Question 1

In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results?

Accepted Answer

A)   Notes to the financial statements
B)   Management discussion and analysis section
C)   Balance sheet
D)   Auditor's report

Question 2

Which of the following is the most appropriate and modern definition of accounting?

Accepted Answer

A)   The information system that identifies, records, and communicates the economic events of an organization to interested users.
B)   A means of collecting information.
C)   The interconnected network of subsystems necessary to operate a business.
D)   Electronic collection, organization, and communication of vast amounts of information.

Question 3

Two primary external users of accounting information are investors and creditors.

Accepted Answer

A) True 
 B)False

Question 4

The management discussion and analysis (MD&A)  section of the annual report covers all of the following aspects except the

Accepted Answer

A)   ability of the company to pay near-term obligations.
B)   certification criteria of the company's auditors.
C)   company's ability to fund operations and expansion.
D)   results of the company operations.

Question 5

John Tate is the bookkeeper for Gabelli Company. John has been trying to get the balance sheet of Gabelli Company to balance. It finally balanced, but now he's not sure it is correct.  Instructions
Prepare a correct balance sheet.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> <br> <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> *$39,0...

Question 6

Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

Accepted Answer

A)   The income statement.
B)   The balance sheet.
C)   The retained earnings statement.
D)   The statement of cash flows.

Question 7

The heading for the income statement might include the line "As of December 31, 20xx."

Accepted Answer

A) True 
 B)False

Question 8

Accounting communicates financial information about a business to both internal and external users.

Accepted Answer

A) True 
 B)False

Question 9

Lankston Company began the year by issuing $90,000 of common stock for cash. The company recorded revenues of $825,000, expenses of $720,000, and paid dividends of $45,000. What was Lankston's net income for the year?

Accepted Answer

A)   $60,000
B)   $150,000
C)   $105,000
D)   $195,000

Question 10

Creditors' rights to assets supersede owners' rights to the assets.

Accepted Answer

A) True 
 B)False

Question 11

Notes to the financial statements include all of the following except

Accepted Answer

A)   descriptions of significant accounting policies used.
B)   explanations of uncertainties.
C)   quantifiable accounting information.
D)   statistics needed to understand the statements.

Question 12

The primary purpose of the statement of cash flows is to report

Accepted Answer

A)   a company's investing transactions.
B)   a company's financing transactions.
C)   information about cash receipts and cash payments of a company.
D)   the net increase or decrease in cash.

Question 13

Which of the following is the best definition of an internal user of accounting information?

Accepted Answer

A)   Investors who use accounting information to decide whether to buy or sell stock.
B)   Creditors like banks that use accounting information to evaluate the risk of lending money.
C)   Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits.
D)   Managers who use accounting information to plan, organize, and run a business.

Question 14

Which of the following is not one of the three forms of business organization?

Accepted Answer

A)   Corporations
B)   Partnerships
C)   Proprietorships
D)   Investors

Question 15

Identify which of the following accounts appear on a balance sheet.
(a) Service revenue
(b) Cash
(c) Common stock
(d) Accounts payable
(e) Rent expense
(f) Supplies
(g) Land

Accepted Answer

(b), (c), ...

Question 16

The information needed to determine whether a company is using accounting methods similar to those of its competitors would be found in the

Accepted Answer

A)   auditor's report.
B)   balance sheet.
C)   management discussion and analysis section.
D)   notes to the financial statements.

Question 17

An annual report includes all of the following except

Accepted Answer

A)   management discussion and analysis section.
B)   notes to the financial statements.
C)   an auditor's report.
D)   salary information for all the executives.

Question 18

Payments to stockholders are called

Accepted Answer

A)   expenses.
B)   liabilities.
C)   dividends.
D)   distributions.

Question 19

The statement of cash flows for Nyland Corporation reveals the following information:  Provide three comments about this information. Make your comments concise yet thorough.

Accepted Answer

(1) Operating activities represent the o...

Question 20

Compute the missing amount in each category of the accounting equation.

Accepted Answer

(a) $152,000: ($243,000 - $91,...

Exam 1: Introduction to Financial Statements

Accounting communicates financial information about a business to both internal and external users.

Correct AnswerverifiedShow Answer

Which of the following is the most appropriate and modern definition of accounting?

Correct AnswerverifiedShow Answer

John Tate is the bookkeeper for Gabelli Company. John has been trying to get the balance sheet of Gabelli Company to balance. It finally balanced, but now he's not sure it is correct. Instructions Prepare a correct balance sheet.

Correct Answerverified *$39,0...View AnswerShow Answer

The information needed to determine whether a company is using accounting methods similar to those of its competitors would be found in the

Correct AnswerverifiedShow Answer

Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

Correct AnswerverifiedShow Answer

Identify which of the following accounts appear on a balance sheet. (a) Service revenue (b) Cash (c) Common stock (d) Accounts payable (e) Rent expense (f) Supplies (g) Land

Correct Answerverified(b), (c), ...View AnswerShow Answer

Creditors' rights to assets supersede owners' rights to the assets.

Correct AnswerverifiedShow Answer

Lankston Company began the year by issuing $90,000 of common stock for cash. The company recorded revenues of $825,000, expenses of $720,000, and paid dividends of $45,000. What was Lankston's net income for the year?

Correct AnswerverifiedShow Answer

Which of the following is the best definition of an internal user of accounting information?

Correct AnswerverifiedShow Answer

Compute the missing amount in each category of the accounting equation.

Correct Answerverified(a) $152,000: ($243,000 - $91,...View AnswerShow Answer

Two primary external users of accounting information are investors and creditors.

Correct AnswerverifiedShow Answer

The heading for the income statement might include the line "As of December 31, 20xx."

Correct AnswerverifiedShow Answer

The statement of cash flows for Nyland Corporation reveals the following information: Provide three comments about this information. Make your comments concise yet thorough.

Correct Answerverified(1) Operating activities represent the o...View AnswerShow Answer

In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results?

Correct AnswerverifiedShow Answer

The primary purpose of the statement of cash flows is to report

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Payments to stockholders are called

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Which of the following is not one of the three forms of business organization?

Correct AnswerverifiedShow Answer

The management discussion and analysis (MD&A) section of the annual report covers all of the following aspects except the

Correct AnswerverifiedShow Answer

An annual report includes all of the following except

Correct AnswerverifiedShow Answer

Notes to the financial statements include all of the following except

Correct AnswerverifiedShow Answer

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*$39,0...
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(b), (c), ...
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(a) $152,000: ($243,000 - $91,...
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(1) Operating activities represent the o...
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