Question 1

The balance sheet

Accepted Answer

A)  summarizes the changes in retained earnings for a specific period of time.
B)  reports the changes in assets liabilities and stockholders' equity over a period of time.
C)  reports the assets liabilities and stockholders' equity at a specific date.
D)  presents the revenues and expenses for a specific period of time.

Question 2

Distributions to stockholders are called

Accepted Answer

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

Question 3

Which of the following is not a step for solving an ethical dilemma?

Accepted Answer

A)  Identifying the alternatives and weighing the impact of each alternative on various stakeholders.
B)  Certifying the ethical accuracy of the financial information.
C)  Identifying and analyzing the principal elements in the situation.
D)  Recognizing the ethical situation and issues involved.

Question 4

The heading on the statement of cash flows identifies all of the following except

Accepted Answer

A)  the preparer of the statement.
B)  the company
C)  the time period covered by the statement.
D)  the type of statement.

Question 5

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 6

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 7

An advantage of the corporate form of business is that

Accepted Answer

A)  it has limited life.
B)  its owner's personal resources are at stake.
C)  its ownership is easily transferable via the sale of shares of stock.
D)  it is simple to establish.

Question 8

Debt securities sold to investors that must be repaid at a particular date some years in the future are called

Accepted Answer

A)  accounts payable.
B)  notes receivable.
C)  taxes payable.
D)  bonds payable.

Question 9

The retained earnings statement would not show

Accepted Answer

A)  the retained earnings beginning balance.
B)  revenues and expenses.
C)  dividends.
D)  the ending retained earning balance.

Question 10

The accounting equation can be expressed as Assets - Liabilities = Stockholders' Equity.

Accepted Answer

A) True 
 B)False

Question 11

Pacifica Company recorded the following cash transactions for the year: Paid $255000 for salaries.
Paid $60000 to purchase equipment.
Collected $7200 from the sale of investments
Repaid $48000 of loan principle
Paid $220000 for other operating expenses.
Paid $112000 in dividends.
Collected $652000 from customers.
What was Pacifica's net cash provided (used)  by investing activities?

Accepted Answer

A)  ($ 60000) 
B)  ($52800) 
C)  $7200
D)  $67200

Question 12

Notes to the financial statements

Accepted Answer

A)  are optional.
B)  help clarify information presented in the financial statements.
C)  are generally brief and few in number.
D)  need not be read in detail if an unqualified opinion accompanies the financial statements.

Question 13

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Accepted Answer

A)  Reduced legal liability for investors
B)  Harder to transfer ownership
C)  Lower taxes
D)  Most common form of organization

Question 14

When expenses exceed revenues which of the following is true?

Accepted Answer

A)  a net loss results
B)  a net income results
C)  assets equal liabilities
D)  assets are increased

Question 15

If total liabilities decreased by $75000 and stockholders' equity increased by $15000 during a period of time then total assets must change by what amount and direction during that same period?

Accepted Answer

A)  $60000 decrease
B)  $60000 increase
C)  $75000 increase
D)  $90000 increase

Question 16

If total liabilities decreased by $90000 and stockholders' equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

Accepted Answer

A)  $120000 increase
B)  $60000 decrease
C)  $60000 increase
D)  $90000 decrease

Question 17

The purchase of equipment is an example of a financing activity.

Accepted Answer

A) True 
 B)False

Question 18

Owners of business firms are the only people who need accounting information.

Accepted Answer

A) True 
 B)False

Question 19

The accounting equation may be expressed as

Accepted Answer

A)  Assets = Stockholders' Equity - Liabilities.
B)  Assets = Liabilities + Stockholders' Equity.
C)  Assets + Liabilities = Stockholders' Equity.
D)  Assets + Stockholders' Equity = Liabilities.

Question 20

External users of accounting information are managers who plan organize and run a business.

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Financial Statements

The accounting equation can be expressed as Assets - Liabilities = Stockholders' Equity.

Correct Answer
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An annual report includes all of the following except

Correct Answer
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The heading on the statement of cash flows identifies all of the following except

Correct Answer
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Owners of business firms are the only people who need accounting information.

Correct Answer
verified

The accounting equation may be expressed as

Correct Answer
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External users of accounting information are managers who plan organize and run a business.

Correct Answer
verified

Which of the following is not a step for solving an ethical dilemma?

Correct Answer
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Debt securities sold to investors that must be repaid at a particular date some years in the future are called

Correct Answer
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Notes to the financial statements

Correct Answer
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The retained earnings statement would not show

Correct Answer
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If total liabilities decreased by $90000 and stockholders' equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

Correct Answer
verified

Distributions to stockholders are called

Correct Answer
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Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

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

Correct Answer
verified

If total liabilities decreased by $75000 and stockholders' equity increased by $15000 during a period of time then total assets must change by what amount and direction during that same period?

Correct Answer
verified

An advantage of the corporate form of business is that

Correct Answer
verified

The purchase of equipment is an example of a financing activity.

Correct Answer
verified

The balance sheet

Correct Answer
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When expenses exceed revenues which of the following is true?

Correct Answer
verified

Correct Answer
verified

Exam 1: Introduction to Financial Statements

The accounting equation can be expressed as Assets - Liabilities = Stockholders' Equity.

Correct AnswerverifiedShow Answer

An annual report includes all of the following except

Correct AnswerverifiedShow Answer

The heading on the statement of cash flows identifies all of the following except

Correct AnswerverifiedShow Answer

Owners of business firms are the only people who need accounting information.

Correct AnswerverifiedShow Answer

The accounting equation may be expressed as

Correct AnswerverifiedShow Answer

External users of accounting information are managers who plan organize and run a business.

Correct AnswerverifiedShow Answer

Which of the following is not a step for solving an ethical dilemma?

Correct AnswerverifiedShow Answer

Debt securities sold to investors that must be repaid at a particular date some years in the future are called

Correct AnswerverifiedShow Answer

Notes to the financial statements

Correct AnswerverifiedShow Answer

The retained earnings statement would not show

Correct AnswerverifiedShow Answer

If total liabilities decreased by $90000 and stockholders' equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

Correct AnswerverifiedShow Answer

Distributions to stockholders are called

Correct AnswerverifiedShow Answer

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If total liabilities decreased by $75000 and stockholders' equity increased by $15000 during a period of time then total assets must change by what amount and direction during that same period?

Correct AnswerverifiedShow Answer

An advantage of the corporate form of business is that

Correct AnswerverifiedShow Answer

The purchase of equipment is an example of a financing activity.

Correct AnswerverifiedShow Answer

The balance sheet

Correct AnswerverifiedShow Answer

When expenses exceed revenues which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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