Question 1

The stockholders' equity of a company is the difference between assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 2

Dividends are reported on the:

Accepted Answer

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

Question 3

What is the amount of net income on the income statement for the year?

Accepted Answer

A)  $30,000
B)  $38,000
C)  $88,000
D)  $47,000E) B) and D)
F) B) and C)

Question 4

Which of the following is not a difference between notes payable and accounts payable?

Accepted Answer

A)  Notes payable are not interest free while accounts payable may be interest free.
B)  Notes payable are often outstanding for longer periods of time than accounts payable.
C)  Notes payable are documented using formal written debt contracts while accounts payable are generally informal.
D)  Notes payable are reported as stockholders' equity on the balance sheet while accounts payable are reported as liabilities on the balance sheet.E) A) and C)
F) None of the above

Question 5

Faithful representation is a characteristic of external financial reporting that means

Accepted Answer

A)  the financial reports of a business are assumed to include the results of only that business's activities.
B)  financial information can be compared across businesses because similar accounting methods are applied.
C)  the results of business activities are reported using an appropriate monetary unit.
D)  financial information depicts the economic substance of business activities.E) None of the above
F) A) and D)

Question 6

What would a financial statement user learn from reading the auditors' report?

Accepted Answer

A)  Whether the financial statements present a fair picture of the company's financial results and are prepared in accordance with GAAP.
B)  Whether or not it is a good time to purchase the stock.
C)  How much the company plans to distribute as dividends.
D)  Whether or not the company has plans for future expansion.E) A) and D)
F) C) and D)

Question 7

The Publish or Perish Printing Company paid a dividend to stockholders.This will be reported on the:

Accepted Answer

A)  audit report.
B)  income statement.
C)  balance sheet.
D)  statement of retained earnings.E) A) and C)
F) A) and D)

Question 8

Each of the following independent companies is missing numerical data.Use your knowledge of the financial statement equations and their interrelationships to fill in the missing amounts.

Accepted Answer

The answer of Each of the following independent companies is...

Question 9

Which of the following would be acceptable as an alternative term used for the income statement?

Accepted Answer

A)  Statement of Operations.
B)  Statement of Financial Position.
C)  Statement of Retained Earnings.
D)  Statement of Revenues and Expenses.E) A) and D)
F) B) and D)

Question 10

Financial statements are most commonly prepared:

Accepted Answer

A)  daily.
B)  monthly,quarterly and annually.
C)  as needed.
D)  weekly.E) All of the above
F) None of the above

Question 11

In the U.S. ,public companies have to be audited by independent auditors using rules approved by the:

Accepted Answer

A)  1933 Securities Act.
B)  Public Company Accounting Oversight Board (PCAO
B)  .
C)  Financial Accounting Standards Board (FAS
B)  .
D)  American Institute of Certified Public Accountants (AICP
A)  .E) None of the above
F) C) and D)

Question 12

What is the amount of total stockholders' equity that would be reported on the Balance Sheet at the end of the year?

Accepted Answer

A)  $30,000
B)  $57,000
C)  $87,000
D)  $102,000E) C) and D)
F) All of the above

Question 13

What was the amount of Cash Flows from Operating Activities?

Accepted Answer

A)  Cash inflow of $5,000
B)  Cash inflow of $35,000
C)  Cash inflow of $25,000
D)  Cash inflow of $4,000E) A) and B)
F) A) and D)

Question 14

Investing activities on the Statement of Cash Flows are

Accepted Answer

A)  transactions with lenders,borrowing and repaying cash.
B)  transactions with stockholders,selling company stock and paying dividends.
C)  transactions directly related to running the business to earn profit.
D)  transactions of buying or selling productive resources with long lives.E) A) and B)
F) A) and C)

Question 15

An investor might look at a company's financial statements to determine all of the following,except:

Accepted Answer

A)  if the company's earnings are rising or falling.
B)  if the company pays a dividend.
C)  if the company has positive cash flow.
D)  if the company's owners are financially sound.E) All of the above
F) A) and B)

Question 16

What was the amount of net income for the year?

Accepted Answer

A)  $225,000
B)  $275,000
C)  $175,000
D)  $450,000E) A) and D)
F) A) and C)

Question 17

Relevance is an objective of external financial reporting that means

Accepted Answer

A)  the financial reports of a business are assumed to include the results of only that business's activities.
B)  financial information can be compared across businesses because similar accounting methods have been applied.
C)  the financial information possesses a feature that allows it to influence a decision.
D)  the financial information depicts the economic substance of business activities.E) A) and D)
F) A) and C)

Question 18

The payment of dividends is a financing activity.

Accepted Answer

A) True 
 B)False

Question 19

Use the following 2013 data to prepare the annual income statement for Kvass,Inc.

Accepted Answer

The answer of Use the following 2013 data to prepare...

Question 20

Which of the following would not represent a financing activity?

Accepted Answer

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 on account.E) A) and B)
F) B) and D)

Exam 1: Business Decisions and Financial Accounting

Which of the following is not a difference between notes payable and accounts payable?

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What was the amount of Cash Flows from Operating Activities?

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The payment of dividends is a financing activity.

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Each of the following independent companies is missing numerical data.Use your knowledge of the financial statement equations and their interrelationships to fill in the missing amounts.

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What is the amount of net income on the income statement for the year?

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What is the amount of total stockholders' equity that would be reported on the Balance Sheet at the end of the year?

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Dividends are reported on the:

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What was the amount of net income for the year?

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Investing activities on the Statement of Cash Flows are

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Which of the following would be acceptable as an alternative term used for the income statement?

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What would a financial statement user learn from reading the auditors' report?

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The stockholders' equity of a company is the difference between assets and liabilities.

Correct AnswerverifiedShow Answer

The Publish or Perish Printing Company paid a dividend to stockholders.This will be reported on the:

Correct AnswerverifiedShow Answer

Financial statements are most commonly prepared:

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Use the following 2013 data to prepare the annual income statement for Kvass,Inc.

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Relevance is an objective of external financial reporting that means

Correct AnswerverifiedShow Answer

Faithful representation is a characteristic of external financial reporting that means

Correct AnswerverifiedShow Answer

An investor might look at a company's financial statements to determine all of the following,except:

Correct AnswerverifiedShow Answer

Which of the following would not represent a financing activity?

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In the U.S. ,public companies have to be audited by independent auditors using rules approved by the:

Correct AnswerverifiedShow Answer

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