Question 1

Objectivity means carrying out one's professional responsibilities honestly and impartially.

Accepted Answer

A) True 
 B)False

Question 2

Independence is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant.

Accepted Answer

A) True 
 B)False

Question 3

The income statement is also known as the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 4

A proper heading for the income statement could include "As of December 31,2013."

Accepted Answer

A) True 
 B)False

Question 5

Use the following accounts and information to prepare,in good form,an income statement,statement of retained earnings,and balance sheet for Jasper Enterprises for the year ended December 31,2013.
 $\begin{array}{lrlr}
\text { Accounts Payable } & \$ 9,600 & \text { Land } & \$ 78,000 \
\text { Accounts Receivable } & 1,200 & \text { Notes Payable } & 12,000 \
\text { Buildings } & 104,000 & \text { Rent Expense } & 7,200 \
\text { Cash } & 52,400 & \text { Retained Earnings, }& 168,800 \
& & \text { December 31, 2012 }  \
\text { Sales Revenues } & 38,000 & \text { Salaries Expense } & 16,800 \
\text { Common Stock } & 40,000 & \text { Inventory } & 800 \
\text { Dividends } & 6,000 & & \
\text { Utilities Expense } & 2,000 & &
\end{array}$

Accepted Answer

The answer of Use the following accounts and information to...

Question 6

The Financial Accounting Standards Board (FASB)is the primary and most important determinant of generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 7

All of the following statements are false about the Sarbanes-Oxley Act except

Accepted Answer

A)  it does not apply to publicly traded companies. 
B)  it shields chief executives from criminal penalties. 
C)  it prevents the SEC from drawing up certain rules. 
D)  its primary goal is to regulate financial reporting and the accounting profession.

Question 8

All of the following are considered nonexchange transactions except

Accepted Answer

A)  the daily accumulation of interest. 
B)  the wear and tear on machinery. 
C)  the repayment of a loan. 
D)  losses from fire,flood,and theft.

Question 9

Dividends are an example of a revenue.

Accepted Answer

A) True 
 B)False

Question 10

Contributed capital appears in the stockholders' equity section of a corporate balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

An increase in revenue will result in an increase in stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 12

The management of a corporation is appointed by the board of directors.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is legally a separate entity from its owner(s)?

Accepted Answer

A)  Sole proprietorship and corporation only 
B)  Sole proprietorship and partnership only 
C)  Corporation only 
D)  Corporation and partnership only

Question 14

Companies whose securities are sold to the general public must adhere to standards established by the Securities and Exchange Commission (SEC).

Accepted Answer

A) True 
 B)False

Question 15

Which three types of transactions affect retained earnings,and how do they affect it?

Accepted Answer

The answer of Which three types of transactions affect retained...

Question 16

Which of the following represents the proper order of financial statement preparation?

Accepted Answer

A)  Statement of cash flows,balance sheet,income statement,statement of retained earnings 
B)  Statement of retained earnings,income statement,statement of cash flows,balance sheet 
C)  Balance sheet,statement of cash flows,statement of retained earnings,income statement 
D)  Income statement,statement of retained earnings,balance sheet,statement of cash flows

Question 17

The audit committee is responsible for all of the following except

Accepted Answer

A)  engaging the company's independent auditors. 
B)  assuring that reliable accounting records are kept. 
C)  carrying out the daily operations of a company 
D)  ascertaining that the company safeguards its resources.

Question 18

The Public Company Accounting Oversight Board (PCAOB)was created by the

Accepted Answer

A)  Sarbanes-Oxley Act. 
B)  American Institute of Certified Public Accountants (AICP
A) . 
C)  Financial Accounting Standards Board (FAS
B) . 
D)  International Accounting Standard Board (IAS
B) .

Question 19

For accounting purposes,a business and its owners are considered the same entity.

Accepted Answer

A) True 
 B)False

Question 20

Palm Textile Corporation had the following balance sheet accounts and balances: $\begin{array}{lrlr}
\text { Accounts Payable } & \$ 12,000 & \text { Common Stock } & ? \
\text { Accounts Receivable } & 2,000 & \text { Equipment } & \$ 14,000 \
\text { Building } & ? & \text { Land } & 14,000 \
\text { Cash } & 6,000 & \text { Retained Earnings } & 4,000
\end{array}$ If the balance of the Building account were $16,000 and $6,000 of Accounts Payable were paid in cash,what would be the total liabilities and stockholders' equity?

Accepted Answer

A)  $28,000 
B)  $46,000 
C)  $36,000 
D)  $38,000

Exam 1: Uses of Accounting Information and the Financial Statements

Objectivity means carrying out one's professional responsibilities honestly and impartially.

Independence is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant.

The income statement is also known as the statement of financial position.

A proper heading for the income statement could include "As of December 31,2013."

The Financial Accounting Standards Board (FASB)is the primary and most important determinant of generally accepted accounting principles.

All of the following statements are false about the Sarbanes-Oxley Act except

All of the following are considered nonexchange transactions except

Dividends are an example of a revenue.

Contributed capital appears in the stockholders' equity section of a corporate balance sheet.

An increase in revenue will result in an increase in stockholders' equity.

The management of a corporation is appointed by the board of directors.

Which of the following is legally a separate entity from its owner(s) ?

Companies whose securities are sold to the general public must adhere to standards established by the Securities and Exchange Commission (SEC).

Which three types of transactions affect retained earnings,and how do they affect it?

Which of the following represents the proper order of financial statement preparation?

The audit committee is responsible for all of the following except

The Public Company Accounting Oversight Board (PCAOB) was created by the

For accounting purposes,a business and its owners are considered the same entity.