Question 1

Investors and creditors look at the balance sheet to see whether the company:

Accepted Answer

A)  is profitable.
B)  owns enough assets to pay what it owes to creditors.
C)  has had a positive cash flow from operations.
D)  is paying sufficient dividends to stockholders.E) A) and B)
F) All of the above

Question 2

A stock that does not pay a dividend is an undesirable investment.

Accepted Answer

A) True 
 B)False

Question 3

Creditors are mainly interested in the profitability of a company.

Accepted Answer

A) True 
 B)False

Question 4

The amount of liabilities at the end of the year is

Accepted Answer

A)  $30,000.
B)  $33,000.
C)  $28,000.
D)  $32,000.E) B) and C)
F) A) and B)

Question 5

What is the amount of total assets to be reported on the balance sheet at the end of the year?

Accepted Answer

A)  $112,000
B)  $102,000
C)  $119,000
D)  $155,000E) A) and B)
F) A) and C)

Question 6

In this period,a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Choose the TRUE statement.

Accepted Answer

A)  Revenue for this period is $45,000.
B)  Accounts receivable at the end of this period is $50,000.
C)  Accounts payable at the end of this period is $5,000.
D)  Cash for next period will increase by $50,000.E) A) and B)
F) A) and C)

Question 7

Which of the following is not a professional certification for accountants?

Accepted Answer

A)  CFO
B)  CPA
C)  CMA
D)  CIAE) B) and D)
F) A) and C)

Question 8

Which of the following statements about organizational forms of a business is FALSE?

Accepted Answer

A)  In a sole proprietorship form of business or in a partnership form,the owner(s) are personally responsible for the debts of the business.
B)  The partnership agreement states how profits are to be shared between partners and what happens when a new partner is to be admitted or an existing partner is retiring.
C)  A corporation is a separate entity from both a legal and accounting perspective.
D)  The owners of a corporation are legally responsible for the corporation's debts and taxes.E) A) and B)
F) A) and C)

Question 9

What is the amount of the change in stockholders' equity during the year?

Accepted Answer

A)  $3,000 increase
B)  $21,000 increase
C)  $21,000 decrease
D)  $3,000 decreaseE) A) and B)
F) All of the above

Question 10

Which of the following statements concerning financial reporting is TRUE?

Accepted Answer

A)  The FASB requires all financial decision makers to adhere to a code of professional conduct.
B)  The Sarbanes-Oxley Act does not require businesses to maintain an audited system of internal control.
C)  A fundamental characteristic of useful financial information is that it fully depicts the economic substance of business activities.
D)  There is no attempt to eliminate the difference in accounting rules in the U.S.and elsewhere as this would prevent investors from comparing financial statements of companies from different countries.E) A) and B)
F) All of the above

Question 11

The Don't Bite Me Pest Control Company has 10,000 gallons of insecticide supplies on hand that cost $300,000;a bill from the vendor for $100,000 of these supplies has not yet been paid.The company expects to earn $800,000 for its services when it uses the insecticide supplies.The company would report a supplies asset in the amount of

Accepted Answer

A)  $10,000.
B)  $200,000.
C)  $300,000.
D)  $800,000.E) C) and D)
F) A) and B)

Question 12

In which of the following organizational forms are the owners not taxed on the business profits?

Accepted Answer

A)  Sole proprietorships.
B)  Partnerships.
C)  Corporations.
D)  Public partnerships.E) A) and D)
F) A) and B)

Question 13

If a company reports net income on the income statement,then the statement of cash flows must show an increase in cash flows from operating activities for the period.

Accepted Answer

A) True 
 B)False

Question 14

Internal users of financial data include:

Accepted Answer

A)  investors.
B)  creditors.
C)  management.
D)  regulatory authorities.E) None of the above
F) A) and B)

Question 15

The Sarbanes-Oxley Act (SOX)requires top management of companies to sign a report certifying that the financial statements are free of error.

Accepted Answer

A) True 
 B)False

Question 16

Accounts payable,notes payable and wages payable are examples of liabilities.

Accepted Answer

A) True 
 B)False

Question 17

The separate entity assumption means:

Accepted Answer

A)  a company's financial statements reflect only the business activities of that company.
B)  each separate owner's finances must be revealed in the financial statements.
C)  each separate entity that has a claim on a company's assets must be shown in the financial statements.
D)  if the business is a sole proprietorship,the owners' personal activities are included in the company's financial statements.E) None of the above
F) B) and D)

Question 18

Revenue is reported on the income statement only if cash was received at the point of sale.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is true regarding a company's fiscal year?

