Question 1

The account 'Wages Payable' would appear on the income statement.

Accepted Answer

A) True 
 B)False

Question 2

Generally accepted accounting principles

Accepted Answer

A)  are changing continually. 
B)  are sound in theory but rarely used in practice. 
C)  have eliminated all the weaknesses in accounting practice. 
D)  are accounting rules formulated by the Internal Revenue Service. 
A)  are changing continually. 
B)  are sound in theory but rarely used in practice. 
C)  have eliminated all the weaknesses in accounting practice. 
D)  are accounting rules formulated by the Internal Revenue Service.

Question 3

Which of the following forms of organization are considered to be separate entities by accountants?

Accepted Answer

A)  Partnerships only 
B)  Sole proprietorships only 
C)  Corporations only 
D)  Sole proprietorships, partnerships, and corporations 
A)  Partnerships only 
B)  Sole proprietorships only 
C)  Corporations only 
D)  Sole proprietorships, partnerships, and corporations

Question 4

The terms bookkeeping and accounting are synonymous.

Accepted Answer

A) True 
 B)False

Question 5

Revenues have the effect of increasing owner's capital.

Accepted Answer

A) True 
 B)False

Question 6

The intentional preparation of misleading financial statements, known as fraudulent financial reporting, can result from all of the following except

Accepted Answer

A)  the misapplication of accounting principles. 
B)  the manipulation of inventory records. 
C)  fictitious sales or orders. 
D)  recording a revenue that has been earned but not yet received. 
A)  the misapplication of accounting principles. 
B)  the manipulation of inventory records. 
C)  fictitious sales or orders. 
D)  recording a revenue that has been earned but not yet received.

Question 7

An auditor maintains no direct financial interest in the company he or she is auditing. The principle being followed is

Accepted Answer

A)  independence. 
B)  integrity. 
C)  objectivity. 
D)  due care. 
A)  independence. 
B)  integrity. 
C)  objectivity. 
D)  due care.

Question 8

Why would it be less risky for a wealthy individual to incorporate his or her business rather than to operate it as a sole proprietorship or partnership?

Accepted Answer

With a sole proprietorship or partnershi

Question 9

Following are the total assets and liabilities at the beginning and end of the year for Maren Company:
 $\begin{array}{|l|r|r|}
\hline &{\text { Assets }} & {\text { Liabilities }} \
\hline \text { Beginning of the year } & \$ 70,000 & \$ 45,000 \
\hline \text { End of the year } & 108,000 & 40,000 \
\hline
\end{array}$ Determine the net income or loss for the year in each of the following situations: 
a. The owner made no investments in the business and no withdrawals were made during the year.
b. The owner made an investment of $20,000 and withdrew $12,000 during the year.

Accepted Answer

a. [($108,000 - $40,000) - ($7

Question 10

Flores Realty Company had the following balance sheet accounts and balances: $\begin{array}{lrlr}
\text { Accounts Payable } & \$ 6,000 & \text { Earl Flores, Capital } & ? \
\text { Accounts Receivable } & 1,000 & \text { Equipment } & \$ 7,000 \
\text { Building } & 8,000 & \text { Land } & 7,000 \
\text { Cash } & 3,000 & & \
\end{array}$ If the equipment were sold for $7,000, what would be the total of owner's equity?

Accepted Answer

A)  $23,400 
B)  $12,400 
C)  $11,400 
D)  $29,400 
A)  $23,400 
B)  $12,400 
C)  $11,400 
D)  $29,400

Question 11

Which of the following accounts is not considered an asset?

Accepted Answer

A)  Accounts Receivable 
B)  Inventory 
C)  Accounts Payable 
D)  Trademark 
A)  Accounts Receivable 
B)  Inventory 
C)  Accounts Payable 
D)  Trademark

Question 12

Creditors are those who lend money to others or deliver goods and services before being paid.

