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| 1 | |
The primary purpose of external financial reporting is to provide external users with the information necessary to profit from buying and selling the shares (stock) of the business in an organized stock exchange. |
| | A) | True |
| | B) | False |
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| 2 | |
The users of accounting information are identified as decision makers. |
| | A) | True |
| | B) | False |
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| 3 | |
The term cost benefit, as used by accountants, refers to an accounting constraint. |
| | A) | True |
| | B) | False |
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| 4 | |
Most companies list assets on the balance sheet in order of the size of the dollar amount of each asset. |
| | A) | True |
| | B) | False |
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| 5 | |
Liabilities are usually listed on the balance sheet in order of maturity. |
| | A) | True |
| | B) | False |
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| 6 | |
Liabilities are probable debts or obligations that result from current and future transactions that will be paid for with assets or services. |
| | A) | True |
| | B) | False |
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| 7 | |
Stockholders' equity is made up of contributed capital and retained earnings. |
| | A) | True |
| | B) | False |
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| 8 | |
The distribution of a company's earnings are called dividends. |
| | A) | True |
| | B) | False |
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| 9 | |
An asset with a market value of $21,000 that is purchased for cash of $19,000 should be listed on the balance sheet at $21,000. |
| | A) | True |
| | B) | False |
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| 10 | |
If the financial leverage ratio is 1.8 and the average stockholders' equity is $245,000, then the average total assets are $441,000. |
| | A) | True |
| | B) | False |
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| 11 | |
A financial leverage close to or at 1:1 indicates that a company is heavily utilizing debt to expand its operations. |
| | A) | True |
| | B) | False |
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| 12 | |
A transaction can only occur between the business and an outside individual or entity. |
| | A) | True |
| | B) | False |
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| 13 | |
A standardized format that is used to accumulate the dollar effect of transactions on each financial statement item is called an account. |
| | A) | True |
| | B) | False |
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| 14 | |
If, at the beginning of January, $450 of office supplies was purchased and at the end of January, $120 of office supplies remains on hand, then the using up of $330 of office supplies is an example of an internal transaction. |
| | A) | True |
| | B) | False |
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| 15 | |
The correct analysis of how a transaction affects the accounts of the business will not always result in the accounting equation remaining in balance. |
| | A) | True |
| | B) | False |
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| 16 | |
When a current liability is paid, cash would be credited. |
| | A) | True |
| | B) | False |
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| 17 | |
All increases in accounts are shown on the credit side of accounts. |
| | A) | True |
| | B) | False |
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| 18 | |
The term debit means increase. |
| | A) | True |
| | B) | False |
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| 19 | |
If, at the end of the month, all of the transactions have been correctly analyzed, the total of all debits will equal the total of all credits. |
| | A) | True |
| | B) | False |
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| 20 | |
Your company purchased office supplies and office equipment by issuing a check for $2,500. Recording this transaction in a journal requires a combined entry. |
| | A) | True |
| | B) | False |
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| 21 | |
All of the accounts used by the business are found in a ledger. |
| | A) | True |
| | B) | False |
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| 22 | |
The T-account is a simplified representation of an account, and is very useful for summarizing the transaction effects and determining the balance for individual accounts. |
| | A) | True |
| | B) | False |
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| 23 | |
If at the end of the accounting period the total of all the asset accounts is $450,000 and the total of all stockholder equity accounts is $300,000, then the total of all the liability accounts must be $750,000. |
| | A) | True |
| | B) | False |
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| 24 | |
Borrowing money from a bank is a financing activity. |
| | A) | True |
| | B) | False |
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| 25 | |
Selling long-term assets for cash is an investing activity. |
| | A) | True |
| | B) | False |
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| 26 | |
The statement of cash flows divides all cash transactions into four categories. |
| | A) | True |
| | B) | False |
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| 27 | |
The Cash at end of month shown on the statement of cash flows must agree with the balance of Cash shown on the balance sheet. |
| | A) | True |
| | B) | False |
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