Question 1

Carrington Company owes you $500 on account due within 15 days.Which of the following amounts on its statement of financial position would help you to determine the likelihood that you will be paid in full and on time?

Accepted Answer

A)  cash and trade receivables.
B)  cash and property and equipment.
C)  cash and inventory.
D)  share capital and retained earnings.

Question 2

What is the purpose of an audit?

Accepted Answer

A)  to prove the accuracy of an entity's financial statements.
B)  to lend credibility to an entity's financial statements.
C)  to endorse the quality of leadership that managers provide for a corporation.
D)  to establish that a corporation's shares are a sound investment.

Question 3

During 20A,Burton Company delivered products to customers for which customers paid or promised to pay $3,820,000.The company collected $3,670,000 in cash from customers during the year.Indicate which of these amounts will appear on the income statement and which on the statement of cash flows.

Accepted Answer

A)  $3,670,000 appears on both the income statement and the statement of cash flows.
B)  $3,670,000 appears on the statement of cash flows,and $3,820,000 appears on the income statement.
C)  $3,820,000 appears on both the income statement and the statement of cash flows.
D)  $3,820,000 appears on the statement of cash flows,and $3,670,000 appears on the income statement.

Question 4

Indicate on which financial statement you would expect to find each of the following.The first is done for you.

Accepted Answer

The answer of Indicate on which financial statement you would...

Question 5

What is accounting information developed primarily for external decision makers called?

Accepted Answer

A)  Financial accounting.
B)  Cost accounting.
C)  Auditing.
D)  Management accounting.

Question 6

The BAT Corporation had 20B revenues of $110,000,expenses of $85,000,and an income tax rate of 20 percent.What would profit after taxes be?

Accepted Answer

A)  $5,000.
B)  $15,000.
C)  $20,000.
D)  $25,000.

Question 7

Which of the following statements is true about a sole proprietorship?

Accepted Answer

A)  The owner and the business are separate legal entities but not separate accounting entities.
B)  The owner and the business are separate accounting entities but not separate legal entities.
C)  The owner and the business are separate legal entities and separate accounting entities.
D)  Most large businesses in this country are organized as sole proprietorships.

Question 8

Liabilities are the entity's legal obligations that result from past business events.

Accepted Answer

A) True 
 B)False

Question 9

External decision makers want answers to all of the following questions except

Accepted Answer

A)  Will the company be able to pay its debts as they come due?
B)  Will the company be able to afford employee pay raises this year?
C)  How does the company compare in profitability with competitors?
D)  Is the company earning satisfactory income?

Question 10

Independent CAs in the public practice of accounting are viewed as employees of their clients.

Accepted Answer

A) True 
 B)False

Question 11

In accounting and reporting for a business entity,the accounting and reporting for the business must be kept separate from other economic affairs of its owners.

Accepted Answer

A) True 
 B)False

Question 12

In what order are assets are listed on a statement of financial position?

Accepted Answer

A)  dollar amount (largest first) .
B)  date of acquisition (earliest first) .
C)  ease of conversion to cash.
D)  importance to the operation of the business.

Question 13

The accounting period in which service revenue is recognized (i.e.,revenue for services rendered)is generally the period in which the cash is collected.

Accepted Answer

A) True 
 B)False

Question 14

If a corporation does not pay its obligations when they are due,its creditors may be able to force the sale of the business's assets to pay their claims.

Accepted Answer

A) True 
 B)False

Question 15

During 20B,its second year in operation,Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000.The amount of cash collected from customers was $5,960,000.The amount of trade receivables at the beginning of 20B was $1,200,000.What is the amount of sales revenue that Banner should report on its income statement for 20B?

Accepted Answer

A)  $4,650,000.
B)  $4,760,000.
C)  $5,850,000.
D)  $5,960,000.

Question 16

The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 17

When would a company report a net loss?

Accepted Answer

A)  When retained earnings decreased due to paying dividends to shareholders.
B)  When its assets decreased during an accounting period.
C)  When its liabilities increased during an accounting period.
D)  When its expenses exceeded its revenues for an accounting period.

Question 18

The management certification indicates management's primary responsibility for financial statement information and the steps to ensure the accuracy of the company's records.

Accepted Answer

A) True 
 B)False

Question 19

How do most businesses earn revenues?

Accepted Answer

A)  When they collect trade receivables.
B)  Through sales of goods or services to customers.
C)  By borrowing money from a bank.
D)  By selling shares to shareholders.

Question 20

What are business liabilities?

