Question 1

Equipment is an asset that is considered nonmonetary in nature.

Accepted Answer

A) True 
 B)False  True

Question 2

Due care means carrying out one's professional responsibilities honestly and impartially.

Accepted Answer

A) True 
 B)False  False

Question 3

All of the following statements are true about the Sarbanes-Oxley Act except

Accepted Answer

A)  it applies to publicly traded companies. 
B)  it shields chief executives from criminal penalties. 
C)  it orders the SEC to draw up certain rules. 
D)  its primary goal is to regulate financial reporting and the accounting profession. 
A)  it applies to publicly traded companies. 
B)  it shields chief executives from criminal penalties. 
C)  it orders the SEC to draw up certain rules. 
D)  its primary goal is to regulate financial reporting and the accounting profession. B

Question 4

A company's ability to attract and hold investment capital ultimately depends on its

Accepted Answer

A)  budgeting. 
B)  planning. 
C)  liquidity. 
D)  profitability. 
A)  budgeting. 
B)  planning. 
C)  liquidity. 
D)  profitability.

Question 5

Use the following accounts and information to prepare,in good form,an income statement,statement of retained earnings,and balance sheet for Hometown Industries for the month ended July 31,2010.
 $\begin{array}{lrlr}
\text { Accounts Payable } & \$ 3,100 & \text { Land } & \$ 35,000 \
\text { Accounts Receivable } & 1,400 & \text { Notes Payable } & 3,300 \
\text { Buildings } & 22,000 & \text { Rent Expense } & 2,400 \
\text { Cash } & 15,600 & \text { Retained Earnings, June } & 57,900 \
& & 30,2010 & \
\text { Commissions Earned } & 12,700 & \text { Salaries Expense } & 10,000 \
\text { Common Stock } & 20,000 & \text { Supplies } & 400 \
\text { Dividends } & 8,000 & & \
\text { Insurance Expense } & 2,200 & &
\end{array}$

Accepted Answer

None

Question 6

Selected amounts from the condensed financial statements of Timson Corporation for 2009 and 2010 are presented below with several amounts missing.The 2008 year-end balance of retained earnings is $82,883.
   
a. Determine the missing amounts indicated by the letters. (Hint: You should not try to find them in alphabetical order.)
b. Given the data presented, did the company's profitability improve from 2009 to 2010? Would you characterize the company as a "growth" company? Why or why not?

Accepted Answer

a.
 @#IMG-DLM& 
b.Timson's profitability did not i

Question 7

Fraudulent financial reporting can result from the misapplication of accounting principles.

Accepted Answer

A) True 
 B)False

Question 8

Revenues have the effect of increasing contributed capital.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of an operating activity?

Accepted Answer

A)  Obtaining capital from stockholders 
B)  Selling goods and services to customers 
C)  Purchasing equipment 
D)  Selling land 
A)  Obtaining capital from stockholders 
B)  Selling goods and services to customers 
C)  Purchasing equipment 
D)  Selling land

Question 10

A proper heading for the income statement could include "For the Year Ended December 31,20xx."

Accepted Answer

A) True 
 B)False

Question 11

The development of international accounting standards is the primary function of the

Accepted Answer

A)  IRS. 
B)  AICPA. 
C)  IASB. 
D)  PCOAB. 
A)  IRS. 
B)  AICPA. 
C)  IASB. 
D)  PCOAB.

Question 12

Which of the following is a regulatory agency?

Accepted Answer

A)  IASB 
B)  SEC 
C)  FASB 
D)  GASB 
A)  IASB 
B)  SEC 
C)  FASB 
D)  GASB

Question 13

Generally accepted accounting principles

Accepted Answer

A)  are changing continually. 
B)  are sound in theory but rarely used in practice. 
C)  have eliminated all the weaknesses in accounting practice. 
D)  are accounting rules formulated by the Internal Revenue Service. 
A)  are changing continually. 
B)  are sound in theory but rarely used in practice. 
C)  have eliminated all the weaknesses in accounting practice. 
D)  are accounting rules formulated by the Internal Revenue Service.

Question 14

Accounting ratios are useful as management performance measures.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of an investing activity?

Accepted Answer

A)  Purchasing a building 
B)  Obtaining a bank loan 
C)  Paying taxes to the government 
D)  Producing goods and services 
A)  Purchasing a building 
B)  Obtaining a bank loan 
C)  Paying taxes to the government 
D)  Producing goods and services

Question 16

The board of directors of a corporation is responsible for all of the following except

Accepted Answer

A)  arranging for major bank loans. 
B)  authorizing contracts. 
C)  carrying out the daily operations of the business. 
D)  declaring dividends. 
A)  arranging for major bank loans. 
B)  authorizing contracts. 
C)  carrying out the daily operations of the business. 
D)  declaring dividends.

Question 17

Which of the following accounts is not considered an asset?

Accepted Answer

A)  Accounts Receivable 
B)  Inventory 
C)  Retained Earnings 
D)  Trademark 
A)  Accounts Receivable 
B)  Inventory 
C)  Retained Earnings 
D)  Trademark

Question 18

The communication stage of accounting is accomplished by

Accepted Answer

A)  storing data. 
B)  reporting to decision makers. 
C)  processing data. 
D)  recording data. 
A)  storing data. 
B)  reporting to decision makers. 
C)  processing data. 
D)  recording data.

Question 19

Companies whose securities are sold to the general public must adhere to standards established by the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 20

A corporation is an economic unit that is legally separate from its owners.

Accepted Answer

A) True 
 B)False

Exam 1: Uses of Accounting Information and the Financial Statements

Equipment is an asset that is considered nonmonetary in nature.

Due care means carrying out one's professional responsibilities honestly and impartially.

All of the following statements are true about the Sarbanes-Oxley Act except

A company's ability to attract and hold investment capital ultimately depends on its

Fraudulent financial reporting can result from the misapplication of accounting principles.

Revenues have the effect of increasing contributed capital.

Which of the following is an example of an operating activity?

A proper heading for the income statement could include "For the Year Ended December 31,20xx."

The development of international accounting standards is the primary function of the

Which of the following is a regulatory agency?

Generally accepted accounting principles

Accounting ratios are useful as management performance measures.

Which of the following is an example of an investing activity?

The board of directors of a corporation is responsible for all of the following except

Which of the following accounts is not considered an asset?

The communication stage of accounting is accomplished by

Companies whose securities are sold to the general public must adhere to standards established by the Securities and Exchange Commission.

A corporation is an economic unit that is legally separate from its owners.

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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