Which of the following statements related to generally accepted accounting principles is true?
a. it is government law that must be followed
b. it is a never changing set of principles and rules
c. it is determined by government regulators
d. it is a set
d. it is a set of principles and guidelines at a given point in time
2. External users of financial statement do not include
a. stockholders
b. lenders
c. investors
d. board of directors
d. board of directors
3. An accounting system is used to provide information for which of the following
a. internal management
b. external shareholders
c. government regulators
d. all of the above
d. all of the above
4. An audit report is issued by
a. management
b. internal auditors
c. a certified public accountant
d. the government
c. a certified public accountant
5. Determine expenses for the period given the company had the following:
Retained earnings, beginning $2,000 Retained earnings, ending $5,000
Revenues this period $8,000 Dividends paid this period $1,000
a. $9,000
b. $4,000
c. $7,000
d. $3,000
d. $3,000
6. When total assets decrease and liabilities and common stock do not change and there are no dividends paid
a. retained earnings remains the same
b. revenues are less than expenses
c. revenues are greater than assets
d. the company had to purchase assets
b. revenues are less than expenses
7. A company spent cash to purchase equipment. This transaction results in
a. total liabilities increased
b. total equity increased
c. total assets increased
d. none of the above
d. none of the above
8. A company provided services and will be paid next period. The transaction results in
a. total assets increased
b. total equity decreased
c. total liabilities decreased
d. total expenses increased
a. total assets increased
9. Which cash flow is an operating activity?
a. purchase of long term assets
b. repayment of long term debt
c. collecting cash from customers
d. paying a dividend to shareholders
c. collecting cash from customers
10. A company earned $5,000 in revenues, collected $7,500 from customers and paid $3,000 for expenses incurred this period. What will be reported on the financial statements for this period?
a. assets are decreased
b. liabilities are increased
c. equity i
c. equity is increased
11. Which of the following would not be a statement that reports services provided and the cost of providing services?
a. statement of income
b. statement of earnings
c. statement of financial position
d. statement of operations
c. statement of financial position
12. A balance sheet reports cash of $3,000, accrued expenses of $1,300, equipment of $10,000 and common stock of $2,500. Retained earnings must be:
a. $7,500
b. $9,200
c. $12,500
d. $11,200
b. $9,200
1. The balance sheet reports
a. goods and services provided to the customer
b. resale value of assets currently held
c. economic resources and claims to those resources
d. probable resources in the future
c. economic resources and claims to those resources
2. Which of the following is not true?
a. assets = liabilities + equity
b. liabilities = assets - equity
c. equity = assets - liabilities
d. assets + liabilities = equity
d. assets + liabilities = equity
3. Which of the following would be an appropriate heading for a balance sheet?
a. as of December 31, 2XXX
b. for the period ended December 31, 2XXX
c. for the year ended December 31, 2XXX
d. any of the following would be appropriate
a. as of December 31, 2XXX
4. An investor looking to determine the financial strength of a company as of a certain date would use which financial statement?
a. balance sheet
b. income statement
c. statement of detail expenses
d. statement of stockholder's equity
a. balance sheet
5. Which of the following are categories that are reported on an income statement?
a. current assets and current liabilities
b. revenues and expenses
c. sales and assets
d. expenses and liabilities
b. revenues and expenses
6. Which of the following statements is not true relative to the statement of cash flows?
a. it does not show the financial resources a company owns
b. it does not show the amount of services a company provided
c. it does not show the amounts owed by a co
d. it does not show the amount spent for long term assets
7. The difference in revenues and expenses during a specific period of time is
a. net income
b. net liabilities
c. net assets
d. net sales
a. net income
8. The price of goods or services provided in exchange for an asset is called
a. expense
b. liability
c. asset
d. revenue
d. revenue
9. Total owner's equity is increased when
a. services provided are less than the cost of providing services
b. dividends are paid to shareholders
c. services provided is more than the cost of providing services
d. interest is paid
c. services provided is more than the cost of providing services
10. What account is used to record cash collected in the period after goods are provided?
a. accounts payable
b. accounts receivable
c. accrued liabilities
d. expenses
b. accounts receivable
11. Taxes payable is reported on the balance sheet as
a. expense
b. liability
c. asset
d. revenue
b. liability
12. A company had assets of $230,000 and liabilities of $145,000 at the beginning of the year. During the year the company earned $45,000 and reduced what it owed by $22,000. What is total assets at the end of the year?