Accepted Answer

A)  Amounts it expects to collect in the future from customers.
B)  Debts or obligations resulting from past business events.
C)  The amounts that owners have invested in the business.
D)  The increases in assets that result from profitable operations.

Exam 1: Financial Statements and Business Decisions

In accounting and reporting for a business entity,the accounting and reporting for the business must be kept separate from other economic affairs of its owners.

Correct Answer
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The management certification indicates management's primary responsibility for financial statement information and the steps to ensure the accuracy of the company's records.

Correct Answer
verified

Independent CAs in the public practice of accounting are viewed as employees of their clients.

Correct Answer
verified

External decision makers want answers to all of the following questions except

Correct Answer
verified

What is accounting information developed primarily for external decision makers called?

Correct Answer
verified

The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings.

Correct Answer
verified

The accounting period in which service revenue is recognized (i.e.,revenue for services rendered)is generally the period in which the cash is collected.

Correct Answer
verified

When would a company report a net loss?

Correct Answer
verified

How do most businesses earn revenues?

Correct Answer
verified

Indicate on which financial statement you would expect to find each of the following.The first is done for you.

Correct Answer
verified

What is the purpose of an audit?

Correct Answer
verified

What are business liabilities?

Correct Answer
verified

During 20A,Burton Company delivered products to customers for which customers paid or promised to pay $3,820,000.The company collected $3,670,000 in cash from customers during the year.Indicate which of these amounts will appear on the income statement and which on the statement of cash flows.

Correct Answer
verified

The BAT Corporation had 20B revenues of $110,000,expenses of $85,000,and an income tax rate of 20 percent.What would profit after taxes be?

Correct Answer
verified

Correct Answer
verified

In what order are assets are listed on a statement of financial position?

Correct Answer
verified

Liabilities are the entity's legal obligations that result from past business events.

Correct Answer
verified

If a corporation does not pay its obligations when they are due,its creditors may be able to force the sale of the business's assets to pay their claims.

Correct Answer
verified

Carrington Company owes you $500 on account due within 15 days.Which of the following amounts on its statement of financial position would help you to determine the likelihood that you will be paid in full and on time?

Correct Answer
verified

Which of the following statements is true about a sole proprietorship?

Correct Answer
verified

Exam 1: Financial Statements and Business Decisions

In accounting and reporting for a business entity,the accounting and reporting for the business must be kept separate from other economic affairs of its owners.

Correct AnswerverifiedShow Answer

The management certification indicates management's primary responsibility for financial statement information and the steps to ensure the accuracy of the company's records.

Correct AnswerverifiedShow Answer

Independent CAs in the public practice of accounting are viewed as employees of their clients.

Correct AnswerverifiedShow Answer

External decision makers want answers to all of the following questions except

Correct AnswerverifiedShow Answer

What is accounting information developed primarily for external decision makers called?

Correct AnswerverifiedShow Answer

The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings.

Correct AnswerverifiedShow Answer

The accounting period in which service revenue is recognized (i.e.,revenue for services rendered)is generally the period in which the cash is collected.

Correct AnswerverifiedShow Answer

When would a company report a net loss?

Correct AnswerverifiedShow Answer

How do most businesses earn revenues?

Correct AnswerverifiedShow Answer

Indicate on which financial statement you would expect to find each of the following.The first is done for you.

Correct AnswerverifiedShow Answer

What is the purpose of an audit?

Correct AnswerverifiedShow Answer

What are business liabilities?

Correct AnswerverifiedShow Answer

During 20A,Burton Company delivered products to customers for which customers paid or promised to pay $3,820,000.The company collected $3,670,000 in cash from customers during the year.Indicate which of these amounts will appear on the income statement and which on the statement of cash flows.

Correct AnswerverifiedShow Answer

The BAT Corporation had 20B revenues of $110,000,expenses of $85,000,and an income tax rate of 20 percent.What would profit after taxes be?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In what order are assets are listed on a statement of financial position?

Correct AnswerverifiedShow Answer

Liabilities are the entity's legal obligations that result from past business events.

Correct AnswerverifiedShow Answer

If a corporation does not pay its obligations when they are due,its creditors may be able to force the sale of the business's assets to pay their claims.

Correct AnswerverifiedShow Answer

Carrington Company owes you $500 on account due within 15 days.Which of the following amounts on its statement of financial position would help you to determine the likelihood that you will be paid in full and on time?

Correct AnswerverifiedShow Answer

Which of the following statements is true about a sole proprietorship?

Correct AnswerverifiedShow Answer

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