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Financial statements are most commonly prepared:


A) semi-monthly.
B) monthly, quarterly and annually.
C) whenever management feels like it.
D) weekly.

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

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Generally accepted accounting principles (GAAP) were (are) established by:


A) an Italian monk in 1494.
B) the U.S. Congress in 1933.
C) the PCAOB in 2004.
D) the FASB.

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

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Stockholders are creditors of a company.

A) True
B) False

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Which of the following would not appear as a possible asset on the balance sheet?


A) Accounts receivable
B) Supplies
C) Retained earnings
D) Cash

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

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In the United States, generally accepted accounting principles (GAAP) are established by the PCAOB (Public Company Accounting Oversight Board).

A) True
B) False

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What was the amount of net income for the year?


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

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

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Which of the following would be reported on the income statement for 2010?


A) Supplies that were purchased and used in 2009 but paid for in 2010.
B) Dividends that were paid in 2010.
C) Supplies that were purchased, used, and paid for in 2010.
D) Supplies that were purchased in 2009 and paid for in 2010 but have not been used.

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

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For the current year, the first year of operations, a company sold $100,000 of goods to customers and received $90,000 in cash from customers. The remainder is owed to the company at the end of the year. The company incurred $70,000 in expenses for the year and paid $65,000 of these in cash. The remainder is owed by the company at the end of the year. Based on this information, what is the amount of net income for the year?


A) $25,000
B) $35,000
C) $20,000
D) $30,000

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

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Stockholders' equity is


A) a liability of the business.
B) an economic resource controlled by the business.
C) the owners' claims on the business.
D) the profit generated by the business.

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

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Following is a list of financial statement items and amounts for Tim Burr's Tree Service as of 12/31/10, the end of its first year in operation. Use this information to prepare the Income Statement, Statement of Retained Earnings, and Balance Sheet.

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Which of the following would not be reported on the Balance Sheet for a company?


A) Accounts receivable
B) Accounts payable
C) Advertising expense
D) Cash

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

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A company's quarterly income statements show that in the last three quarters both sales revenue and net income have been falling. Which of the following conclusions drawn by users are valid, given this information?


A) Creditors are likely to conclude that the risk of lending to the company is falling and might be willing to accept a lower interest rate on loans.
B) Investors are likely to conclude that the stock price is likely to rise, making the company more attractive as a potential investment.
C) Investors are likely to conclude that the company is more attractive as a potential investment.
D) Owners may conclude that the company will be less likely to distribute dividends.

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

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At the end of the current year, a company paid cash to acquire a storage facility with plans to use it in its business activities for several years. Choose the TRUE statement.


A) In the current year, total assets will decrease and stockholders' equity will decrease.
B) In the current year, total assets will decrease and stockholders' equity will increase.
C) This year, this activity will be reported as a cash outflow from investing activities on the Statement of Cash Flows.
D) This year, this activity will not result in any changes to the balance sheet or the income statement.

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

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


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. The owners of a corporation are not responsible for the debts and taxes of the business.

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

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Which of the following business organizations has only one owner?


A) A corporation.
B) A sole proprietorship.
C) A public company.
D) A partnership.

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

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


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

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

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Which of the following would be reported on the income statement for the year?


A) The amount of Cash at the end of the year.
B) The amount of Supplies used up during the current year.
C) The amount of dividends distributed to owners during the current year.
D) The amount of unpaid employee wages at the end of the year.

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

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What was the amount of Cash Flows from Operating Activities?


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

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

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Which of the following statements concerning financial reporting is FALSE?


A) Accounting rules in the U.S. are called GAAP.
B) Accounting rules developed by the IASB are called IFRS.
C) Both GAAP and IFRS share the same goal which is to ensure useful information to users of financial statements.
D) There are no differences between the accounting rules developed by FASB and those developed by IASB.

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

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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?


A) $30,000
B) $57,000
C) $87,000
D) $102,000

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

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Showing 101 - 120 of 135

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