Question 1

The entity concept is the most basic accounting concept.

Accepted Answer

A) True 
 B)False

Question 2

A net loss occurs when:

Accepted Answer

A)  total revenues exceed total expenses.
B)  total revenues and dividends exceed total expenses.
C)  not enough cash exists.
D)  total expenses exceed total revenues.

Question 3

The SEC Edgar file contains information on all:

Accepted Answer

A)  US companies traded on the American Stock Exchange.
B)  publicly traded companies in the US.
C)  companies on the SEC "watch list."
D)  US companies traded on the New York Stock Exchange.

Question 4

Which of the following best describes a liability? Liabilities are:

Accepted Answer

A)  a form of paid- in capital.
B)  payables of the corporation.
C)  economic obligations to owners to be paid at some future date by the corporation.
D)  future economic benefits to which a company is entitled.

Question 5

Where would the payment of salaries appear on the statement of cash flows?

Accepted Answer

A)  Not on statement of cash flows, but on the statement of earnings with the revenues
B)  Not on statement of cash flows, but on the statement of operations as part of cost of goods sold
C)  With the current liabilities
D)  With the operating activities

Question 6

An investor wishing to assess a company's financial position at the end of the period would probably examine the:

Accepted Answer

A)  income statement only.
B)  statement of retained earnings.
C)  balance sheet.
D)  statement of cash flows and the income statement.

Question 7

Receivables are classified as:

Accepted Answer

A)  increases in earnings.
B)  liabilities.
C)  decreases in earnings.
D)  assets.

Question 8

Stockholders' equity for Commerce- GA Corporation on 01/01/2008 and 12/31/2008 were $60,000 and $75,000, respectively. Assets on 01/01/2008 and 12/31/2008 were $115,000 and $105,000, respectively. Liabilities on 01/01/2008 were $55,000. What is the amount of liabilities on 12/31/2008?

Accepted Answer

A)  $30,000
B)  $15,000
C)  $40,000
D)  The amount is indeterminable from the given information.

Question 9

Expenses are increases in retained earnings that result from operations.

Accepted Answer

A) True 
 B)False

Question 10

Retained earnings appears on which of the following financial statements?

Accepted Answer

A)  Statement of retained earnings, statement of cash flows, and balance sheet, but not the income statement
B)  Statement of retained earnings and balance sheet, but not the income statement or statement of cash flows
C)  Statement of retained earnings and statement of cash flows, but not the income statement or balance sheet
D)  Statement of retained earnings, statement of cash flows, and income statement, but not the balance sheet

Question 11

Since cost is a reliable measure to use in financial accounting, the objectivity principle states that assets and services should be recorded at their actual cost.

Accepted Answer

A) True 
 B)False

Question 12

Depreciation is normally associated with which asset on the balance sheet?

Accepted Answer

A)  Land
B)  Equipment
C)  Accounts receivable
D)  Inventory

Question 13

Net income appears on both the income statement and the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

In accounting, the word "net" means "something taken out."

Accepted Answer

A) True 
 B)False

Question 15

A balance sheet reports the company's financial position at a specific point in time.

Accepted Answer

A) True 
 B)False

Question 16

Current assets are assets expected to be converted to cash, sold, or consumed:

Accepted Answer

A)  within the next 12 months or within the business's normal operating cycle if less than a year.
B)  within the next 24 months.
C)  within the next 6 months.
D)  within the next 12 months or within the business's normal operating cycle if longer than a year.

Question 17

Equipment would appear on the:

Accepted Answer

A)  income statement with the revenues.
B)  balance sheet with the current assets.
C)  income statement with the operating expenses.
D)  balance sheet with the long- term assets.

Question 18

The largest organization of professional accountants in the United States is the:

Accepted Answer

A)  American Institute of Certified Public Accountants.
B)  Securities and Exchange Commission.
C)  Auditing Standards Board.
D)  Financial Accounting Standards Board.

Question 19

Which of the following statements is FALSE?

Accepted Answer

A)  An independent appraisal, conducted by a licensed professional, is usually considered reliable.
B)  Reliable data are verifiable.
C)  Reliable data may be supported by objective evidence.
D)  The informed opinion of owners is an important source of objective evidence.

Question 20

Revenues are:

Accepted Answer

A)  decreases in assets resulting from delivering goods or services to customers.
B)  increases in liabilities resulting from delivering goods or services to customers.
C)  decreases in retained earnings resulting from delivering goods or services to customers.
D)  increases in retained earnings resulting from delivering goods or services to customers.

Exam 1: The Financial Statements

The largest organization of professional accountants in the United States is the:

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In accounting, the word "net" means "something taken out."

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Equipment would appear on the:

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Since cost is a reliable measure to use in financial accounting, the objectivity principle states that assets and services should be recorded at their actual cost.

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Receivables are classified as:

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Retained earnings appears on which of the following financial statements?

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A net loss occurs when:

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An investor wishing to assess a company's financial position at the end of the period would probably examine the:

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The SEC Edgar file contains information on all:

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Where would the payment of salaries appear on the statement of cash flows?

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Expenses are increases in retained earnings that result from operations.

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A balance sheet reports the company's financial position at a specific point in time.

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The entity concept is the most basic accounting concept.

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Revenues are:

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Depreciation is normally associated with which asset on the balance sheet?

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Which of the following best describes a liability? Liabilities are:

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Current assets are assets expected to be converted to cash, sold, or consumed:

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Stockholders' equity for Commerce- GA Corporation on 01/01/2008 and 12/31/2008 were $60,000 and $75,000, respectively. Assets on 01/01/2008 and 12/31/2008 were $115,000 and $105,000, respectively. Liabilities on 01/01/2008 were $55,000. What is the amount of liabilities on 12/31/2008?

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Which of the following statements is FALSE?

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Net income appears on both the income statement and the statement of retained earnings.

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