Question 1

Which of the following would not be considered an internal user of accounting data for the Xanadu Company?

Accepted Answer

A) President of the company 
B) Production manager 
C) Merchandise inventory clerk 
D) President of the employees' labor union 
A) President of the company 
B) Production manager 
C) Merchandise inventory clerk 
D) President of the employees' labor union

Question 2

Liabilities

Accepted Answer

A) are future economic benefits. 
B) are debts and obligations. 
C) possess service potential. 
D) are things of value owned by a business. 
A) are future economic benefits. 
B) are debts and obligations. 
C) possess service potential. 
D) are things of value owned by a business.

Question 3

In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement?

Accepted Answer

A) I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets. 
B) You are right.Revenues and expenses are shown on the income statement.Dividends are a cost of generating revenues and that makes them an expense.Why else would a corporation pay dividends? 
C) Dividends represent a portion of corporate profits that are paid to the shareholders.They belong on the retained earnings statement. 
D) Dividends are deducted from retained earnings on the balance sheet. 
A) I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets. 
B) You are right.Revenues and expenses are shown on the income statement.Dividends are a cost of generating revenues and that makes them an expense.Why else would a corporation pay dividends? 
C) Dividends represent a portion of corporate profits that are paid to the shareholders.They belong on the retained earnings statement. 
D) Dividends are deducted from retained earnings on the balance sheet.

Question 4

Ashley's Accessory Shop started the year with total assets of $210,000 and total liabilities of $120,000. During the year the business recorded $330,000 in revenues, $165,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was

Accepted Answer

A) $180,000. 
B) $165,000. 
C) $195,000. 
D) $105,000. 
A) $180,000. 
B) $165,000. 
C) $195,000. 
D) $105,000.

Question 5

All of the following are interrelationships that are important to understand when preparing financial statements except

Accepted Answer

A) the net income from the income statement is used in the retained earnings statement. 
B) the ending retained earnings from the retained earnings statement is used in the stockholder's equity section of the balance sheet. 
C) the cash on the balance sheet should be equal to the cash at the end of the period on the statement of cash flows. 
D) all of the payments on the balance sheet should be equal to the cash payments for operating activities on the statement of cash flows. 
A) the net income from the income statement is used in the retained earnings statement. 
B) the ending retained earnings from the retained earnings statement is used in the stockholder's equity section of the balance sheet. 
C) the cash on the balance sheet should be equal to the cash at the end of the period on the statement of cash flows. 
D) all of the payments on the balance sheet should be equal to the cash payments for operating activities on the statement of cash flows.

Question 6

Common stock is reported on the

Accepted Answer

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

Question 7

Benedict Company compiled the following financial information as of December 31, 2017: $$\begin{array} { l r } 
\text { Service revenue } & \$ 1,120,000 \
\text { Common stock } & 240,000 \
\text { Equipment } & 320,000 \
\text { Operating expenses } & 1,000,000 \
\text { Cash } & 280,000 \
\text { Dividends } & 80,000 \
\text { Supplies } & 40,000 \
\text { Accounts payable } & 160,000 \
\text { Accounts receivable } & 120,000 \
\text { Retained earnings, } 1 / 1 / 17 & 600,000
\end{array}$$ Benedict's stockholders' equity on December 31, 2017 is

Accepted Answer

A) $840,000. 
B) $880,000. 
C) $640,000. 
D) $960,000. 
A) $840,000. 
B) $880,000. 
C) $640,000. 
D) $960,000.