Accepted Answer

A) True 
 B)False

Question 13

Use the following accounts and balances to prepare a balance sheet for Havrilla Company at December 31, 2010.
 $\begin{array}{|l|r|}
\hline \text { Accounts Payable } & \$ 10,000 \
\hline \text { Cash } & 4,800 \
\hline \text { Juan Havrilla, Capital } & ? \
\hline \text { Equipment } &13,200 \
\hline \text { Accounts Receivable } & 6,400\\hline 
\end{array}$

Accepted Answer

The answer of Use the following accounts and balances to...

Question 14

Which of the following groups uses accounting information primarily to help protect the public?

Accepted Answer

A)  Management 
B)  Regulatory agencies 
C)  Taxing authorities 
D)  Economic planners 
A)  Management 
B)  Regulatory agencies 
C)  Taxing authorities 
D)  Economic planners

Question 15

The statement of cash flows would disclose the purchase of a building for cash

Accepted Answer

A)  nowhere on the statement. 
B)  in the operating activities section. 
C)  in the investing activities section. 
D)  in the financing activities section. 
A)  nowhere on the statement. 
B)  in the operating activities section. 
C)  in the investing activities section. 
D)  in the financing activities section.

Question 16

The authoritative body currently responsible for establishing accounting practice is the

Accepted Answer

A)  Internal Revenue Service. 
B)  Financial Accounting Standards Board. 
C)  American Institute of Certified Public Accountants. 
D)  Federal Reserve Board. 
A)  Internal Revenue Service. 
B)  Financial Accounting Standards Board. 
C)  American Institute of Certified Public Accountants. 
D)  Federal Reserve Board.

Question 17

The economic resources invested in a business by the owner are represented by owner's equity.

Accepted Answer

A) True 
 B)False

Question 18

The purchase of land with cash would be disclosed on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are considered nonexchange transactions except

Accepted Answer

A)  the day-by-day accumulation of interest. 
B)  the wear and tear on machinery. 
C)  the sale of goods and services. 
D)  losses from fire, flood, and theft. 
A)  the day-by-day accumulation of interest. 
B)  the wear and tear on machinery. 
C)  the sale of goods and services. 
D)  losses from fire, flood, and theft.

Question 20

Most business enterprises in the United States are

Accepted Answer

A)  government units. 
B)  partnerships. 
C)  sole proprietorships. 
D)  corporations. 
A)  government units. 
B)  partnerships. 
C)  sole proprietorships. 
D)  corporations.

Exam 1: Uses of Accounting Information and the Financial Statements

The account 'Wages Payable' would appear on the income statement.

Generally accepted accounting principles

Which of the following forms of organization are considered to be separate entities by accountants?

The terms bookkeeping and accounting are synonymous.

Revenues have the effect of increasing owner's capital.

The intentional preparation of misleading financial statements, known as fraudulent financial reporting, can result from all of the following except

An auditor maintains no direct financial interest in the company he or she is auditing. The principle being followed is

Why would it be less risky for a wealthy individual to incorporate his or her business rather than to operate it as a sole proprietorship or partnership?

Flores Realty Company had the following balance sheet accounts and balances: Accounts Payable \ 6,000 Earl Flores, Capital ? Accounts Receivable 1,000 Equipment \ 7,000 Building 8,000 Land 7,000 Cash 3,000 If the equipment were sold for $7,000, what would be the total of owner's equity?

Which of the following accounts is not considered an asset?

Creditors are those who lend money to others or deliver goods and services before being paid.

Use the following accounts and balances to prepare a balance sheet for Havrilla Company at December 31, 2010. Accounts Payable \ 10,000 Cash 4,800 Juan Havrilla, Capital ? Equipment 13,200 Accounts Receivable 6,400

Which of the following groups uses accounting information primarily to help protect the public?

The statement of cash flows would disclose the purchase of a building for cash

The authoritative body currently responsible for establishing accounting practice is the

The economic resources invested in a business by the owner are represented by owner's equity.

The purchase of land with cash would be disclosed on the statement of cash flows.

All of the following are considered nonexchange transactions except

Most business enterprises in the United States are

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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