Question 1

All of the following can be found on an Statement of Income except

Accepted Answer

A)  Interest expense. 
B)  Depreciation expense. 
C)  Prepaid rent expense. 
D)  Other income.

Question 2

Where in the financial statements would a user find out which accounting policies management has selected to use?

Accepted Answer

A)  Statement of Management Responsibility 
B)  Notes to the Financial Statements 
C)  Auditors' Report 
D)  Management Discussion and Analysis

Question 3

Retained earnings is the earnings that have been kept and not paid out as dividends.

Accepted Answer

A) True 
 B)False

Question 4

A positive ___ represents an internal source of funding.

Accepted Answer

A)  Cash flow 
B)  Retained earnings 
C)  Dividends account 
D)  Share capital account

Question 5

What is the initial investment by the shareholders in a company called?

Accepted Answer

A)  owners' capital 
B)  shareholders' capital 
C)  retained earnings 
D)  shareholders' equity

Question 6

Net earnings is the amount of the company's revenue that remains after all of its expenses are accounted for.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following are the two components of Shareholders' equity?

Accepted Answer

A)  Dividends and Retained Earnings 
B)  Share Capital and Retained Earnings 
C)  Share Capital and Net Income 
D)  Net Income and Dividends

Question 8

The working capital equation is

Accepted Answer

A)  Working Capital = Current Assets - Current Liabilities. 
B)  Working Capital = Current Assets + Current Liabilities. 
C)  Working Capital = Current Assets - Non-Current Liabilities. 
D)  Working Capital = Non-current Assets + Current Liabilities.

Question 9

Prepaid expenses can be found on the Statement of Income.

Accepted Answer

A) True 
 B)False

Question 10

The Statement of Income is also known as

Accepted Answer

A)  Statement of Operations. 
B)  Statement of Earnings. 
C)  Statement of Profit or Loss. 
D)  all of the above

Question 11

A corporation whose shares are held by a small number of individuals is referred to as a

Accepted Answer

A)  proprietorship. 
B)  publicly traded corporation. 
C)  small business corporation. 
D)  privately held corporation.

Question 12

Creditors include which of the following?

Accepted Answer

A)  suppliers 
B)  financial institutions 
C)  employees 
D)  all of the above

Question 13

Jennifer is a university student looking to earn some cash for tuition over the summer months (April-August). She has decided to start a lawn care business, what business structure would best suit her needs?

Accepted Answer

A)  private corporation 
B)  public corporation 
C)  general partnership 
D)  sole proprietorship

Question 14

The shareholders are an example of an internal user of annual report information.

Accepted Answer

A) True 
 B)False

Question 15

The following data was taken from the books of Debrose Enterprises Ltd. as of December 31, 2020:  Instructions
From the list above determine which items should not be reported on the Statement of Financial Position.

Accepted Answer

The answer of The following data was taken from the...

Question 16

Which of the following statements best describes financial accounting?

Accepted Answer

A)  An information system in which the underlying transactions of organization are captured, analyzed, and reported. 
B)  The reports that management prepares for the owners of the company summarizing how the company performed during the period. 
C)  An information system in which all transactions with the company are accurately reported. 
D)  The reports that management prepares for use in making decisions related to the financing, investing, and operating activities of a company.

Question 17

Which of the following statements is true?

Accepted Answer

A)  The market value and the book value of a company's shareholders' equity are usually the same. 
B)  The market value is usually less than the book value of a company's shareholders' equity. 
C)  The market value is usually more than the book value of a company's shareholders' equity. 
D)  The value of the shareholders' equity on the Statement of Financial Position is based on the value of the company's shares in the market.

Question 18

A friend is looking to purchase shares as an investment, but would like information about whether or not the company has paid dividends in the last year. Where would your friend find this information in the financial statements?

Accepted Answer

A)  Income Statement 
B)  Operating Activities on the Cash Flow Statement 
C)  Investing Activities on the Cash Flow Statement 
D)  Financing Activities on the Cash Flow Statement

Question 19

Where would the information about company operations be found?

Accepted Answer

A)  on the Statement of Income 
B)  on the Statement of Financial Position 
C)  in the notes of the financial statements 
D)  in the statement of management responsibility

Question 20

Privately held corporations

Accepted Answer

A)  always have multiple shareholders. 
B)  always require a board of directors to represents its interests. 
C)  raise capital through the sale of shares. 
D)  none of the above

Exam 1: Overview of Corporate Financial Reporting

All of the following can be found on an Statement of Income except

Where in the financial statements would a user find out which accounting policies management has selected to use?

Retained earnings is the earnings that have been kept and not paid out as dividends.

A positive ___ represents an internal source of funding.

What is the initial investment by the shareholders in a company called?

Net earnings is the amount of the company's revenue that remains after all of its expenses are accounted for.

Which of the following are the two components of Shareholders' equity?

The working capital equation is

Prepaid expenses can be found on the Statement of Income.

The Statement of Income is also known as

A corporation whose shares are held by a small number of individuals is referred to as a

Creditors include which of the following?

Jennifer is a university student looking to earn some cash for tuition over the summer months (April-August) . She has decided to start a lawn care business, what business structure would best suit her needs?

The shareholders are an example of an internal user of annual report information.

The following data was taken from the books of Debrose Enterprises Ltd. as of December 31, 2020: Instructions From the list above determine which items should not be reported on the Statement of Financial Position.

Which of the following statements best describes financial accounting?

Which of the following statements is true?

A friend is looking to purchase shares as an investment, but would like information about whether or not the company has paid dividends in the last year. Where would your friend find this information in the financial statements?

Where would the information about company operations be found?

Privately held corporations