a. $185,000
b. $275,000
c. $253,000
c. $253,000
13. The company received bills for services provided to them during this month totaling $11,800 and paid bills this month totaling $13,600. What will be reported as expenses for this month?
a. $13,600
b. $11,800
c. $25,400
d. $ 1,800
b. $11,800
14. The company provided goods to customers totaling $34,800 and collected payments from customers this month in the amount of $39,200. What will be reported as revenues for this month?
a. $39,200
b. $34,800
c. $74,000
d. $ 4,400
b. $34,800
15. Cash transactions related to common stock are reported in which section of the cash flow statement?
a. operating
b. investing
c. financing
d. stockholder's equity
c. financing
1. Revenue reported on the income statement would be the same as
a. the amount of cash collected during the period
b. the value of services provided during the period
c. the amount of cash collected less what the customer returns
d. the amount of cash col
b. the value of services provided during the period
2. What categories are reported on the cash flow statement?
a. operating, borrowing, repayments
b. investing, financing, selling
c. operating, investing, financing
d. operating, buying, selling
c. operating, investing, financing
3. Rent expense reported on the income statement represents
a. the service that was provided to the company
b. the service that was provided to the customer
c. the amount that was paid for rent
d. the amount that was collected for rent
a. the service that was provided to the company
4. The notes to the financial statements provide
a. a detail list of all assets the company owns
b. a detail list of all the debts the company owns
c. the financial accounting principles followed by the company
d. all of the above
c. the financial accounting principles followed by the company
5. A company reports $200,000 total assets, $60,000 total equity and $180,000 total revenues. What are total liabilities?
a. $180,000
b. $140,000
c. $260,000
d. $ 20,000
b. $140,000
6. A business records revenues when
a. it collects cash from customers
b. it provides goods and services to customers
c. it pays expenses related to collecting cash
d. its revenues are greater than expenses
b. it provides goods and services to customers
7. The most common way that a business communicates the results of operations is
a. new releases
b. financial statements
c. board of director meetings
d. letters to potential investors and lenders
b. financial statements
8. The financial statement that reports the financial position of a business on a certain date is the
a. balance sheet
b. income statement
c. statement of cash flows
d. statement of stockholder's equity
a. balance sheet
9. Which of the following items is a revenue?
a. interest earned
b. interest paid
c. collections from customers
d. paying for an expense before it is provided
a. interest earned
10. The reason a company has an audit is
a. to prove that financial information is 100% accurate
b. to lend credibility to the financial information
c. to state that the company is a good investment
d. to tell the shareholder about future performance
b. to lend credibility to the financial information
11. The Financial Accounting Standards Board (FASB)
a. enforces the application of GAAP
b. provides general guidance on accounting
c. develops laws that all companies must follow
d. is a government entity
b. provides general guidance on accounting
12. An expense is
a. all things the company has to pay for
b. the cost of providing goods and services
c. paying for an asset
d. only an expense if it will be paid for in the future
b. the cost of providing goods and services
13. Financial accounting
a. records all transactions and reports a summary of transactions
b. records and reports only large transactions
c. provides reports to only managers in the company
d. provides financial statements that project income in the futur
a. records all transactions and reports a summary of transactions
14, Who is responsible for the financial statements provided by the company?
a. management
b. loan officers
c. auditors
d. shareholders
a. management
15. Which of the following is not considered an expense?
a. cost of goods sold
b. prepaid expenses
c. rent incurred
d. utilities used during the period
b. prepaid expenses