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| 1 | |
What is the correct order of listing items on the balance sheet? |
| | A) | Liabilities, Assets, and Stockholders' Equity |
| | B) | Assets, Liabilities, and Stockholders' Equity |
| | C) | Stockholders' Equity, Liabilities, and Assets |
| | D) | Assets, Stockholders' Equity, and Liabilities |
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| 2 | |
Which financial statement shows the balances of financial items at a particular date? |
| | A) | balance sheet |
| | B) | income statement |
| | C) | statement of retained earnings |
| | D) | statement of cash flows |
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| 3 | |
The three basic elements of the balance sheet are |
| | A) | assets, liabilities, and contributed capital. |
| | B) | assets, liabilities, and retained earnings. |
| | C) | assets, liabilities, and stockholders' equity. |
| | D) | assets, liabilities, and revenues. |
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| 4 | |
What items on the balance sheet are considered to be sources for financing economic resources (assets). |
| | A) | liabilities and contributed capital, only |
| | B) | liabilities only |
| | C) | contributed capital and retained earnings, only |
| | D) | liabilities and stockholders' equity |
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| 5 | |
Which of the following items would be shown as part of the Stockholder's Equity on the balance sheet? |
| | A) | Cash |
| | B) | Notes Payable |
| | C) | Retained Earnings |
| | D) | Accounts Receivable |
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| 6 | |
Assets total $450,000, liabilities total $120,000, and contributed capital totals $200,000. What is the dollar amount of retained earnings? |
| | A) | $80,000 |
| | B) | $330,000 |
| | C) | $320,000 |
| | D) | $130,000 |
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| 7 | |
Expenses represent dollar amounts of resources used by the entity to earn revenues. Expenses may actually be paid |
| | A) | only when incurred. |
| | B) | only before they are incurred. |
| | C) | only after they are incurred. |
| | D) | before, when, or after they are incurred. |
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| 8 | |
A company sold $400,000 of merchandise for cash and $120,000 of merchandise to credit customers who will pay for the merchandise in a later time period. How much revenue should be reported on the income statement of the current time period? |
| | A) | $280,000 |
| | B) | $520,000 |
| | C) | $400,000 |
| | D) | $120,000 |
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| 9 | |
The net income reported on the income statement for the accounting period is reported on what other financial statement? |
| | A) | balance sheet |
| | B) | statement of retained earnings |
| | C) | statement of cash flows |
| | D) | no other financial statement |
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| 10 | |
The beginning balance of retained earnings was $7,500. The dividends paid to stockholders' were $1,500. The ending balance of retained earnings is $5,000. What was the net income or net loss for the accounting period? |
| | A) | net loss of $1,000 |
| | B) | net income of $1,000 |
| | C) | net loss of $2,000 |
| | D) | net income of $2,500 |
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| 11 | |
The statement of cash flows for a business would not include which cash flow category? |
| | A) | Operating activities |
| | B) | Capital related financing and investing activities |
| | C) | Financing activities |
| | D) | Investing activities |
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| 12 | |
Which cash flow activity is related to the acquisition of productive assets? |
| | A) | operating activities |
| | B) | investing activities |
| | C) | financing activities |
| | D) | capital related financing activities |
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| 13 | |
Which cash flow activity is related to borrowing money on a long-term basis? |
| | A) | operating activities |
| | B) | investing activities |
| | C) | financing activities |
| | D) | investing and financing activities |
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| 14 | |
Which cash flow activity is related to payments made to suppliers of inventories? |
| | A) | operating activities |
| | B) | investing activities |
| | C) | financing activities |
| | D) | investing and financing activities |
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| 15 | |
The ending amount reported on the statement of cash flows is also reported on what other financial statement? |
| | A) | balance sheet |
| | B) | income statement |
| | C) | statement of retained earnings |
| | D) | balance sheet and statement of retained earnings |
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| 16 | |
Which of the following transactions would be considered an investing activity on a Statement of Cash Flows?
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| | A) | Purchased equipment for cash |
| | B) | Sold stock for cash to stockholders |
| | C) | Borrowed $200,000 on a long-term note |
| | D) | Paid $45,000 for inventory for resale |
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| 17 | |
Which of the following transactions would be considered an operating activity on a Statement of Cash Flows? |
| | A) | Paid a long-term note of $100,000 |
| | B) | Collected money from cash customers |
| | C) | Paid cash dividends of $24,000 |
| | D) | Purchased equipment for cash |
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| 18 | |
Notes to the financial statement provide the following information except: |
| | A) | Descriptions of the accounting rules applied in the company's statements. |
| | B) | Additional detail about a line on the financial statements. |
| | C) | Names of the majority stockholders. |
| | D) | Additional financial disclosures about items not listed on the statements themselves. |
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| 19 | |
Liabilities are listed on the balance sheet in |
| | A) | order of their relative dollar size. |
| | B) | order of their maturity or due date. |
| | C) | no particular order |
| | D) | alphabetical order |
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| 20 | |
The price/earnings ratio is 8 and the net income is $120,000. What is the market (purchase) price of the company? |
| | A) | $1,500,000 |
| | B) | $150,000 |
| | C) | $960,000 |
| | D) | $800,000 |
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| 21 | |
Which organization has the responsibility of developing generally accepted accounting principles (GAAP) |
| | A) | American Institute of Certified Public Accountants (AICPA) |
| | B) | Financial Accounting Standards Board (FASB) |
| | C) | Securities and Exchange Commission (SEC) |
| | D) | Internal Revenue Service (IRS) |
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| 22 | |
An audit report can be prepared and issued by |
| | A) | management. |
| | B) | a certified public accountant (CPA). |
| | C) | an internal auditor. |
| | D) | the chief executive officer (CEO). |
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| 23 | |
The primary purpose of an audit (examination) of the financial reports of a company is to |
| | A) | uncover fraud. |
| | B) | determine who is guilty of malpractice. |
| | C) | determine whether the financial reports conform to GAAP. |
| | D) | examine every document and transaction to verify it was accurately reported. |
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| 24 | |
A CPA adheres to a professional code of ethics developed by which organization? |
| | A) | American Institute of Certified Public Accountants (AICPA) |
| | B) | Financial Accounting Standards Board (FASB) |
| | C) | Securities and Exchange Commission (SEC) |
| | D) | Internal Revenue Service (IRS) |
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