Question 1

Which of the following would not represent a financing activity?

Accepted Answer

A)   Paying dividends to stockholders.
B)   An investment of capital by the owners.
C)   Borrowing money from a bank to purchase new equipment.
D)   Buying supplies on account.E) B) and C)
F) C) and D)

Question 2

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

Accepted Answer

A)   Accounts Receivable.
B)   Account Payable.
C)   increase in Cash, since Beta is sure to pay next month.
D)   net loss.E) B) and C)
F) All of the above

Question 3

Stockholders' equity is the difference between a company's assets and its liabilities.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not correct?

Accepted Answer

A)   Assets = Liabilities + Stockholders' Equity
B)   Liabilities = Assets - Stockholders' Equity
C)   Stockholders' Equity + Liabilities - Assets = 0
D)   Assets = Liabilities - Stockholders' EquityE) None of the above
F) A) and C)

Question 5

Managerial accounting reports prepared for internal use are used by the company's:

Accepted Answer

A)   suppliers.
B)   bank.
C)   employees.
D)   stockholders.E) A) and D)
F) C) and D)

Question 6

If a company reports net income on the income statement,then the statement of cash flows will report the same amount as cash flows from operating activities for the period.

Accepted Answer

A) True 
 B)False

Question 7

During its first year of operations,Widgets Incorporated reported Sales Revenue of $386,000 but collected only $303,000 from customers.At the end of the year,Accounts Receivable equal:

Accepted Answer

A)   $689,000.
B)   $386,000.
C)   $303,000.
D)   $83,000.E) A) and B)
F) A) and C)

Question 8

The Whackem-Smackem Software Company sold $11 million of computer games in its first year of operations.The company received payments of $7.5 million for these computer games.The company's income statement would report:

Accepted Answer

A)   Accounts Receivable of $3.5 million.
B)   expenses of $3.5 million.
C)   Sales Revenue of $7.5 million.
D)   Sales Revenue of $11 million.E) B) and C)
F) A) and C)

Question 9

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 liabilities at the end of Year 4?

Accepted Answer

A)   $7,075.
B)   $10,075.
C)   $9,075.
D)   $12,975.E) A) and C)
F) A) and B)

Question 10

Which of the following expressions of the accounting equation is correct?

Accepted Answer

A)   Liabilities + Assets = Stockholder's Equity
B)   Stockholder's Equity + Assets = Liabilities
C)   Assets = Liabilities - Stockholder's Equity
D)   Stockholder's Equity = Assets - LiabilitiesE) C) and D)
F) All of the above

Question 11

A cost of doing business is referred to as a(n) ______ and it is necessary to earn ______.

Accepted Answer

A)   revenue; assets
B)   expense; revenue
C)   liability; expenses
D)   dividend; revenueE) A) and B)
F) A) and C)

Question 12

The income statement reports:

Accepted Answer

A)   the assets, liabilities, and stockholders' equity of a company.
B)   cumulative earnings that have not been distributed to stockholders.
C)   the amount of profit distributed to owners during the period.
D)   the amount of revenues earned and expenses incurred during the period.E) None of the above
F) All of the above

Question 13

When a company earns net income,the company's Retained Earnings:

Accepted Answer

A)   increase.
B)   decrease.
C)   are converted to cash.
D)   are paid to stockholders.E) None of the above
F) A) and B)

Question 14

The income statement would report the amount of:

Accepted Answer

A)   cash at the end of the year.
B)   supplies used up during the current year.
C)   dividends distributed to owners during the current year.
D)   unpaid employee wages at the end of the year.E) B) and C)
F) B) and D)

Question 15

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

Accepted Answer

A)   Accounts Receivable
B)   Accounts Payable
C)   Advertising Expense
D)   CashE) B) and C)
F) A) and B)

Question 16

What is the main goal of GAAP?

Accepted Answer

A)   To help ensure that financial decisions are made in a professional and ethical manner.
B)   To establish standards that help to prevent and detect fraudulent acts by management.
C)   To ensure that the financial information produced by companies is useful to present and potential investors and other parties in making decisions.
D)   To oversee the stock exchanges and financial reporting by public companies in the United States.E) B) and C)
F) None of the above

Question 17

Each of the following independent companies is missing numerical data.
Required:
Use your knowledge of the financial statement equations and their interrelationships to fill in the missing amounts.

Accepted Answer

The answer of Each of the following independent companies is...

Question 18

A stock that does not pay a dividend is an undesirable investment.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about this statement of retained earnings is not correct?

Accepted Answer

A)   Retained earnings of $350,500 will appear on the balance sheet as of December 31, Year 3.
B)   The net income in the above statement came from the income statement for the year ending December 31, Year 3.
C)   Dividends are shown in parentheses because they are distributions of earnings to the stockholders.
D)   The ending retained earnings amount represents the amount of cash at the end of Year 3.E) A) and B)
F) B) and C)

Question 20

The main goal of both U.S.GAAP and IFRS is to:

Accepted Answer

A)   ensure that companies produce useful information for capital providers.
B)   reduce the number of required financial statements.
C)   prevent all fraud and ensure the amounts reported are precise to the penny.
D)   ensure that companies become more profitable.E) None of the above
F) A) and D)

Exam 1: Business Decisions and Financial Accounting

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

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

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Which of the following would not represent a financing activity?

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If a company reports net income on the income statement,then the statement of cash flows will report the same amount as cash flows from operating activities for the period.

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The Whackem-Smackem Software Company sold $11 million of computer games in its first year of operations.The company received payments of $7.5 million for these computer games.The company's income statement would report:

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A cost of doing business is referred to as a(n) ______ and it is necessary to earn ______.

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Which of the following is not correct?

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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 liabilities at the end of Year 4?

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Managerial accounting reports prepared for internal use are used by the company's:

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A stock that does not pay a dividend is an undesirable investment.

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The income statement reports:

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During its first year of operations,Widgets Incorporated reported Sales Revenue of $386,000 but collected only $303,000 from customers.At the end of the year,Accounts Receivable equal:

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Each of the following independent companies is missing numerical data. Required: Use your knowledge of the financial statement equations and their interrelationships to fill in the missing amounts.

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When a company earns net income,the company's Retained Earnings:

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What is the main goal of GAAP?

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The main goal of both U.S.GAAP and IFRS is to:

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Which of the following statements about this statement of retained earnings is not correct?

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Which of the following expressions of the accounting equation is correct?

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Stockholders' equity is the difference between a company's assets and its liabilities.

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The income statement would report the amount of:

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A cost of doing business is referred to as a(n) and it is necessary to earn .

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