Question 1

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

Question 2

Explanatory notes and supporting schedules are an optional part of an annual report.

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

Borrowing money is an example of a(n)

Accepted Answer

A) delivering activity. 
B) financing activity. 
C) investing activity. 
D) operating activity. 
A) delivering activity. 
B) financing activity. 
C) investing activity. 
D) operating activity.

Question 5

Which financial statement is prepared first?

Accepted Answer

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

Question 6

A business organized as a separate legal entity owned by stockholders is a partnership.

Accepted Answer

A) True 
 B)False

Question 7

An income statement shows

Accepted Answer

A) revenues, liabilities, and stockholders' equity. 
B) expenses, dividends, and stockholders' equity. 
C) revenues, expenses, and net income. 
D) assets, liabilities, and stockholders' equity. 
A) revenues, liabilities, and stockholders' equity. 
B) expenses, dividends, and stockholders' equity. 
C) revenues, expenses, and net income. 
D) assets, liabilities, and stockholders' equity.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n)

Accepted Answer

A) account payable. 
B) account receivable. 
C) revenue. 
D) expense. 
A) account payable. 
B) account receivable. 
C) revenue. 
D) expense.

Question 10

Which of the following is an asset?

Accepted Answer

A) Mortgage payable 
B) Investments 
C) Common stock 
D) Retained earnings 
A) Mortgage payable 
B) Investments 
C) Common stock 
D) Retained earnings

Question 11

A business is usually involved in two types of activities-financing and investing.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would not be considered an external user of accounting data for the Julian Company?

Accepted Answer

A) Internal Revenue Service agent 
B) Management 
C) Creditors 
D) Customers 
A) Internal Revenue Service agent 
B) Management 
C) Creditors 
D) Customers

Question 13

The partnership form of business organization

Accepted Answer

A) is a separate legal entity. 
B) is a common form of organization for service-type businesses. 
C) enjoys an unlimited life. 
D) has limited liability. 
A) is a separate legal entity. 
B) is a common form of organization for service-type businesses. 
C) enjoys an unlimited life. 
D) has limited liability.

Question 14

An income statement

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. 
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 15

Ending retained earnings for a period is equal to beginning

Accepted Answer

A) Retained earnings + Net income + Dividends. 
B) Retained earnings - Net income - Dividends. 
C) Retained earnings + Net income - Dividends. 
D) Retained earnings - Net income + Dividends. 
A) Retained earnings + Net income + Dividends. 
B) Retained earnings - Net income - Dividends. 
C) Retained earnings + Net income - Dividends. 
D) Retained earnings - Net income + Dividends.

Question 16

Net income will result during a time period when

Accepted Answer

A) assets exceed liabilities. 
B) assets exceed revenues. 
C) expenses exceed revenues. 
D) revenues exceed expenses. 
A) assets exceed liabilities. 
B) assets exceed revenues. 
C) expenses exceed revenues. 
D) revenues exceed expenses.

Question 17

Retained earnings at the end of the period is equal to

Accepted Answer

A) retained earnings at the beginning of the period plus net income minus liabilities. 
B) retained earnings at the beginning of the period plus net income minus dividends. 
C) net income. 
D) assets plus liabilities. 
A) retained earnings at the beginning of the period plus net income minus liabilities. 
B) retained earnings at the beginning of the period plus net income minus dividends. 
C) net income. 
D) assets plus liabilities.

Question 18

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 19

Which of the following groups uses accounting information to determine whether the company's operating performance might result in a stock price increase?

Accepted Answer

A) Investors in common stock 
B) Marketing managers 
C) Creditors 
D) Chief Financial Officer 
A) Investors in common stock 
B) Marketing managers 
C) Creditors 
D) Chief Financial Officer

Question 20

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

Accepted Answer

A) True 
 B)False

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

Explanatory notes and supporting schedules are an optional part of an annual report.

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

Borrowing money is an example of a(n)

Which financial statement is prepared first?

A business organized as a separate legal entity owned by stockholders is a partnership.

An income statement shows

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

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n)

Which of the following is an asset?

A business is usually involved in two types of activities-financing and investing.

Which of the following would not be considered an external user of accounting data for the Julian Company?

The partnership form of business organization

An income statement

Ending retained earnings for a period is equal to beginning

Net income will result during a time period when

Retained earnings at the end of the period is equal to

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

Which of the following groups uses accounting information to determine whether the company's operating performance might result in a stock price increase?

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

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

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Exam 1: Introduction to Financial Statements

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

Explanatory notes and supporting schedules are an optional part of an annual report.

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

Borrowing money is an example of a(n)

Which financial statement is prepared first?

A business organized as a separate legal entity owned by stockholders is a partnership.

An income statement shows

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

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n)

Which of the following is an asset?

A business is usually involved in two types of activities-financing and investing.

Which of the following would not be considered an external user of accounting data for the Julian Company?

The partnership form of business organization

An income statement

Ending retained earnings for a period is equal to beginning

Net income will result during a time period when

Retained earnings at the end of the period is equal to

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

Which of the following groups uses accounting information to determine whether the company's operating performance might result in a stock price increase?

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

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

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