 |
| 1.
| |
Who are the two primary groups of financial resource providers for a corporation? (LO 1) |
| | A) | Accountants and CPAs |
| | B) | Suppliers and vendors |
| | C) | Investors and creditors |
| | D) | Lenders and suppliers |
|
|
|
| 2.
| |
Accountants establish measurement and reporting rules that business people use to facilitate communication of financial information. What are the financial accounting measurement rules used in the United States called? (LO 1) |
| | A) | FASB |
| | B) | GAAP |
| | C) | The accounting equation |
| | D) | Accrual accounting |
|
|
|
| 3.
| |
Business entities communicate information to the public through the financial reporting process. The information reported in financial statements is organized into categories known as elements. Which of the following categories is NOT a financial statement element? (LO 3) |
| | A) | Cash flow |
| | B) | Contributed capital |
| | C) | Assets |
| | D) | Distributions |
|
|
|
| 4.
| |
State the accounting equation. (LO 4) |
| | A) | Assets + Liabilities = Equity |
| | B) | Assets + Equity = Liabilities |
| | C) | Assets = Liabilities - Equity |
| | D) | Assets = Liabilities + Equity |
|
|
|
| 5.
| |
On which of the following financial statements would you expect to find revenues and expenses? (LO 8) |
| | A) | Balance sheet |
| | B) | Income statement |
| | C) | Statement of cash flows |
| | D) | Statement of changes in equity |
|
|
|
| 6.
| |
On which of the following financial statements would you expect to find operating, investing, and financing activities? (LO 8) |
| | A) | Balance sheet |
| | B) | Income statement |
| | C) | Statement of cash flows |
| | D) | Statement of changes in equity |
|
|
|
| 7.
| |
On which of the following financial statements would you expect to find assets, liabilities, and stockholders' equity? (LO 8) |
| | A) | Balance sheet |
| | B) | Income statement |
| | C) | Statement of cash flows |
| | D) | Statement of changes in equity |
|
|
|
| 8.
| |
Bulldog Company purchased land for $50,000 cash. What is a financial statement impact of this transaction? (LO 5) |
| | A) | Assets decreased |
| | B) | Equity increased |
| | C) | Cash decreased |
| | D) | Liabilities increased |
|
|
|
| 9.
| |
Bulldog Company purchased land for $50,000 cash. Which of the following best describes this transaction type? (LO 5, 7) |
| | A) | Asset source transaction |
| | B) | Asset use transaction |
| | C) | Asset exchange transaction |
| | D) | Claims exchange transaction |
|
|
|
| 10.
| |
Maroon Company borrowed $100,000 from the First State Bank. What is a financial statement impact of this transaction? (LO 5) |
| | A) | Assets decreased |
| | B) | Equity increased |
| | C) | Cash decreased |
| | D) | Liabilities increased |
|
|
|
| 11.
| |
Maroon Company borrowed $100,000 from the First State Bank. How should this transaction be classified on the statement of cash flows? (LO 8) |
| | A) | Financing activity |
| | B) | Operating activity |
| | C) | Investing activity |
| | D) | It would not be shown on the statement of cash flows. |
|
|
|
| 12.
| |
Maroon Company issued its common stock for $80,000 cash. What is a financial statement impact of this transaction? (LO 5) |
| | A) | Assets decreased |
| | B) | Equity increased |
| | C) | Cash decreased |
| | D) | Liabilities increased |
|
|
|
| 13.
| |
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=png::::/sites/dl/free/0072846003/310567/chap01_13.png','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (33.0K)</a>]]> Home Landscaping provided services and received $50,000 cash. Using the horizontal financial statements model, determine which of the following is NOT impacted by this transaction. (LO 9) |
| | A) | Balance sheet assets |
| | B) | Balance sheet liabilities |
| | C) | Income statement |
| | D) | Statement of cash flows |
|
|
|
| 14.
| |
Home Landscaping paid $5,000 of cash dividends to the owners. Using the horizontal financial statements model, determine which of the following is NOT impacted by this transaction. (LO 9) |
| | A) | Balance sheet assets |
| | B) | Balance sheet equity |
| | C) | Income statement |
| | D) | Statement of cash flows |
|
|
|
| 15.
| |
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=png::::/sites/dl/free/0072846003/310567/chap01_14.png','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (31.0K)</a>]]> Which of the following statements is FALSE? (LO 1, 2, 6) |
| | A) | Land that increases in value is reported at its increased value on the balance sheet. |
| | B) | Information is reliable if it can be independently verified. |
| | C) | A reporting entity is a business or entity for which financial statements are prepared. |
| | D) | Financial accounting focuses on the needs of the external users. |
|
|
|
| 16.
