Question 1

Which of the following is the most appropriate definition of accounting?

Accepted Answer

A) The information system that identifies records and communicates the economic events of an organization to interested users. 
B) A means of collecting information. 
C) The interconnected network of subsystems necessary to operate a business. 
D) Electronic collection organization and communication of vast amounts of information. 
A) The information system that identifies records and communicates the economic events of an organization to interested users. 
B) A means of collecting information. 
C) The interconnected network of subsystems necessary to operate a business. 
D) Electronic collection organization and communication of vast amounts of information.

Question 2

Operating activities involve putting the resources of the business into action to generate a profit.

Accepted Answer

A) True 
 B)False

Question 3

Jimmy's Repair Shop started the year with total assets of $300000 and total liabilities of $240000.During the year the business recorded $630000 in revenues $330000 in expenses and dividends of $60000.Stockholders' equity at the end of the year was

Accepted Answer

A) $360000. 
B) $300000. 
C) $240000. 
D) $270000. 
A) $360000. 
B) $300000. 
C) $240000. 
D) $270000.

Question 4

The proprietorship form of business organization

Accepted Answer

A) must have at least two owners in most states. 
B) generally receives favorable tax treatment relative to a corporation. 
C) combines the records of the business with the personal records of the owner. 
D) is classified as a separate legal entity. 
A) must have at least two owners in most states. 
B) generally receives favorable tax treatment relative to a corporation. 
C) combines the records of the business with the personal records of the owner. 
D) is classified as a separate legal entity.

Question 5

Net income is another term for revenue.

Accepted Answer

A) True 
 B)False

Question 6

Dr.Mark Veterinary Services recorded the following cash transactions for the year: Paid $154000 for salaries.
Paid $85000 to purchase equipment.
Paid $49000 for utilities supplies insurance and advertising.
Paid $36000 for rent.
Issued shares of stock for $60000
Paid $28000 in dividends.
Collected $650000 from customers.
Paid $3600 to purchase investments.
What was the company's net cash provided (used) by investing activities?

Accepted Answer

A) $25000 
B) ($85.000) 
C) ($88600) 
D) The amount cannot be determined from the information provided. 
A) $25000 
B) ($85.000) 
C) ($88600) 
D) The amount cannot be determined from the information provided.

Question 7

Ashley's Accessory Shop started the year with total assets of $210000 and total liabilities of $120000.During the year the business recorded $330000 in revenues $165000 in expenses and dividends of $60000.The net income reported by Ashley's Accessory Shop for the year was

Accepted Answer

A) $120000. 
B) $150000. 
C) $195000. 
D) $165000. 
A) $120000. 
B) $150000. 
C) $195000. 
D) $165000.

Question 8

Kilmer Corporation began the year with retained earnings of $930000.During the year the company issued $1260000 of common stock recorded expenses of $3600000 and paid dividends of $240000.If Kilmer's ending retained earnings was $990000 what was the company's revenue for the year?

Accepted Answer

A) $3660000 
B) $3900000 
C) $4920000 
D) $50160000 
A) $3660000 
B) $3900000 
C) $4920000 
D) $50160000

Question 9

Net income results when

Accepted Answer

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

Question 10

A business organized as a separate legal entity is a

Accepted Answer

A) corporation. 
B) proprietor. 
C) government unit. 
D) partnership. 
A) corporation. 
B) proprietor. 
C) government unit. 
D) partnership.

Question 11

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 12

The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 13

The information needed to determine whether a company is using accounting methods similar to those of its competitors would be found in the

Accepted Answer

A) auditor's report. 
B) balance sheet. 
C) management discussion and analysis section. 
D) notes to the financial statements. 
A) auditor's report. 
B) balance sheet. 
C) management discussion and analysis section. 
D) notes to the financial statements.

Question 14

Elston Company compiled the following financial information as of December 31 2022: $$\begin{array} { l r } 
\text { Service revenue } & \$ 840,000 \
\text { Common stock } & 180,000 \
\text { Equipment } & 240,000 \
\text { Operating expenses } & 750,000 \
\text { Cash } & 210,000 \
\text { Dividends } & 60,000 \
\text { Supplies } & 30,000 \
\text { Accounts payable } & 120,000 \
\text { Accounts receivable } & 300,000 \
\text { Retained earnings, } 1 / 1 / 22 & 450,000
\end{array}$$ Elston's assets on December 31 2022 are

Accepted Answer

A) $1620000. 
B) $1230000. 
C) $750000. 
D) $780000. 
A) $1620000. 
B) $1230000. 
C) $750000. 
D) $780000.

