Question 1

The balance sheet includes the:

Accepted Answer

A)  amount of net income or net loss.
B)  beginning balance in retained earnings.
C)  ending balance in retained earnings.
D)  amount of cash dividends paid to stockholders.E) A) and B)
F) All of the above

Question 2

The ending balance of cash and cash equivalents is found on the Statement of Cash Flows and the:

Accepted Answer

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

Question 3

The word "payable" always signifies a liability.

Accepted Answer

A) True 
 B)False

Question 4

Which statement is FALSE?

Accepted Answer

A)  International Financial Reporting Standards are used by most countries around the world.
B)  U.S.Generally Accepted Accounting Principles are used by many countries around the world.
C)  The most commonly used accounting practices are essentially the same under both U.S.Generally Accepted Accounting Principles and International Financial Reporting Standards.
D)  For many years,U.S.Generally Accepted Accounting Principles were considered to be the strongest single set of accounting standards in the world.E) B) and C)
F) All of the above

Question 5

The International Accounting Standards Board is responsible for establishing:

Accepted Answer

A)  the code of professional conduct for accountants.
B)  an international Securities and Exchange Commission.
C)  U.S.Generally Accepted Accounting Principles.
D)  International Financial Reporting Standards.E) A) and B)
F) None of the above

Question 6

The conceptual foundation of accounting does NOT include:

Accepted Answer

A)  accounting objectives.
B)  fundamental qualitative characteristics.
C)  enhancing qualitative characteristics.
D)  decision making.E) C) and D)
F) All of the above

Question 7

Which of the following have unlimited liability for a company's debts?

Accepted Answer

A)  owners of a corporation
B)  members of a limited liability company
C)  limited partners in a limited liability partnership
D)  general partner in a limited liability partnershipE) B) and C)
F) C) and D)

Question 8

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

Accepted Answer

A)  All partners have limited liability for the debts of the partnership.
B)  All partners have limited liability for the acts of the other partners.
C)  The general partner has unlimited liability for the debts of the partnership.
D)  The limited partners have unlimited liability for the debts of the partnership.E) B) and D)
F) A) and C)

Question 9

The two types of accounting are:

Accepted Answer

A)  profit and nonprofit.
B)  financial and managerial.
C)  internal and external.
D)  bookkeeping and decision-oriented.E) A) and B)
F) A) and C)

Question 10

The Clarke Company had beginning retained earnings of $20,000 and net income of $5,000.Clarke declared and paid dividends of $1,000.Therefore,the ending retained earnings is $25,000.

Accepted Answer

A) True 
 B)False

Question 11

Which is the CORRECT order for items to appear on the income statement?

Accepted Answer

A)  revenues,operating expenses,net income
B)  cost of goods sold,revenues,net income
C)  revenues,net income,operating expenses
D)  interest expense,revenues,income from operationsE) A) and D)
F) None of the above

Question 12

Historical cost:

Accepted Answer

A)  is used in the U.S.to value all business assets.
B)  is equal to the amount of cash paid minus the dollar value of all noncash considerations also given in the exchange.
C)  is a verifiable measure that is relatively free from bias.
D)  is the amount that the business could sell an asset for.E) B) and C)
F) A) and B)

Question 13

The American Institute of Certified Public Accountants (AICPA)Code of Professional Conduct contains basic principles that can only be applied to CPAs.

Accepted Answer

A) True 
 B)False

Question 14

Stockholders' equity is the stockholders' interest in the assets of the corporation.

Accepted Answer

A) True 
 B)False

Question 15

Accounting can be defined as:

Accepted Answer

Accounting is the information ...

Question 16

The accounting assumption that states that the business,rather than its owners,is the reporting unit is the:

Accepted Answer

A)  entity assumption.
B)  going concern assumption.
C)  stable-monetary-unit assumption.
D)  historical cost assumption.E) None of the above
F) All of the above

Question 17

Owners' equity consists of two accounts,Amy Jones,Capital,and Mindy Lenz,Capital.This indicates the entity is a:

Accepted Answer

A)  proprietorship.
B)  corporation.
C)  not-for-profit.
D)  partnership.E) None of the above
F) B) and C)

Question 18

An example of an operating expense is:

Accepted Answer

A)  cost of products sold.
B)  sales returns.
C)  sales commissions paid to employees.
D)  interest expense.E) A) and D)
F) A) and C)

Question 19

Complicating factors for a global business include:

Accepted Answer

A)  what is legal in one country may not be legal in another country.
B)  what is ethical in one country may not be ethical in another country.
C)  a foreign government threatening to take over the company's plant.
D)  all of the above.E) C) and D)
F) A) and D)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: The Financial Statements

Historical cost:

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Which statement is FALSE?

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The ending balance of cash and cash equivalents is found on the Statement of Cash Flows and the:

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Accounting can be defined as:

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

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The Clarke Company had beginning retained earnings of $20,000 and net income of $5,000.Clarke declared and paid dividends of $1,000.Therefore,the ending retained earnings is $25,000.

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The two types of accounting are:

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The American Institute of Certified Public Accountants (AICPA)Code of Professional Conduct contains basic principles that can only be applied to CPAs.

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Stockholders' equity is the stockholders' interest in the assets of the corporation.

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The word "payable" always signifies a liability.

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

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The International Accounting Standards Board is responsible for establishing:

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Complicating factors for a global business include:

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The conceptual foundation of accounting does NOT include:

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Which of the following have unlimited liability for a company's debts?

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Which is the CORRECT order for items to appear on the income statement?

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An example of an operating expense is:

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The accounting assumption that states that the business,rather than its owners,is the reporting unit is the:

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The balance sheet includes the:

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Owners' equity consists of two accounts,Amy Jones,Capital,and Mindy Lenz,Capital.This indicates the entity is a:

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Accounting is the information ...
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