Question 1

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 2

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

Accepted Answer

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

Question 3

Generally accepted accounting principles

Accepted Answer

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

Question 4

Accountants focus on the needs for financial information by both internal and external decision makers.

Accepted Answer

A) True 
 B)False

Question 5

What is independence,and why is it important for a CPA to maintain it when conducting an audit?

Accepted Answer

Independence means having no financial o

Question 6

The statement of cash flows would disclose the distribution of dividends to stockholders

Accepted Answer

A) in the financing activities section. 
B) in the investing activities section. 
C) in the operating activities section. 
D) nowhere on the statement. 
A) in the financing activities section. 
B) in the investing activities section. 
C) in the operating activities section. 
D) nowhere on the statement.

Question 7

Criminal penalties can be imposed on those who prepare fraudulent financial statements.

Accepted Answer

A) True 
 B)False

Question 8

Accounting ratios are useful as management performance measures.

Accepted Answer

A) True 
 B)False

Question 9

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 10

An example of a monetary asset is

Accepted Answer

A) Accounts Receivable. 
B) Copyright. 
C) Retained Earnings. 
D) Land. 
A) Accounts Receivable. 
B) Copyright. 
C) Retained Earnings. 
D) Land.

Question 11

The Internal Revenue Service is responsible for issuing accounting standards for state and local governments.

Accepted Answer

A) True 
 B)False

Question 12

Stockholders' equity equals assets minus liabilities.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The purchase of land with cash would be disclosed on the statement of cash flows.

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) Paying off a loan 
C) Employing workers 
D) Producing goods and services 
A) Purchasing a building 
B) Paying off a loan 
C) Employing workers 
D) Producing goods and services

Question 16

Carrying out professional responsibilities with competence and diligence is called

Accepted Answer

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

Question 17

Regulatory agencies are considered information users with an indirect financial interest.

Accepted Answer

A) True 
 B)False

Question 18

Distinguish between profitability and liquidity.

Accepted Answer

Profitability is the ability t

Question 19

An audit is an examination of a company's

Accepted Answer

A) financial statements. 
B) accounting systems. 
C) accounting controls. 
D) all of these. 
A) financial statements. 
B) accounting systems. 
C) accounting controls. 
D) all of these.

Question 20

The net income figure appears in all the following financial statements except the

Accepted Answer

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

Exam 1: Uses of Accounting Information and the Financial Statements

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

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

Generally accepted accounting principles

Accountants focus on the needs for financial information by both internal and external decision makers.

What is independence,and why is it important for a CPA to maintain it when conducting an audit?

The statement of cash flows would disclose the distribution of dividends to stockholders

Criminal penalties can be imposed on those who prepare fraudulent financial statements.

Accounting ratios are useful as management performance measures.

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

An example of a monetary asset is

The Internal Revenue Service is responsible for issuing accounting standards for state and local governments.

Stockholders' equity equals assets minus liabilities.

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

The purchase of land with cash would be disclosed on the statement of cash flows.

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

Carrying out professional responsibilities with competence and diligence is called

Regulatory agencies are considered information users with an indirect financial interest.

Distinguish between profitability and liquidity.

An audit is an examination of a company's

The net income figure appears in all the following financial statements except the

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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