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

Question 9

Benedict Company compiled the following financial information as of December 31, 2017: $$\begin{array} { l r } 
\text { Service revenue } & \$ 1,120,000 \
\text { Common stock } & 240,000 \
\text { Equipment } & 320,000 \
\text { Operating expenses } & 1,000,000 \
\text { Cash } & 280,000 \
\text { Dividends } & 80,000 \
\text { Supplies } & 40,000 \
\text { Accounts payable } & 160,000 \
\text { Accounts receivable } & 120,000 \
\text { Retained earnings, } 1 / 1 / 17 & 600,000
\end{array}$$ Benedict's retained earnings on December 31, 2017 are

Accepted Answer

A) $600,000. 
B) $720,000. 
C) $640,000. 
D) $ 40,000. 
A) $600,000. 
B) $720,000. 
C) $640,000. 
D) $ 40,000.

Question 10

IFRS, compared to GAAP, tends to be more

Accepted Answer

A) detailed. 
B) rules-based. 
C) principles-based. 
D) full of disclosure requirements. 
A) detailed. 
B) rules-based. 
C) principles-based. 
D) full of disclosure requirements.

Question 11

If the assets owned by a business total $100,000 and liabilities total $65,000, stockholders' equity totals $25,000.

Accepted Answer

A) True 
 B)False

Question 12

All publicly traded U.S. companies must provide their stockholders with an annual report each year.

Accepted Answer

A) True 
 B)False

Question 13

Gilkey Corporation began the year with retained earnings of $310,000. During the year, the company issued $420,000 of common stock, recorded expenses of $1,200,000, and paid dividends of $80,000. If Gilkey's ending retained earnings was $330,000, what was the company's revenue for the year?

Accepted Answer

A) $1,220,000 
B) $1,300,000 
C) $1,640,000 
D) $1,720,000 
A) $1,220,000 
B) $1,300,000 
C) $1,640,000 
D) $1,720,000

Question 14

Investing activities involve collecting the necessary funds to support the business.

Accepted Answer

A) True 
 B)False

Question 15

Dividends paid

Accepted Answer

A) increase assets. 
B) increase expenses. 
C) decrease revenues. 
D) decrease retained earnings. 
A) increase assets. 
B) increase expenses. 
C) decrease revenues. 
D) decrease retained earnings.

Question 16

Dividends are reported on the

Accepted Answer

A) income statement. 
B) retained earnings statement. 
C) balance sheet. 
D) income statement and balance sheet. 
A) income statement. 
B) retained earnings statement. 
C) balance sheet. 
D) income statement and balance sheet.

Question 17

Retained earnings is

Accepted Answer

A) the stockholders' claim on total assets. 
B) equal to cash. 
C) equal to revenues. 
D) the amount of net income kept in the corporation for future use. 
A) the stockholders' claim on total assets. 
B) equal to cash. 
C) equal to revenues. 
D) the amount of net income kept in the corporation for future use.

Question 18

Payments to stockholders are called

Accepted Answer

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

Question 19

Which of the following activities involves collecting the necessary funds to support the business?

Accepted Answer

A) Operating 
B) Investing 
C) Financing 
D) Delivering 
A) Operating 
B) Investing 
C) Financing 
D) Delivering

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Financial Statements

Which of the following would not be considered an internal user of accounting data for the Xanadu Company?

Liabilities

In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement?

Ashley's Accessory Shop started the year with total assets of $210,000 and total liabilities of $120,000. During the year the business recorded $330,000 in revenues, $165,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was

All of the following are interrelationships that are important to understand when preparing financial statements except

Common stock is reported on the

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

IFRS, compared to GAAP, tends to be more

If the assets owned by a business total $100,000 and liabilities total $65,000, stockholders' equity totals $25,000.

All publicly traded U.S. companies must provide their stockholders with an annual report each year.

Gilkey Corporation began the year with retained earnings of $310,000. During the year, the company issued $420,000 of common stock, recorded expenses of $1,200,000, and paid dividends of $80,000. If Gilkey's ending retained earnings was $330,000, what was the company's revenue for the year?

Investing activities involve collecting the necessary funds to support the business.

Dividends paid

Dividends are reported on the

Retained earnings is

Payments to stockholders are called

Which of the following activities involves collecting the necessary funds to support the business?

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

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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