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If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during that same time period?


A) $20,000 increase
B) $20,000 decrease
C) $30,000 increase
D) $30,000 decrease

Correct Answer

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Which one of the following is not likely to be a consequence of fraudulent financial reporting?


A) The company's stock price drops once the fraud is discovered.
B) Innocent accountants who work for the company's CPA firm lose their jobs.
C) Creditors recover 100% of amounts owed to them.
D) Employees lose their retirement savings.

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Which of the following statements is prepared as of a point in time?


A) Income statement
B) Statement of Retained Earnings
C) Balance sheet
D) Statement of cash flows

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The Statement of Cash Flows for the current year contained the following: The Statement of Cash Flows for the current year contained the following: The change in cash for the current year was an increase of $14,000. -Use the information above to answer the following question.What was the amount of cash flows from (used in) operating activities? A) $5,000. B) $35,000. C) $25,000. D) $4,000. The change in cash for the current year was an increase of $14,000. -Use the information above to answer the following question.What was the amount of cash flows from (used in) operating activities?


A) $5,000.
B) $35,000.
C) $25,000.
D) $4,000.

Correct Answer

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According to Generally Accepted Accounting Principles,which of the following is not a characteristic of useful financial information?


A) comparable
B) verifiable
C) timely
D) ethical

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The Publish or Perish Printing Company paid a dividend to stockholders.This will be reported on the:


A) audit report.
B) income statement.
C) balance sheet.
D) statement of retained earnings.

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Common Stock is reported as an asset on the balance sheet.

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The Sarbanes-Oxley Act (SOX) :


A) outlines the code of professional ethics for accountants.
B) is a set of laws established to strengthen corporate reporting.
C) requires all publicly-traded corporations to pay annual dividends.

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Choose the appropriate letter to match the terms to the blanks below to complete the relevant equation for each financial statement. FINANCIAL STATEMENT EQUATION Choose the appropriate letter to match the terms to the blanks below to complete the relevant equation for each financial statement. FINANCIAL STATEMENT EQUATION TERM A.Cash at beginning of year B.Net cash flow from operating activities C.Balance of retained earnings from previous year D.Net cash flow from investing activities E.Liabilities F.Net cash flow from financing activities G.Balance of retained earnings at end of year H.Net income I.Revenue J.Assets K.Stockholders' equity L.Expenses M.Cash at end of year N.Dividends paid TERM A.Cash at beginning of year B.Net cash flow from operating activities C.Balance of retained earnings from previous year D.Net cash flow from investing activities E.Liabilities F.Net cash flow from financing activities G.Balance of retained earnings at end of year H.Net income I.Revenue J.Assets K.Stockholders' equity L.Expenses M.Cash at end of year N.Dividends paid

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Balance Sheet: J = E + K
Incom...

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A company started the current year with assets of $700,000, liabilities of $350,000 and common stock of $200,000.During the current year, assets increased by $400,000, liabilities decreased by $50,000 and common stock increased by $275,000.There was no payment of dividends to owners during the year. -Use the information above to answer the following question.What was the amount of the change in total stockholders' equity during the year?


A) $350,000 increase
B) $450,000 increase
C) $250,000 increase
D) $200,000 increase

Correct Answer

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The purpose of a statement of retained earnings is to:


A) estimate the current value of a company's assets.
B) report the way that net income and dividends affected the financial position of the company during the period.
C) show where the cash is flowing into and out of a company.
D) report the specific revenues and expenses arising during the period.

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Ace Electronics received $200 of copy paper from its supplier and promised to pay for it next month.Ace should report:


A) Accounts payable of $200 on its balance sheet.
B) Accounts payable of $200 on its income statement.
C) Accounts receivable of $200 on its balance sheet.
D) Accounts receivable of $200 on its income statement.
E) Cash of $(200) on its balance sheet. F) nothing, because cash hasn't been paid yet.

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Accounts Payable,Notes Payable,and Salaries and Wages Payable are examples of liabilities.

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Every financial statement should have "who,what,and when" in its heading.These include the:


A) name of the person preparing the statement, the type of financial statement, and when the financial statement was reported to the SEC.
B) name of the person preparing the statement, the name of the company, and the date the statement was prepared.
C) name of the company, the type of financial statement, and the time period or date from which the data were taken.
D) name of the company, the purpose of the statement, and when the financial statement was reported to the IRS.

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Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?


A) Investors: Dividends; Creditors: Sufficient cash to make loan payments
B) Investors: Cash flows from investing activities; Creditors: Dividends
C) Investors: Sufficient cash to make loan payments; Creditors: Cash flows from investing activities
D) Investors: Sufficient cash to make loan payments; Creditors: Stock prices

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Cash flows from (used in) investing activities includes amounts:


A) received from a company's stockholders for the sale of stock.
B) received from the sale of the company's office building.
C) paid for dividends to the company's stockholders.
D) paid for salaries of employees.

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Faithful representation is a characteristic of external financial reporting that means:


A) the financial reports of a business are assumed to include the results of only that business's activities.
B) financial information can be compared across businesses because similar accounting methods are applied.
C) the results of business activities are reported using an appropriate monetary unit.
D) financial information depicts the economic substance of business activities.

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A company began the year with assets of $100,000 and liabilities of $75,000.During the year assets increased by $12,000 and liabilities decreased by $9,000. -Use the information above to answer the following question.What is the amount of stockholders' equity at the beginning of the year?


A) $0
B) $25,000.
C) $175,000.
D) $100,000.

Correct Answer

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The following accounts are taken from the December 31, Year 4 financial statements of a company. 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 net income for Year 4? A) $3,825. B) $1,825. C) $10,300. D) $5,625. -Use the information above to answer the following question.What is the amount of net income for Year 4?


A) $3,825.
B) $1,825.
C) $10,300.
D) $5,625.

Correct Answer

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Accounts receivable are:


A) amounts the company expects to pay for previous credit sales.
B) amounts the company expects to collect for previous credit sales.
C) always less than the company's cash.
D) reported in the liabilities section of the balance sheet.
E) reported on the income statement.

Correct Answer

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