Question 1

Which statement below best describes the accounting equation?

Accepted Answer

A) The change in retained earnings equals net income less dividends. 
B) Equality of revenue and expense transactions over time. 
C) Resources of the company equal creditors' and owners' claims to those resources. 
A) The change in retained earnings equals net income less dividends. 
B) Equality of revenue and expense transactions over time. 
C) Resources of the company equal creditors' and owners' claims to those resources.

Question 2

Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

Accepted Answer

A) True 
 B)False

Question 3

Materiality is based upon which factor(s)?

Accepted Answer

A) Timeliness of an item. 
B) Amount and nature of an item. 
C) Consistency of an item. 
A) Timeliness of an item. 
B) Amount and nature of an item. 
C) Consistency of an item.

Question 4

Investing activities include the purchase and sale of long-term resources.

Accepted Answer

A) True 
 B)False

Question 5

Operating cash flows generally include cash transactions for the purchase and sale of investments and long-term assets.These are investing activities.

Accepted Answer

A) True 
 B)False

Question 6

The assumption that the life of the business can be divided into time intervals for reporting purposes is the:

Accepted Answer

A) Monetary unit assumption. 
B) Periodicity assumption. 
C) Economic entity assumption. 
A) Monetary unit assumption. 
B) Periodicity assumption. 
C) Economic entity assumption.

Question 7

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

Accepted Answer

A) True 
 B)False

Question 8

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

Accepted Answer

A) True 
 B)False

Question 9

Transactions of a company that include the purchase and sale of long-term assets are referred to as:

Accepted Answer

A) Investing activities. 
B) Financing activities. 
C) Expenditure activities. 
A) Investing activities. 
B) Financing activities. 
C) Expenditure activities.

Question 10

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

Accepted Answer

A) $140,000. 
B) $0. 
C) $30,000. 
A) $140,000. 
B) $0. 
C) $30,000.

Question 11

The two primary components of stockholders' equity include common stock and revenue.The two components of stockholders' equity include common stock and retained earnings.

Accepted Answer

A) True 
 B)False

Question 12

If a company has gone bankrupt,its financial statements likely violate the:

Accepted Answer

A) Periodicity assumption. 
B) Monetary unit assumption. 
C) Going concern assumption. 
A) Periodicity assumption. 
B) Monetary unit assumption. 
C) Going concern assumption.

Question 13

On January 1,Gucci Brothers Inc.started the year with a $492,000 balance in Retained Earnings and a $605,000 balance in Common Stock.During the year,the company reported net income of $92,000,paid a dividend of $15,200,and issued more common stock for $27,500.What is total stockholders' equity at the end of the year?

Accepted Answer

A) $1,231,700. 
B) $1,097,000. 
C) $1,201,300. 
A) $1,231,700. 
B) $1,097,000. 
C) $1,201,300.

Question 14

The independent,private-sector group that is primarily responsible for setting financial reporting standards in the United States is the:

Accepted Answer

A) FASB. 
B) IASB. 
C) SEC. 
A) FASB. 
B) IASB. 
C) SEC.

Question 15

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income for the year?

Accepted Answer

A) $7.5 million. 
B) $6.4 million. 
C) $4.4 million. 
A) $7.5 million. 
B) $6.4 million. 
C) $4.4 million.

Question 16

Financial accounting and reporting standards in the United States are established primarily by the:

Accepted Answer

A) Securities and Exchange Commission. 
B) Financial Accounting Standards Board. 
C) International Accounting Standards Board. 
A) Securities and Exchange Commission. 
B) Financial Accounting Standards Board. 
C) International Accounting Standards Board.

Question 17

Retained earnings represents the cumulative amount of net income,over the life of the company,that has not been distributed to stockholders as dividends.

Accepted Answer

A) True 
 B)False

Question 18

Financing activities are transactions involving externals sources of funding.

Accepted Answer

A) True 
 B)False

Question 19

The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity over an interval of time.

Accepted Answer

A) True 
 B)False

Question 20

Liabilities are best defined as:

Accepted Answer

A) Amounts the company expects to collect in the future from customers. 
B) Debts or obligations the company owes resulting from past transactions. 
C) The amounts that owners have invested in the business. 
A) Amounts the company expects to collect in the future from customers. 
B) Debts or obligations the company owes resulting from past transactions. 
C) The amounts that owners have invested in the business.

Which statement below best describes the accounting equation?

Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

Materiality is based upon which factor(s)?

Investing activities include the purchase and sale of long-term resources.

Operating cash flows generally include cash transactions for the purchase and sale of investments and long-term assets.These are investing activities.

The assumption that the life of the business can be divided into time intervals for reporting purposes is the:

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

Transactions of a company that include the purchase and sale of long-term assets are referred to as:

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

The two primary components of stockholders' equity include common stock and revenue.The two components of stockholders' equity include common stock and retained earnings.

If a company has gone bankrupt,its financial statements likely violate the:

The independent,private-sector group that is primarily responsible for setting financial reporting standards in the United States is the:

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income for the year?

Financial accounting and reporting standards in the United States are established primarily by the:

Retained earnings represents the cumulative amount of net income,over the life of the company,that has not been distributed to stockholders as dividends.

Financing activities are transactions involving externals sources of funding.

The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity over an interval of time.

Liabilities are best defined as:

The Accounting Cycle: During the Period

The Accounting Cycle: End of the Period

Cash and Internal Controls

Receivables and Sales

Inventory and Cost of Goods Sold

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

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Exam 1: A Framework for Financial Accounting

Which statement below best describes the accounting equation?

Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

Materiality is based upon which factor(s)?

Investing activities include the purchase and sale of long-term resources.

Operating cash flows generally include cash transactions for the purchase and sale of investments and long-term assets.These are investing activities.

The assumption that the life of the business can be divided into time intervals for reporting purposes is the:

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

Transactions of a company that include the purchase and sale of long-term assets are referred to as:

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

The two primary components of stockholders' equity include common stock and revenue.The two components of stockholders' equity include common stock and retained earnings.

If a company has gone bankrupt,its financial statements likely violate the:

The independent,private-sector group that is primarily responsible for setting financial reporting standards in the United States is the:

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income for the year?

Financial accounting and reporting standards in the United States are established primarily by the:

Retained earnings represents the cumulative amount of net income,over the life of the company,that has not been distributed to stockholders as dividends.

Financing activities are transactions involving externals sources of funding.

The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity over an interval of time.

Liabilities are best defined as:

The Accounting Cycle: During the Period

The Accounting Cycle: End of the Period

Cash and Internal Controls

Receivables and Sales

Inventory and Cost of Goods Sold

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

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