Question 1

Which of the following is true?

Accepted Answer

A)   Companies can choose to end their fiscal year on any date they feel is most relevant.
B)   Companies must end their fiscal year on March 31, June 30, September 30, or December 31.
C)   Companies can select any date except a holiday to end their fiscal year.
D)   Companies must end their fiscal year on December 31.E) A) and C)
F) B) and C)

Question 2

Investors are often interested in the amount of net income distributed as dividends. In which section of the financial statements would investors look to find this amount?

Accepted Answer

A)   Statement of retained earnings.
B)   Balance sheet.
C)   Notes to the financial statements.
D)   Income statement.E) None of the above
F) A) and B) A

Question 3

Liabilities on the balance sheet would include which of the following?

Accepted Answer

A)   Accounts payable, notes payable and contributed capital
B)   Accounts receivable, supplies expense and retained earnings
C)   Accounts payable, notes payable and wages payable
D)   Contributed capital, retained earnings and notes payableE) C) and D)
F) A) and C)

Question 4

Based on this information, what was the amount of retained earnings at the beginning of the year?

Accepted Answer

A)   $150,000
B)   $0
C)   $550,000
D)   $350,000E) All of the above
F) B) and C)

Question 5

What is the amount of retained earnings at the end of 2011?

Accepted Answer

A)   $37,000
B)   $240,000
C)   $29,000
D)   $269,000E) A) and B)
F) C) and D)

Question 6

A company owes $200,000 on a bank loan. If this loan is documented using a formal written debt contract, it will be reported as a liability called Notes Payable.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not true?

Accepted Answer

A)   Assets = Liabilities + Stockholders' Equity
B)   Liabilities = Assets - Stockholders' Equity
C)   Stockholders' Equity + Liabilities - Assets = 0
D)   Liabilities - Stockholders' Equity = AssetsE) A) and C)
F) B) and C)

Question 8

Accounting information systems:

Accepted Answer

A)   are summarized by reports that are published to the public.
B)   capture and report the results of a business's operating, investing, and financing activities.
C)   monitor business activities only in financial terms.
D)   capture only the information that is needed by the owners of the company.E) A) and B)
F) A) and C) B

Question 9

The amount of Assets at the end of the year is

Accepted Answer

A)   $105,000.
B)   $108,000.
C)   $104,000.
D)   $107,000.E) A) and B)
F) All of the above

Question 10

Assets:

Accepted Answer

A)   represent the amounts earned by a company.
B)   must equal the liabilities of a company.
C)   must equal the stockholders' equity of the company.
D)   represent the resources owned by a company.E) None of the above
F) B) and C)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

What was the amount of the change in liabilities during the year?

Accepted Answer

A)   Increase of $100,000
B)   Increase of $40,000
C)   Increase of $70,000
D)   Increase of $170,000E) B) and D)
F) A) and C)

Question 13

To determine whether generally accepted accounting principles (GAAP)  were followed in the preparation of financial statements, an examination of:

Accepted Answer

A)   tax documents would be performed by the IRS.
B)   the annual report would be performed by the SEC.
C)   the financial statements and related documents would be performed by an independent auditor.
D)   the financial statements and related documents would be performed by the FASB.E) None of the above
F) B) and C)

Question 14

For a new business, the beginning balance of Retained Earnings is zero.

Accepted Answer

A) True 
 B)False

Question 15

Accounts payable and accounts receivable are reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 16

What was the amount of retained earnings at the end of 2010?

Accepted Answer

A)   $20,000
B)   $8,000
C)   $150,000
D)   $155,000E) A) and B)
F) C) and D)

Question 17

Find the missing data.

Accepted Answer

A)   Total revenues are $3,810,200, other selling and administrative expenses are $1,051,500, and net income is $364,600.
B)   Total revenues are $2,495,300, other selling and administrative expenses are $1,051,500, and net income is ($950,300) .
C)   Total revenues are $364,600, other selling and administrative expenses are $3,081,000, and net income is $7,255,800.
D)   Total revenues are $3,810,200, other selling and administrative expenses are $364,600, and net income isE) C) and D)
F) B) and C) A

Question 18

A company issued stock to investors for cash of $50,000. Choose the TRUE statement.

Accepted Answer

A)   Cash will increase $50,000 and contributed capital will increase $50,000.
B)   Cash will decrease $50,000 and retained earnings will decrease $50,000.
C)   Cash will increase $50,000 and retained earnings will increase $50,000.
D)   Cash will decrease $50,000 and contributed capital will increase $50,000.E) C) and D)
F) All of the above

Question 19

Which of the following would affect stockholders' equity?

Accepted Answer

A)   A company borrows $100 million and buys $100 million in equipment.
B)   A company pays $100 million to stockholders as a dividend.
C)   A company sells $100 million in assets for $100 million cash.
D)   A company receives payment for $100 million in accounts receivable.E) A) and C)
F) A) and D)

Question 20

Expenses are the costs incurred in doing business which are necessary to earn revenue.

Accepted Answer

A) True 
 B)False

Exam 1: Business Decisions and Financial Accounting

Which of the following is true?

Correct AnswerverifiedShow Answer

Investors are often interested in the amount of net income distributed as dividends. In which section of the financial statements would investors look to find this amount?

Correct AnswerverifiedA

Liabilities on the balance sheet would include which of the following?

Correct AnswerverifiedShow Answer

Based on this information, what was the amount of retained earnings at the beginning of the year?

Correct AnswerverifiedShow Answer

What is the amount of retained earnings at the end of 2011?

Correct AnswerverifiedShow Answer

A company owes $200,000 on a bank loan. If this loan is documented using a formal written debt contract, it will be reported as a liability called Notes Payable.

Correct AnswerverifiedShow Answer

Which of the following is not true?

Correct AnswerverifiedShow Answer

Accounting information systems:

Correct AnswerverifiedB

The amount of Assets at the end of the year is

Correct AnswerverifiedShow Answer

Assets:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What was the amount of the change in liabilities during the year?

Correct AnswerverifiedShow Answer

To determine whether generally accepted accounting principles (GAAP) were followed in the preparation of financial statements, an examination of:

Correct AnswerverifiedShow Answer

For a new business, the beginning balance of Retained Earnings is zero.

Correct AnswerverifiedShow Answer

Accounts payable and accounts receivable are reported on the income statement.

Correct AnswerverifiedShow Answer

What was the amount of retained earnings at the end of 2010?

Correct AnswerverifiedShow Answer

Find the missing data.

Correct AnswerverifiedA

A company issued stock to investors for cash of $50,000. Choose the TRUE statement.

Correct AnswerverifiedShow Answer

Which of the following would affect stockholders' equity?

Correct AnswerverifiedShow Answer

Expenses are the costs incurred in doing business which are necessary to earn revenue.

Correct AnswerverifiedShow Answer

Correct Answer
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A

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B

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A

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