Question 1

Which financial statement would indicate whether a company has made a profit or loss during the reporting period?

Accepted Answer

A)   balance sheet
B)   statement of financial position
C)   statement of changes in equity
D)   income statement D

Question 2

As the owner of a landscaping business, you review how your company did last month. You mowed over 300 lawns and made $8000. After paying your two employees, buying gas and supplies, and a new weed eater, your profit was $3500. All of this information is found on which financial statement?

Accepted Answer

A)   income statement
B)   statement of cash flows
C)   balance sheet
D)   cash flows from investing statement A

Question 3

What are the components of the balance sheet?

Accepted Answer

A)   owners' equity, assets, and liabilities
B)   expenses, revenue, and net income
C)   revenue, expenses, and owners' equity
D)   assets, liabilities, and revenues A

Question 4

Along with the types of financial reports that are produced, which of the following is another difference between managerial and financial accounting?

Accepted Answer

A)   whether the reports are prepared monthly or quarterly
B)   whether the accountant is a CPA
C)   the audience for whom the reports are intended
D)   the accuracy and authenticity of the reports

Question 5

Which of the following is commonly used in accounting analysis to show a relationship between two elements of a firm's financial statements?

Accepted Answer

A)   comparative number
B)   maxim
C)   financial ratio
D)   formula

Question 6

Which financial statement illustrates how the company's operating, investing, and financing activities have affected cash over a specified period of time?

Accepted Answer

A)   balance sheet
B)   statement of cash flows
C)   income statement
D)   profit and loss statement

Question 7

Which of the following is the correct order for the balance sheet?

Accepted Answer

A)   assets, owners' equity, liabilities
B)   owners' equity, financial position, assets
C)   assets, liabilities, owners' equity
D)   owners' equity, assets, liabilities

Question 8

On the statement of cash flows, how would the payment of cash dividends to company shareholders be characterized?

Accepted Answer

A)   cash flows from operating activities
B)   cash flows from financing activities
C)   cash flows from investing activities
D)   long-term liability

Question 9

What are generally accepted accounting principles?

Accepted Answer

A)   a set of globally accepted accounting standards for public companies
B)   accounting rules and standards used only for private companies
C)   the former financial accounting rules and standards for accountants in Canada
D)   what is taught in accounting courses

Question 10

All of the following are classified as fixed assets EXCEPT which one?

Accepted Answer

A)   factory equipment
B)   trademarks
C)   property
D)   buildings

Question 11

Pepperidge Farm stores items like flour, salt, and sugar as raw materials it will use to produce a variety of food items. These raw materials are listed as which of the following on the company's balance sheet?

Accepted Answer

A)   equipment
B)   owner's equity
C)   short-term loans
D)   liabilities

Question 12

An executive at a manufacturing firm thinks his company should open a second manufacturing plant, but first needs to check a series of reports before making a decision. What will the executive use to make this decision?

Accepted Answer

A)   financial accounting
B)   managerial accounting
C)   the statement of cash flows
D)   a balance sheet

Question 13

What are the three activities according to which a statement of cash flows is organized?

Accepted Answer

A)   operating, selling, and investing
B)   financing, buying, and selling
C)   investing, financing, and expensing
D)   operating, investing, and financing

Question 14

What is the term for variable expenses that are directly related to the production or purchase of a product?

Accepted Answer

A)   long-term liabilities
B)   fixed expenses
C)   cost of goods sold
D)   operating expenses

Question 15

Dr. Shalhoub runs a chiropractic clinic. He typically bills his customers for services he performs and gives them about 30 days to make the payments. What are these amounts of money that his customers owe called?

Accepted Answer

A)   prepaid expenses
B)   unearned revenues
C)   intangible assets
D)   accounts receivable

Question 16

The Cheese Shoppe's liabilities total $59,000 and its owners' equity is $124,000. Which of the following statements is correct?

Accepted Answer

A)   the total assets equal $65,000
B)   the firm's assets are $124,000
C)   the total assets equal $183,000
D)   the firm's sales are $183,000

Question 17

The resources owned by David's Spa and Salon total $148,000. The total amount of debt that it owes to others is $87,000. Which of the following describes David's Spa and Salon?

Accepted Answer

A)   owners' equity is $61,000
B)   liabilities are $148,000
C)   liabilities are $61,000
D)   owners' equity is $235,000

Question 18

Which of the following describes the debts of a business that will be paid in one year or less?

Accepted Answer

A)   current liabilities
B)   expenses
C)   prepaid expenses
D)   long-term liabilities

Question 19

If the liabilities of a business are $85,000 and the owners' equity is $110,000, which of the following statements is correct?

Accepted Answer

A)   assets equal $25,000
B)   assets equal $195,000
C)   assets equal $110,000
D)   assets equal $85,000

Question 20

When Alibaba went public and sold shares of the company on the New York Stock Exchange, it raised $25 billion. This was listed as which of the following on Alibaba's statement of cash flows?

Accepted Answer

A)   cash flows from investing activities
B)   revenue
C)   cash flows from operating activities
D)   cash flows from financing activities

Exam 17: Using Accounting and Financial Information