| |
Crimson Company paid $8,000 cash to its employees for salaries expense during the current accounting period. Which of the following best describes this transaction type? (LO 5, 7) |
| | A) | Asset source transaction |
| | B) | Asset use transaction |
| | C) | Asset exchange transaction |
| | D) | Claims exchange transaction |
|
|
|
| 17.
| |
Crimson Company paid $8,000 cash for to its employees for salaries expense during the current accounting period. How should this transaction be classified on the statement of cash flows? (LO 8) |
| | A) | Financing activity |
| | B) | Operating activity |
| | C) | Investing activity |
| | D) | It would not be shown on the statement of cash flows. |
|
|
|
| 18.
| |
Which of the following statements is FALSE? (LO 5, 8) |
| | A) | The general ledger is a collection of a company's financial accounts. |
| | B) | The term articulation is used to describe the interrelationship among the various elements of the financial statements. |
| | C) | All transactions that affect retained earnings also impact the income statement. |
| | D) | The information in the ledger accounts is used to prepare the financial statements. |
|
|
|
| 19.
| |
Which of the following transactions does NOT affect retained earnings? (LO 5) |
| | A) | Paying a cash dividend |
| | B) | Issuing common stock for cash |
| | C) | Providing services to customers for cash |
| | D) | Paying cash for office rent for the current accounting period |
|
|
|
| 20.
| |
Which of the following transactions impacts the investing activities section of the statement of cash flows? (LO 8) |
| | A) | Issued common stock for cash |
| | B) | Paid cash dividends |
| | C) | Purchased a building for cash |
| | D) | Repaid a bank loan |
|
|
|
| 21.
| |
White Company had an $8,000 beginning balance in Retained Earnings and a $20,000 beginning balance in Common Stock. During the accounting period, White Company earned $45,000, borrowed $10,000 from the bank, and paid $6,000 in cash dividends. What is the ending balance for the statement of changes in stockholders' equity (i.e., the ending amount of stockholders' equity)? (LO 8) |
| | A) | $20,000 |
| | B) | $47,000 |
| | C) | $67,000 |
| | D) | $77,000 |
|
|
|
| 22.
| |
Which of the following business entities is a merchandising business? (LO 11) |
| | A) | City Dry Cleaners |
| | B) | Smith and Smith, CPAs |
| | C) | J.C. Penney Company |
| | D) | International Paper Company |
|
|
|
| 23.
| |
Golden Corporation paid $6,000 in cash dividends to its owners. Which of the following answers reflects how this payment of cash dividends would affect Golden Corporation's financial statements? (LO 5, 9)  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=png::::/sites/dl/free/0072846003/310567/chap01_23.png','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (36.0K)</a>]]> |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
|
|
|
| 24.
| |
Frazier Company provided services for $25,000 cash. Which of the following answers accurately reflects how this event would affect the company's financial statements?(LO 5, 9)  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0072846003/310564/table.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (4.0K)</a>]]> |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
|
|
|
| 25.
| |
The American Institute of Certified Public Accountants (AICPA) requires its members to comply with the AICPA Code of Professional Conduct. Which of the following is NOT covered by this Code of Professional Conduct? (LO 10) |
| | A) | A CPA will serve the public interest. |
| | B) | A CPA will perform all professional responsibilities with the highest sense of integrity. |
| | C) | A CPA will maintain independence in fact and appearance when performing an audit. |
| | D) | A CPA must exercise moral judgment only when providing professional services. |
|
|
|
| 26.
| |
As a result of major audit failures on the part of the independent auditors (e.g., Enron and WorldCom), what act did Congress pass in 2002 to tighten rules governing auditor independence? (LO 10) |
| | A) | AICPA Auditor Independence Act |
| | B) | SEC Audit Control Act |
| | C) | Sarbanes-Oxley Act |
| | D) | GAAP Improvement Act of 2002 |
|
|
|
| 27.
| |
Which of the following would be a subclassification of the financial statement element "assets"? (LO 3) |
| | A) | Balance sheet |
| | B) | Net income |
| | C) | Land |
| | D) | Notes payable |
|
|
|
| 28.
| |
What is the name for the creditors' claims on the assets of a company? (LO 4) |
| | A) | Liabilities |
| | B) | Equity |
| | C) | Common Stock |
| | D) | Dividends |
|
|
.