Question 1

Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

Accepted Answer

A)  Taxing authorities 
B)  Regulatory agencies 
C)  Labor Unions 
D)  Management 
A)  Taxing authorities 
B)  Regulatory agencies 
C)  Labor Unions 
D)  Management

Question 2

Cash is another term for stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Jimmy's Repair Shop started the year with total assets of $200,000 and total liabilities of $160,000. During the year the business recorded $420,000 in revenues, $220,000 in expenses, and dividends of $40,000. The net income reported by Jimmy's Repair Shop for the year was

Accepted Answer

A)  $160,000. 
B)  $200,000. 
C)  $120,000. 
D)  $380,000. 
A)  $160,000. 
B)  $200,000. 
C)  $120,000. 
D)  $380,000.

Question 5

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 6

Which of the following statements concerning users of accounting information is incorrect?

Accepted Answer

A)  Management is considered an internal user. 
B)  Present creditors are considered external users. 
C)  Regulatory authorities are considered internal users. 
D)  Taxing authorities are considered external users. 
A)  Management is considered an internal user. 
B)  Present creditors are considered external users. 
C)  Regulatory authorities are considered internal users. 
D)  Taxing authorities are considered external users.

Question 7

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 8

Stockholders' equity

Accepted Answer

A)  is usually equal to cash on hand. 
B)  is equal to liabilities and retained earnings. 
C)  includes retained earnings and common stock. 
D)  is shown on the income statement. 
A)  is usually equal to cash on hand. 
B)  is equal to liabilities and retained earnings. 
C)  includes retained earnings and common stock. 
D)  is shown on the income statement.

Question 9

Claims of owners are called

Accepted Answer

A)  dividends. 
B)  stockholders' equity. 
C)  liabilities. 
D)  income payable. 
A)  dividends. 
B)  stockholders' equity. 
C)  liabilities. 
D)  income payable.

Question 10

The information needs and questions of external users vary considerably.

Accepted Answer

A) True 
 B)False

Question 11

The financial statement that summarizes the changes in retained earnings for a specific period of time is the

Accepted Answer

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

Question 12

Which of the following is not a satisfactory statement of the accounting equation?

Accepted Answer

A)  Assets = Stockholders' Equity - Liabilities 
B)  Assets = Liabilities + Stockholders' Equity 
C)  Assets - Liabilities = Stockholders' Equity 
D)  Assets - Stockholders' Equity = Liabilities 
A)  Assets = Stockholders' Equity - Liabilities 
B)  Assets = Liabilities + Stockholders' Equity 
C)  Assets - Liabilities = Stockholders' Equity 
D)  Assets - Stockholders' Equity = Liabilities

Question 13

Issuing shares of stock in exchange for cash is an example of a(n)

Accepted Answer

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

Question 14

Why should the income statement be prepared first?

Accepted Answer

A)  The statement of cash flows should be prepared first because it determines the sources of cash. That information is then used in preparing the income statement. 
B)  Net income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet. 
C)  The income statement does not have to be prepared first. Financial statements can be prepared in any order. 
D)  None of these answer choices are correct. 
A)  The statement of cash flows should be prepared first because it determines the sources of cash. That information is then used in preparing the income statement. 
B)  Net income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet. 
C)  The income statement does not have to be prepared first. Financial statements can be prepared in any order. 
D)  None of these answer choices are correct.

Question 15

Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt?

Accepted Answer

A)  Only Jack is personally liable for the debt, since he has been the managing partner during that time. 
B)  Only Jill is personally liable for the debt of the business, since Jack has been working and she has not. 
C)  Both Jack and Jill are personally liable for the business debt. 
D)  Neither Jack nor Jill is personally liable for the business debt, since the partnership is a separate legal entity. 
A)  Only Jack is personally liable for the debt, since he has been the managing partner during that time. 
B)  Only Jill is personally liable for the debt of the business, since Jack has been working and she has not. 
C)  Both Jack and Jill are personally liable for the business debt. 
D)  Neither Jack nor Jill is personally liable for the business debt, since the partnership is a separate legal entity.

Question 16

The group of users of accounting information charged with achieving the goals of the business is its

Accepted Answer

A)  auditors. 
B)  investors. 
C)  managers. 
D)  creditors. 
A)  auditors. 
B)  investors. 
C)  managers. 
D)  creditors.

Question 17

An advantage of the corporate form of business is that

Accepted Answer

A)  it has limited life. 
B)  its owner's personal resources are at stake. 
C)  its ownership is easily transferable via the sale of shares of stock. 
D)  it is simple to establish. 
A)  it has limited life. 
B)  its owner's personal resources are at stake. 
C)  its ownership is easily transferable via the sale of shares of stock. 
D)  it is simple to establish.

Question 18

One item is omitted in each of the following summaries of balance sheet and income statement data for three different corporations, A, B, and C.
Determine the amounts of the missing items, identifying each corporation by letter.

Accepted Answer

The answer of One item is omitted in each of...

Question 19

Which of the following statements is true?

Accepted Answer

A)  Amounts received from issuing stock are revenues. 
B)  Amounts paid out as dividends are not expenses. 
C)  Amounts paid out as dividends are reported on the income statement. 
D)  Amounts received from issued stock are reported on the income statement. 
A)  Amounts received from issuing stock are revenues. 
B)  Amounts paid out as dividends are not expenses. 
C)  Amounts paid out as dividends are reported on the income statement. 
D)  Amounts received from issued stock are reported on the income statement.

Question 20

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

Accepted Answer

A) True 
 B)False

Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

Cash is another term for stockholders' equity.

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

Jimmy's Repair Shop started the year with total assets of $200,000 and total liabilities of $160,000. During the year the business recorded $420,000 in revenues, $220,000 in expenses, and dividends of $40,000. The net income reported by Jimmy's Repair Shop for the year was

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

Which of the following statements concerning users of accounting information is incorrect?

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

Stockholders' equity

Claims of owners are called

The information needs and questions of external users vary considerably.

The financial statement that summarizes the changes in retained earnings for a specific period of time is the

Which of the following is not a satisfactory statement of the accounting equation?

Issuing shares of stock in exchange for cash is an example of a(n)

Why should the income statement be prepared first?

Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt?

The group of users of accounting information charged with achieving the goals of the business is its

An advantage of the corporate form of business is that

One item is omitted in each of the following summaries of balance sheet and income statement data for three different corporations, A, B, and C. Determine the amounts of the missing items, identifying each corporation by letter.

Which of the following statements is true?

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

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

Time Value of Money

Filters

Exam 1: Introduction to Financial Statements

Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

Cash is another term for stockholders' equity.

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

Jimmy's Repair Shop started the year with total assets of $200,000 and total liabilities of $160,000. During the year the business recorded $420,000 in revenues, $220,000 in expenses, and dividends of $40,000. The net income reported by Jimmy's Repair Shop for the year was

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

Which of the following statements concerning users of accounting information is incorrect?

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

Stockholders' equity

Claims of owners are called

The information needs and questions of external users vary considerably.

The financial statement that summarizes the changes in retained earnings for a specific period of time is the

Which of the following is not a satisfactory statement of the accounting equation?

Issuing shares of stock in exchange for cash is an example of a(n)

Why should the income statement be prepared first?

Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt?

The group of users of accounting information charged with achieving the goals of the business is its

An advantage of the corporate form of business is that

One item is omitted in each of the following summaries of balance sheet and income statement data for three different corporations, A, B, and C. Determine the amounts of the missing items, identifying each corporation by letter.

Which of the following statements is true?

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

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

Time Value of Money

Filters