Question 1

The authoritative body currently responsible for establishing accounting practice is the

Accepted Answer

A) Internal Revenue Service. 
B) Financial Accounting Standards Board. 
C) American Institute of Certified Public Accountants. 
D) Federal Reserve Board. 
A) Internal Revenue Service. 
B) Financial Accounting Standards Board. 
C) American Institute of Certified Public Accountants. 
D) Federal Reserve Board.

Question 2

Following are the total assets and liabilities at the beginning and end of the year for Hagedorn Company:
   Determine the net income or loss for the year in each of the following situations:
a.There were no additional stock issues and no dividends were paid during the year.
b.Additional stock was issued for $20,000 and dividends of $12,000 were paid during the year.

Accepted Answer

a.[($108,000 - $40,000)- ($70,

Question 3

The liability of corporate stockholders is limited to their percentage share of ownership.

Accepted Answer

A) True 
 B)False

Question 4

The following users of accounting information have an indirect financial interest in the business except

Accepted Answer

A) regulatory agency. 
B) creditor. 
C) taxing authority. 
D) labor union. 
A) regulatory agency. 
B) creditor. 
C) taxing authority. 
D) labor union.

Question 5

For reporting purposes,the personal assets and debts of a business owner should be combined with the assets and debts of the business.

Accepted Answer

A) True 
 B)False

Question 6

The economic resources invested in a business by the owners are represented by stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 7

The day-by-day accumulation of interest is considered a transaction involving an exchange of value.

Accepted Answer

A) True 
 B)False

Question 8

Generally accepted accounting principles encompass the conventions,rules,and procedures necessary to define accepted accounting practice at a particular time.

Accepted Answer

A) True 
 B)False

Question 9

Explain why each of the following persons or groups would be interested in seeing the financial statements of a company.Also state whether each has a direct or indirect financial interest.
a.Potential investor
b.Internal Revenue Service
c.A labor union
d.Securities and Exchange Commission
e.Potential creditor
f.Management
g.Economic planners

Accepted Answer

a.To help determine if the prospects for

Question 10

Both public accountants and managerial accountants are required to adhere to a code of professional conduct.

Accepted Answer

A) True 
 B)False

Question 11

The statement of cash flows discloses significant events related to the operating,investing,and financing activities of a business.

Accepted Answer

A) True 
 B)False

Question 12

Dividends of a corporation are declared by its

Accepted Answer

A) board of directors. 
B) officers. 
C) stockholders. 
D) creditors. 
A) board of directors. 
B) officers. 
C) stockholders. 
D) creditors.

Question 13

Exchange rates for currency change daily according to the supply and demand for each currency.

Accepted Answer

A) True 
 B)False

Question 14

The personal resources of any partner can be called upon to pay the obligations of the partnership.

Accepted Answer

A) True 
 B)False

Question 15

How does the statement of retained earnings relate to the income statement and the balance sheet?

Accepted Answer

The statement of retained earnings provi

Question 16

All of the following statements about corporations are true except

Accepted Answer

A) they are chartered by the state. 
B) ownership is represented by shares of stock. 
C) the sale of stock does not dissolve the business. 
D) the stockholders have direct control of the business. 
A) they are chartered by the state. 
B) ownership is represented by shares of stock. 
C) the sale of stock does not dissolve the business. 
D) the stockholders have direct control of the business.

Question 17

Taxing authorities are considered accounting information users with a direct financial interest in a business.

Accepted Answer

A) True 
 B)False

Question 18

Net assets equal stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 19

An auditor maintains no direct financial interest in the company he or she is auditing.The principle being followed is

Accepted Answer

A) independence. 
B) integrity. 
C) objectivity. 
D) due care. 
A) independence. 
B) integrity. 
C) objectivity. 
D) due care.

Question 20

Net income is a measure of profitability.

Accepted Answer

A) True 
 B)False

Exam 1: Uses of Accounting Information and the Financial Statements

The authoritative body currently responsible for establishing accounting practice is the

The liability of corporate stockholders is limited to their percentage share of ownership.

The following users of accounting information have an indirect financial interest in the business except

For reporting purposes,the personal assets and debts of a business owner should be combined with the assets and debts of the business.

The economic resources invested in a business by the owners are represented by stockholders' equity.

The day-by-day accumulation of interest is considered a transaction involving an exchange of value.

Generally accepted accounting principles encompass the conventions,rules,and procedures necessary to define accepted accounting practice at a particular time.

Both public accountants and managerial accountants are required to adhere to a code of professional conduct.

The statement of cash flows discloses significant events related to the operating,investing,and financing activities of a business.

Dividends of a corporation are declared by its

Exchange rates for currency change daily according to the supply and demand for each currency.

The personal resources of any partner can be called upon to pay the obligations of the partnership.

How does the statement of retained earnings relate to the income statement and the balance sheet?

All of the following statements about corporations are true except

Taxing authorities are considered accounting information users with a direct financial interest in a business.

Net assets equal stockholders' equity.

An auditor maintains no direct financial interest in the company he or she is auditing.The principle being followed is

Net income is a measure of profitability.

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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