Question 1

Net income results when

Accepted Answer

A) Assets > Liabilities. B) Assets Expenses. D) Revenues < Expenses. A) Assets > Liabilities. B) Assets Expenses. D) Revenues < Expenses. C

Question 2

External users want answers to all of the following questions except

Accepted Answer

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

Question 3

A proprietor has unlimited liability.

Accepted Answer

A) True 
 B)False  True

Question 4

Accounting communicates financial information about a business to both internal and external users.

Accepted Answer

A) True 
 B)False

Question 5

Liabilities of a company are owed to

Accepted Answer

A)  debtors. 
B)  owners. 
C)  creditors. 
D)  shareholders. 
A)  debtors. 
B)  owners. 
C)  creditors. 
D)  shareholders.

Question 6

The users of private company financial statements do not have access to financial information beyond that available to the users of public company financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Allocating and recording the cost of using property, plant & equipment over their useful lives is called

Accepted Answer

A)  allocation expense. 
B)  depreciation expense. 
C)  a general expense. 
D)  amortization expense. 
A)  allocation expense. 
B)  depreciation expense. 
C)  a general expense. 
D)  amortization expense.

Question 8

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 9

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 shareholders' equity over a period of time. 
C)  reports the assets, liabilities, and shareholders' equity at a specific date. 
D)  reports 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 shareholders' equity over a period of time. 
C)  reports the assets, liabilities, and shareholders' equity at a specific date. 
D)  reports the revenues and expenses for a specific period of time.

Question 10

The concept that economic activity which can be identified with a particular company must be kept separate and distinct from the owner(s) and from all other economic entities is known as

Accepted Answer

A)  the separation concept. 
B)  the reporting entity concept. 
C)  the economic concept. 
D)  the business organization concept. 
A)  the separation concept. 
B)  the reporting entity concept. 
C)  the economic concept. 
D)  the business organization concept.

Question 11

As labour unions represent employees they are also regarded as internal users.

Accepted Answer

A) True 
 B)False

Question 12

Which form of business would have its shares listed on a stock exchange?

Accepted Answer

A)  proprietorship 
B)  partnership 
C)  private corporation 
D)  public corporation 
A)  proprietorship 
B)  partnership 
C)  private corporation 
D)  public corporation

Question 13

Shareholder's equity consists of at least two parts: share capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is not true?

Accepted Answer

A)  Public corporations must use International Financial Reporting Standards. 
B)  Private corporations can choose to use either International Financial Reporting Standards (IFRS) or Accounting Standards for Private Enterprises (ASP
E) . 
C)  Both public and private corporations issue shares. 
D)  All private corporations are small. 
A)  Public corporations must use International Financial Reporting Standards. 
B)  Private corporations can choose to use either International Financial Reporting Standards (IFRS) or Accounting Standards for Private Enterprises (ASP
E) . 
C)  Both public and private corporations issue shares. 
D)  All private corporations are small.

Question 15

Expenses are incurred

Accepted Answer

A)  only on rare occasions. 
B)  to produce assets. 
C)  to produce liabilities. 
D)  to generate revenues. 
A)  only on rare occasions. 
B)  to produce assets. 
C)  to produce liabilities. 
D)  to generate revenues.

Question 16

High standards of ethics are not required for preparers of financial information.

Accepted Answer

A) True 
 B)False

Question 17

Accounting information is not important to marketing managers.

Accepted Answer

A) True 
 B)False

Question 18

The right to receive money in the future is called a(n)

Accepted Answer

A)  account payable. 
B)  account receivable. 
C)  liability. 
D)  unearned revenue. 
A)  account payable. 
B)  account receivable. 
C)  liability. 
D)  unearned revenue.

Question 19

Debt and obligations of a business are referred to as

Accepted Answer

A)  assets. 
B)  equities. 
C)  liabilities. 
D)  expenses. 
A)  assets. 
B)  equities. 
C)  liabilities. 
D)  expenses.

Question 20

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

Accepted Answer

A)  $18,000 increase 
B)  $21,000 increase 
C)  $39,000 decrease 
D)  $39,000 increase 
A)  $18,000 increase 
B)  $21,000 increase 
C)  $39,000 decrease 
D)  $39,000 increase

Net income results when

External users want answers to all of the following questions except

A proprietor has unlimited liability.

Accounting communicates financial information about a business to both internal and external users.

Liabilities of a company are owed to

The users of private company financial statements do not have access to financial information beyond that available to the users of public company financial statements.

Allocating and recording the cost of using property, plant & equipment over their useful lives is called

The partnership form of business organization

An income statement

The concept that economic activity which can be identified with a particular company must be kept separate and distinct from the owner(s) and from all other economic entities is known as

As labour unions represent employees they are also regarded as internal users.

Which form of business would have its shares listed on a stock exchange?

Shareholder's equity consists of at least two parts: share capital and retained earnings.

Which of the following statements is not true?

Expenses are incurred

High standards of ethics are not required for preparers of financial information.

Accounting information is not important to marketing managers.

The right to receive money in the future is called a(n)

Debt and obligations of a business are referred to as

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 1: The Purpose and Use of Financial Statements

Net income results when

External users want answers to all of the following questions except

A proprietor has unlimited liability.

Accounting communicates financial information about a business to both internal and external users.

Liabilities of a company are owed to

The users of private company financial statements do not have access to financial information beyond that available to the users of public company financial statements.

Allocating and recording the cost of using property, plant & equipment over their useful lives is called

The partnership form of business organization

An income statement

The concept that economic activity which can be identified with a particular company must be kept separate and distinct from the owner(s) and from all other economic entities is known as

As labour unions represent employees they are also regarded as internal users.

Which form of business would have its shares listed on a stock exchange?

Shareholder's equity consists of at least two parts: share capital and retained earnings.

Which of the following statements is not true?

Expenses are incurred

High standards of ethics are not required for preparers of financial information.

Accounting information is not important to marketing managers.

The right to receive money in the future is called a(n)

Debt and obligations of a business are referred to as

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters