Question 1

Owners' equity is called stockholders' equity for a corporation.

Accepted Answer

A) True 
 B)False

Question 2

The three factors that influence business and accounting decisions are:

Accepted Answer

A)  judgment,cost/benefit analysis,and religious training.
B)  minimizing costs,maximizing profits and cost/benefit tradeoff.
C)  economic,legal,and ethical.
D)  legal implications,religious training,profit maximization.E) A) and B)
F) C) and D)

Question 3

Which financial statement answers the following question: What is the company's operating performance over the past year?

Accepted Answer

A)  statement of cash flows
B)  income statement
C)  statement of retained earnings
D)  balance sheetE) C) and D)
F) A) and B)

Question 4

All of the following would be considered investing activities on the statement of cash flows EXCEPT for:

Accepted Answer

A)  purchase of land for cash.
B)  the sale of equipment for cash.
C)  the payment of cash dividends.
D)  the purchase of equipment for cash.E) A) and B)
F) A) and C)

Question 5

Every corporation must pay dividends every year.

Accepted Answer

A) True 
 B)False

Question 6

The balance sheet is organized in terms of the organization's operating,investing,and financing activities.

Accepted Answer

A) True 
 B)False  False

Question 7

On the Statement of Cash Flows,the ending balance of cash is also found on the:

Accepted Answer

A)  Statement of Retained Earnings.
B)  Balance Sheet.
C)  Income Statement.
D)  Statement of Stockholders' Equity.E) A) and B)
F) A) and C)

Question 8

Equipment would appear on the:

Accepted Answer

A)  balance sheet with the long-term assets.
B)  income statement with the revenues.
C)  income statement with the operating expenses.
D)  balance sheet with the current assets.E) B) and C)
F) A) and D)

Question 9

A company reports the purchase of equipment for $1,000,000 in cash.On a statement of cash flows,this is a(n) example of:

Accepted Answer

A)  cash outflow from financing activity.
B)  cash outflow from operating activity.
C)  cash outflow from investing activity.
D)  noncash activity.E) C) and D)
F) B) and D)

Question 10

Which of the following statements is TRUE for a limited liability company?

Accepted Answer

A)  Members have unlimited liability for the debts of the business.
B)  Members have limited liability for the debts of the business.
C)  Only the limited partners have limited liability for the debts of the business.
D)  The general partner has unlimited liability for the debts of the business.E) A) and B)
F) A) and C)

Question 11

Revenues were $150,000,expenses were $140,000,and cash dividends declared and paid were $5,000.What was the net income and the change in retained earnings for the period?

Accepted Answer

A)  Net income was $10,000; the change in retained earnings was $10,000.
B)  Net income was $150,000; the change in retained earnings was $15,000.
C)  Net income was $10,000; the change in retained earnings was $5,000.
D)  Net income was $150,000; the change in retained earnings was $145,000.E) A) and B)
F) All of the above

Question 12

Expenses are decreases in retained earnings that result from operations.

Accepted Answer

A) True 
 B)False

Question 13

Long-term debt is a liability that is payable beyond one year from the date of the financial statements.

Accepted Answer

A) True 
 B)False  True

Question 14

The stable monetary unit assumption:

Accepted Answer

A)  ensures that accounting records and statements are based on the most reliable data available.
B)  holds that the entity will remain in operation for the foreseeable future.
C)  maintains that each organization or section of an organization stands apart from other organizations and individuals.
D)  enables accountants to ignore the effect of inflation on the accounting records.E) A) and C)
F) B) and C)

Question 15

At the end of the current accounting period,account balances were as follows: Cash,$25,000; Accounts Receivable,$40,000; Common Stock,$18,000; Retained Earnings,$14,000.Liabilities for the period were:

Accepted Answer

A)  $13,000.
B)  $20,000.
C)  $27,000.
D)  $33,000.E) A) and D)
F) A) and B)

Question 16

The fundamental qualitative characteristics of accounting information are relevance and reliability.

Accepted Answer

A) True 
 B)False  False

Question 17

If an investor wants to know a company's cash balance at the end of the year,this balance is reported on the:

Accepted Answer

A)  balance sheet.
B)  statement of cash flows.
C)  income statement.
D)  A and B.E) A) and C)
F) A) and B)

Question 18

Another way to state the accounting equation is:

Accepted Answer

A)  Assets = Liabilities + Paid-in Capital - Common Stock.
B)  Assets + Liabilities = Stockholders' Equity.
C)  Assets = Liabilities + Paid-in Capital + Retained Earnings.
D)  Assets = Liabilities - Paid-in Capital - Dividends.E) A) and C)
F) B) and C)

Question 19

The relevant measure of the value of the assets of a company that is going out of business is the:

Accepted Answer

A)  liquidating value.
B)  inflation-adjusted book value.
C)  historical cost.
D)  book value.E) B) and C)
F) A) and D)

Question 20

Which type of business organization transacts the most business and is the largest in terms of assets,income,and number of employees?

Accepted Answer

A)  Proprietorship
B)  Partnership
C)  Limited-liability company
D)  CorporationE) A) and B)
F) B) and C)

Exam 1: The Financial Statements

Owners' equity is called stockholders' equity for a corporation.

Correct AnswerverifiedShow Answer

The three factors that influence business and accounting decisions are:

Correct AnswerverifiedShow Answer

Which financial statement answers the following question: What is the company's operating performance over the past year?

Correct AnswerverifiedShow Answer

All of the following would be considered investing activities on the statement of cash flows EXCEPT for:

Correct AnswerverifiedShow Answer

Every corporation must pay dividends every year.

Correct AnswerverifiedShow Answer

The balance sheet is organized in terms of the organization's operating,investing,and financing activities.

Correct AnswerverifiedFalse

On the Statement of Cash Flows,the ending balance of cash is also found on the:

Correct AnswerverifiedShow Answer

Equipment would appear on the:

Correct AnswerverifiedShow Answer

A company reports the purchase of equipment for $1,000,000 in cash.On a statement of cash flows,this is a(n) example of:

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE for a limited liability company?

Correct AnswerverifiedShow Answer

Revenues were $150,000,expenses were $140,000,and cash dividends declared and paid were $5,000.What was the net income and the change in retained earnings for the period?

Correct AnswerverifiedShow Answer

Expenses are decreases in retained earnings that result from operations.

Correct AnswerverifiedShow Answer

Long-term debt is a liability that is payable beyond one year from the date of the financial statements.

Correct AnswerverifiedTrue

The stable monetary unit assumption:

Correct AnswerverifiedShow Answer

At the end of the current accounting period,account balances were as follows: Cash,$25,000; Accounts Receivable,$40,000; Common Stock,$18,000; Retained Earnings,$14,000.Liabilities for the period were:

Correct AnswerverifiedShow Answer

The fundamental qualitative characteristics of accounting information are relevance and reliability.

Correct AnswerverifiedFalse

If an investor wants to know a company's cash balance at the end of the year,this balance is reported on the:

Correct AnswerverifiedShow Answer

Another way to state the accounting equation is:

Correct AnswerverifiedShow Answer

The relevant measure of the value of the assets of a company that is going out of business is the:

Correct AnswerverifiedShow Answer

Which type of business organization transacts the most business and is the largest in terms of assets,income,and number of employees?

Correct AnswerverifiedShow Answer

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False

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True

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False

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