofit organization 
B)  Partnership 
C)  Institution 
D)  Sole proprietorship

Question 9

Exhibit 2-2 The following information was taken from the records of Tellers Corporation for the month ended December 31, 2012:
  
-Refer to Exhibit 2-2. Given the above information, net income is

Accepted Answer

A)  $45,110 
B)  $35,310 
C)  $31,185 
D)  $11,385 
A)  $45,110 
B)  $35,310 
C)  $31,185 
D)  $11,385

Question 10

Which of the following would be classified as a current asset?

Accepted Answer

A)  Accounts payable 
B)  Land 
C)  Capital stock 
D)  Accounts receivable 
A)  Accounts payable 
B)  Land 
C)  Capital stock 
D)  Accounts receivable

Question 11

What is the primary limitation of the balance sheet?

Accepted Answer

A)  It does not reflect the net assets of a company 
B)  It does not reflect the current value of the company 
C)  It does not reflect the number of shares of capital stock issued 
D)  It does not reflect the undistributed earnings of a company 
A)  It does not reflect the net assets of a company 
B)  It does not reflect the current value of the company 
C)  It does not reflect the number of shares of capital stock issued 
D)  It does not reflect the undistributed earnings of a company

Question 12

The following information was taken from the records of Hart Corporation for the month ended December 31, 2013:   Given the above information, retained earnings as of December 31, 2013 is

Accepted Answer

A)  $79,045 
B)  $79,245 
C)  $55,795 
D)  $33,895 
A)  $79,045 
B)  $79,245 
C)  $55,795 
D)  $33,895

Question 13

Which of the following classifications refers to those activities whereby cash is obtained or repaid to owners and creditors?

Accepted Answer

A)  Investing 
B)  Operating 
C)  Borrowing 
D)  Financing 
A)  Investing 
B)  Operating 
C)  Borrowing 
D)  Financing

Question 14

Which of the following classifications does NOT appear on the Statement of Cash Flows?

Accepted Answer

A)  Investing 
B)  Operating 
C)  Borrowing 
D)  Financing 
A)  Investing 
B)  Operating 
C)  Borrowing 
D)  Financing

Question 15

The price that would be paid today for an asset is the

Accepted Answer

A)  Book value 
B)  Market value 
C)  Purchase cost 
D)  Economic value 
A)  Book value 
B)  Market value 
C)  Purchase cost 
D)  Economic value

Question 16

Companies prepare classified and comparative financial statements because

Accepted Answer

A)  They are required by international accounting principles 
B)  They provide financial statement readers with useful information about trends in financial position and operating performance 
C)  They are required by the IRS 
D)  They show changes in a company's management policies 
A)  They are required by international accounting principles 
B)  They provide financial statement readers with useful information about trends in financial position and operating performance 
C)  They are required by the IRS 
D)  They show changes in a company's management policies

Question 17

Another name for the income statement is

Accepted Answer

A)  Statement of cash flows 
B)  Statement of financial position 
C)  Statement of earnings 
D)  Retained earnings statement 
A)  Statement of cash flows 
B)  Statement of financial position 
C)  Statement of earnings 
D)  Retained earnings statement

Question 18

The comparative balance sheet for Earthwork Company is presented below:

Accepted Answer

Additional information for Earthwork's 2

Exam 2: Financial Statements: An Overview

Costs that are incurred during the normal operations of a business to generate revenues are called

The idea that both parties to a transaction must be rational and free to act independently is the

Which of the following is an example of a disclosure of information NOT recognized that would be explained in the notes to the financial statements?

Revenues cause

The following information was taken from the records of Tellers Corporation for the year ended December 31, 2013: Given the above information, retained earnings on December 31, 2012 was

Which of the following is an overall measure of the performance of a business entity's activities?

The following information was taken from Hemp Corporation's books as of December 31, 2013: Prepare a classified balance sheet for the year ended December 31, 2013.

A business owned by two or more individuals or entities is called a(n)

Exhibit 2-2 The following information was taken from the records of Tellers Corporation for the month ended December 31, 2012: -Refer to Exhibit 2-2. Given the above information, net income is

Which of the following would be classified as a current asset?

What is the primary limitation of the balance sheet?

The following information was taken from the records of Hart Corporation for the month ended December 31, 2013: Given the above information, retained earnings as of December 31, 2013 is

Which of the following classifications refers to those activities whereby cash is obtained or repaid to owners and creditors?

Which of the following classifications does NOT appear on the Statement of Cash Flows?

The price that would be paid today for an asset is the

Companies prepare classified and comparative financial statements because

Another name for the income statement is

The comparative balance sheet for Earthwork Company is presented below:

Accounting Information: Users and Uses

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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