Accepted Answer

A)  All companies have a December 31 year end.
B)  It usually corresponds to a company's slow period.
C)  It always corresponds to the calendar year.
D)  The Financial Accounting Standards Board assigns a year end to each company.E) A) and D)
F) B) and C)

Question 20

What was the amount of Cash Flows from Investing Activities?

Accepted Answer

A)  Cash Outflow of $1,000
B)  Cash Outflow of $40,000
C)  Cash Outflow of $10,000
D)  Cash Inflow of $10,000E) A) and C)
F) A) and D)

Exam 1: Business Decisions and Financial Accounting

Investors and creditors look at the balance sheet to see whether the company:

Correct Answer
verified

Creditors are mainly interested in the profitability of a company.

Correct Answer
verified

Revenue is reported on the income statement only if cash was received at the point of sale.

Correct Answer
verified

What is the amount of the change in stockholders' equity during the year?

Correct Answer
verified

Which of the following is not a professional certification for accountants?

Correct Answer
verified

Accounts payable,notes payable and wages payable are examples of liabilities.

Correct Answer
verified

Which of the following statements about organizational forms of a business is FALSE?

Correct Answer
verified

What was the amount of Cash Flows from Investing Activities?

Correct Answer
verified

Which of the following is true regarding a company's fiscal year?

Correct Answer
verified

If a company reports net income on the income statement,then the statement of cash flows must show an increase in cash flows from operating activities for the period.

Correct Answer
verified

A stock that does not pay a dividend is an undesirable investment.

Correct Answer
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The separate entity assumption means:

Correct Answer
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In this period,a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Choose the TRUE statement.

Correct Answer
verified

In which of the following organizational forms are the owners not taxed on the business profits?

Correct Answer
verified

Internal users of financial data include:

Correct Answer
verified

The Sarbanes-Oxley Act (SOX)requires top management of companies to sign a report certifying that the financial statements are free of error.

Correct Answer
verified

What is the amount of total assets to be reported on the balance sheet at the end of the year?

Correct Answer
verified

Correct Answer
verified

Which of the following statements concerning financial reporting is TRUE?

Correct Answer
verified

The amount of liabilities at the end of the year is

Correct Answer
verified

Exam 1: Business Decisions and Financial Accounting

Investors and creditors look at the balance sheet to see whether the company:

Correct AnswerverifiedShow Answer

Creditors are mainly interested in the profitability of a company.

Correct AnswerverifiedShow Answer

Revenue is reported on the income statement only if cash was received at the point of sale.

Correct AnswerverifiedShow Answer

What is the amount of the change in stockholders' equity during the year?

Correct AnswerverifiedShow Answer

Which of the following is not a professional certification for accountants?

Correct AnswerverifiedShow Answer

Accounts payable,notes payable and wages payable are examples of liabilities.

Correct AnswerverifiedShow Answer

Which of the following statements about organizational forms of a business is FALSE?

Correct AnswerverifiedShow Answer

What was the amount of Cash Flows from Investing Activities?

Correct AnswerverifiedShow Answer

Which of the following is true regarding a company's fiscal year?

Correct AnswerverifiedShow Answer

If a company reports net income on the income statement,then the statement of cash flows must show an increase in cash flows from operating activities for the period.

Correct AnswerverifiedShow Answer

A stock that does not pay a dividend is an undesirable investment.

Correct AnswerverifiedShow Answer

The separate entity assumption means:

Correct AnswerverifiedShow Answer

In this period,a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later.In the next period,the company received payment from customers of $45,000.Choose the TRUE statement.

Correct AnswerverifiedShow Answer

In which of the following organizational forms are the owners not taxed on the business profits?

Correct AnswerverifiedShow Answer

Internal users of financial data include:

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act (SOX)requires top management of companies to sign a report certifying that the financial statements are free of error.

Correct AnswerverifiedShow Answer

What is the amount of total assets to be reported on the balance sheet at the end of the year?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements concerning financial reporting is TRUE?

Correct AnswerverifiedShow Answer

The amount of liabilities at the end of the year is

Correct AnswerverifiedShow Answer

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