Question 15

Which of the following is a primary user of accounting information with a direct financial interest in the business?

Accepted Answer

A) Taxing authority 
B) Creditor 
C) Regulatory agency 
D) Labor union 
A) Taxing authority 
B) Creditor 
C) Regulatory agency 
D) Labor union

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 19

Which of the following clarifies information presented in the financial statements as well as expanding upon it where additional detail is needed?

Accepted Answer

A) Auditor's report 
B) Management discussion and analysis section 
C) Notes to the financial statements 
D) President's state of the company report 
A) Auditor's report 
B) Management discussion and analysis section 
C) Notes to the financial statements 
D) President's state of the company report

Question 20

A local retail shop has been operating as a sole proprietorship.The business is growing and now the owner wants to incorporate.Which of the following is not a reason for this owner to incorporate?

Accepted Answer

A) Ability to raise capital for expansion 
B) Desire to limit the owner's personal liability 
C) The prestige of operating as a corporation 
D) The ease in transferring shares of the corporation's stock 
A) Ability to raise capital for expansion 
B) Desire to limit the owner's personal liability 
C) The prestige of operating as a corporation 
D) The ease in transferring shares of the corporation's stock

Which of the following is the most appropriate definition of accounting?

Operating activities involve putting the resources of the business into action to generate a profit.

Jimmy's Repair Shop started the year with total assets of $300000 and total liabilities of $240000.During the year the business recorded $630000 in revenues $330000 in expenses and dividends of $60000.Stockholders' equity at the end of the year was

The proprietorship form of business organization

Net income is another term for revenue.

Ashley's Accessory Shop started the year with total assets of $210000 and total liabilities of $120000.During the year the business recorded $330000 in revenues $165000 in expenses and dividends of $60000.The net income reported by Ashley's Accessory Shop for the year was

Kilmer Corporation began the year with retained earnings of $930000.During the year the company issued $1260000 of common stock recorded expenses of $3600000 and paid dividends of $240000.If Kilmer's ending retained earnings was $990000 what was the company's revenue for the year?

Net income results when

A business organized as a separate legal entity is a

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?

The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time.

The information needed to determine whether a company is using accounting methods similar to those of its competitors would be found in the

Which of the following is a primary user of accounting information with a direct financial interest in the business?

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

Ending retained earnings for a period is equal to beginning

Expenses are incurred

Which of the following clarifies information presented in the financial statements as well as expanding upon it where additional detail is needed?

A local retail shop has been operating as a sole proprietorship.The business is growing and now the owner wants to incorporate.Which of the following is not a reason for this owner to incorporate?

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 1: Introduction to Financial Statements

Which of the following is the most appropriate definition of accounting?

Operating activities involve putting the resources of the business into action to generate a profit.

Jimmy's Repair Shop started the year with total assets of $300000 and total liabilities of $240000.During the year the business recorded $630000 in revenues $330000 in expenses and dividends of $60000.Stockholders' equity at the end of the year was

The proprietorship form of business organization

Net income is another term for revenue.

Ashley's Accessory Shop started the year with total assets of $210000 and total liabilities of $120000.During the year the business recorded $330000 in revenues $165000 in expenses and dividends of $60000.The net income reported by Ashley's Accessory Shop for the year was

Kilmer Corporation began the year with retained earnings of $930000.During the year the company issued $1260000 of common stock recorded expenses of $3600000 and paid dividends of $240000.If Kilmer's ending retained earnings was $990000 what was the company's revenue for the year?

Net income results when

A business organized as a separate legal entity is a

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?

The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time.

The information needed to determine whether a company is using accounting methods similar to those of its competitors would be found in the

Which of the following is a primary user of accounting information with a direct financial interest in the business?

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

Ending retained earnings for a period is equal to beginning

Expenses are incurred

Which of the following clarifies information presented in the financial statements as well as expanding upon it where additional detail is needed?

A local retail shop has been operating as a sole proprietorship.The business is growing and now the owner wants to incorporate.Which of the following is not a reason for this owner to incorporate?

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters