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According to Generally Accepted Accounting Principles,which of the following is not a characteristic of useful financial information?


A) Comparable
B) Verifiable
C) Timely
D) Ethical

E) A) and B)
F) A) and D)

Correct Answer

verifed

verified

Generally Accepted Accounting Principles (GAAP)require profitable companies to distribute some of their earnings to their stockholders.

A) True
B) False

Correct Answer

verifed

verified

Cash paid for wages is an example of an operating activity on the statement of cash flows.

A) True
B) False

Correct Answer

verifed

verified

Cash activity from the buying and selling of productive resources,such as land,buildings and equipment,are reported as cash flows from ________ activities on the statement of cash flows.


A) investing
B) operating
C) financing
D) managing

E) B) and D)
F) A) and B)

Correct Answer

verifed

verified

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

A) True
B) False

Correct Answer

verifed

verified

Golden Enterprises started the year with the following: Assets $50,000;Liabilities $15,000;Common Stock $30,000;Retained Earnings $5,000.During the year,the company earned revenue of $2,500,all of which was received in cash,and incurred expenses of $1,500,all of which were unpaid as of the end of the year.In addition,the company paid dividends of $500 to owners.Assume no other activities occurred during the year. The amount of Golden's retained earnings at the end of the year is:


A) $7,500.
B) $5,500.
C) $6,000.
D) $500.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

The statement of cash flows shows the following information: Cash provided by operating activities of $33,000 Cash used by investing activities of $16,800 Cash used by financing activities of $5,800 The beginning cash was $28,000.What is the amount of cash at the end of the period?


A) $83,600.
B) $61,000.
C) $17,600.
D) $38,400.

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

The owner is not responsible for the entity's taxes and debts if the entity is organized as a(n) :


A) corporation
B) sole proprietorship.
C) unlimited liability corporation.
D) limited liability corporation.

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

In order to be considered useful,information must have two fundamental characteristics: reliability and understandability.

A) True
B) False

Correct Answer

verifed

verified

Characteristics that make information useful do not include:


A) relevance.
B) detail.
C) consistency.
D) understandability.

E) B) and C)
F) None of the above

Correct Answer

verifed

verified

What is the main goal of GAAP?


A) To help ensure that financial decisions are made in a professional and ethical manner.
B) To establish standards that help to prevent and detect fraudulent acts by management.
C) To ensure that the financial information produced by companies is useful to present and potential investors and other parties in making decisions.
D) To oversee the stock exchanges and financial reporting by public companies in the United States.

E) B) and C)
F) A) and C)

Correct Answer

verifed

verified

Which of the following would not be reported as a liability on the balance sheet?


A) Accounts Payable
B) Common Stock
C) Notes Payable
D) Salaries and Wages Payable

E) A) and C)
F) None of the above

Correct Answer

verifed

verified

Match the term to the appropriate definition.(There are more definitions than terms. ) -Income Statement


A) A procedure by which independent evaluators assess the accounting procedures and financial reports of a company.
B) An example of external users of financial statements.
C) Activities directly related to running the business to earn a profit.
D) When a company acquires money from investors.
E) A financial statement that summarizes a company's past and current cash situation.
F) Transactions with lenders (borrowing and repaying cash) and stockholders (selling company stock and paying dividends) .
G) The total amount of profits that are kept by the company.
H) The idea that the financial statements of a company include the results of only that company's business activities.
I) The idea that a company should report its financial data in the relevant currency.
J) Borrowing money from lenders.
K) A financial statement showing a company's assets,liabilities and stockholders' equity.
L) A financial statement that shows a company's revenues and expenses.
M) An example of an internal user of financial statements.

N) D) and M)
O) G) and H)

Correct Answer

verifed

verified

Which of the following would not represent a financing activity?


A) Paying dividends to stockholders.
B) An investment of capital by the owners.
C) Borrowing money from a bank to purchase new equipment.
D) Buying supplies.

E) C) and D)
F) A) and B)

Correct Answer

verifed

verified

Which of the following would not be reported on the balance sheet?


A) Accounts Receivable
B) Accounts Payable
C) Advertising Expense
D) Cash

E) B) and C)
F) C) and D)

Correct Answer

verifed

verified

In the U.S. ,Generally Accepted Accounting Principles (GAAP) are established by the:


A) International Accounting Standards Board (IASB) .
B) Public Company Accounting Oversight Board (PCAOB) .
C) Financial Accounting Standards Board (FASB) .
D) American Institute of Certified Public Accountants (AICPA) .

E) A) and D)
F) B) and D)

Correct Answer

verifed

verified

The Sarbanes-Oxley Act is a set of laws established to:


A) limit the amount of compensation received by executives in publicly traded companies.
B) strengthen corporate reporting in the United States.
C) enhance the conceptual framework of GAAP.
D) redefine the display of financial statements.

E) All of the above
F) A) and D)

Correct Answer

verifed

verified

Golden Enterprises started the year with the following: Assets $50,000;Liabilities $15,000;Common Stock $30,000;Retained Earnings $5,000.During the year,the company earned revenue of $2,500,all of which was received in cash,and incurred expenses of $1,500,all of which were unpaid as of the end of the year.In addition,the company paid dividends of $500 to owners.Assume no other activities occurred during the year. What was the amount of Golden's net income for the year?


A) $1,000
B) $500
C) $1,500
D) $2,500

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

Which of the following items appear on more than one financial statement?


A) Ending Cash and ending Retained Earnings
B) Ending Cash and beginning Retained Earnings
C) Sales Revenue and ending Retained Earnings
D) Beginning Cash and Sales Revenue

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) -SOX


A) The U.S.agency that must approve mergers between very large publicly owned corporations.
B) The U.S.Board that approves the rules for auditing publicly owned companies.
C) The organization that establishes business laws in the U.S.
D) The Board that establishes the accounting rules that govern American owned corporations.
E) This organization regulates activities associated with the stock market such as the reporting of financial data by publicly owned companies.
F) The national professional organization of accountants.
G) Rules of financial accounting created by the FASB for use in the United States.
H) A set of laws established to strengthen corporate reporting in the United States.
I) The Board that establishes international accounting standards.
J) The U.S.agency that certifies foreign accounting firms to practice in the U.S.

K) C) and E)
L) A) and C)

Correct Answer

verifed

verified

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