Question 1

Which business form has the advantage of limited liability?

Accepted Answer

A)  Corporation.
B)  Sole proprietorship.
C)  Partnership.
D)  All business forms share equal limited liability.E) All of the above
F) A) and C)

Question 2

Given the information below about Thomas Corporation,what was the amount of dividends the company paid in the current period?

Accepted Answer

A)  $13,000.
B)  $110,000.
C)  $28,000.
D)  $18,000.E) C) and D)
F) A) and D)

Question 3

If accounting information is considered to have faithful representation,then which of the following is true?

Accepted Answer

A)  The information represents to users what it claims to represent.
B)  The information follows conservatism principles and is also material.
C)  The information is considered pertinent to or affects decisions.
D)  The information will have predictive value,feedback value,and is timely.E) B) and D)
F) A) and C)

Question 4

If a company has stockholders' equity of $60,000 at the end of the year,which of the following statements must be true?

Accepted Answer

A)  The company's assets exceed liabilities by $60,000.
B)  The company has issued $60,000 of common stock.
C)  Net income for the year equals $60,000.
D)  Total revenues earned during the year equal $60,000.E) A) and D)
F) B) and C)

Question 5

Which of the following is not a balance sheet item?

Accepted Answer

A)  Assets.
B)  Common stock.
C)  Retained earnings.
D)  Revenues.E) C) and D)
F) B) and C)

Question 6

Auditors are trained individuals hired by a company as an independent party to express a professional opinion of the accuracy of that company's financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Generally Accepted Accounting Principles (GAAP) are best defined as:

Accepted Answer

A)  Standards or methods for presenting financial accounting information.
B)  Government-mandated rules that companies must follow.
C)  Rules that best estimate profitability for a company.
D)  The group of individuals that create and enforce all accounting rules.E) B) and C)
F) All of the above

Question 8

The balance sheet is a financial statement that reports the company's revenues and expenses over an interval of time.

Accepted Answer

A) True 
 B)False

Question 9

For the past five years,Mookie Consulting Services reported the following annual net income and dividend amounts:  If Mookie had Retained Earnings of $88,000 at the end of year 5,what was the company's Retained Earnings at the beginning of Year 1?

Accepted Answer

A)  $13,000.
B)  $25,000.
C)  $7,000.
D)  $1,000.E) C) and D)
F) A) and C)

Question 10

Liabilities can be best described as:

Accepted Answer

A)  The amount of expenses over the past year.
B)  The amount expected to be distributed to stockholders.
C)  The amount owed to creditors.
D)  The amount of services provided to customers during the year.E) C) and D)
F) A) and C)

Question 11

Use the following appropriate amounts to calculate net income: Revenues,$12,000;Liabilities,$5,000;Expenses,$4,000;Assets,$19,000;Dividends,$4,000.

Accepted Answer

A)  $6,000.
B)  $8,000.
C)  $4,000.
D)  $14,000.E) None of the above
F) All of the above

Question 12

Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

Accepted Answer

A) True 
 B)False

Question 13

Net income (loss) appears in which two financial statements?

Accepted Answer

A)  Balance sheet and income statement.
B)  Income statement and statement of stockholders' equity.
C)  Statement of stockholders' equity and balance sheet.
D)  Net income appears in only one financial statement.E) A) and B)
F) None of the above

Question 14

At the end of the current period,Rogers Company reports the following amounts: Assets = $25,000;Liabilities = $15,000;Dividends = $3,000;Revenues = $20,000;Expenses = $13,000.Calculate net income and stockholders' equity at the end of the period.

Accepted Answer

The answer of At the end of the current period,Rogers...

Question 15

The account type that represents payments to stockholders is called:

Accepted Answer

A)  Liabilities.
B)  Assets.
C)  Stockholders' equity.
D)  Dividends.E) All of the above
F) A) and B)

Question 16

Liabilities are shown in which of the following statements?

Accepted Answer

A)  Income statement.
B)  Statement of cash flows.
C)  Balance sheet.
D)  Statement of stockholders' equity.E) A) and D)
F) C) and D)

Question 17

Financing cash flows include cash transactions with lenders,such as borrowing money and repaying debt,and with stockholders,such as issuing stock and paying dividends.

Accepted Answer

A) True 
 B)False

Question 18

Net income can best be described as:

Accepted Answer

A)  Net cash received by a company during the year.
B)  Revenues minus expenses.
C)  The amount of profits retained in a company for the year.
D)  Resources of a company.E) B) and C)
F) All of the above

Question 19

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

Accepted Answer

A)  $140,000.
B)  $0.
C)  $30,000.
D)  $20,000.E) B) and D)
F) C) and D)

Question 20

Financial accounting has an impact on everyday business decisions as well as wide-ranging economic consequences.

Accepted Answer

A) True 
 B)False

Exam 1: A Framework for Financial Accounting

For the past five years,Mookie Consulting Services reported the following annual net income and dividend amounts: If Mookie had Retained Earnings of $88,000 at the end of year 5,what was the company's Retained Earnings at the beginning of Year 1?

Correct AnswerverifiedShow Answer

Liabilities are shown in which of the following statements?

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The balance sheet is a financial statement that reports the company's revenues and expenses over an interval of time.

Correct AnswerverifiedShow Answer

Financial accounting has an impact on everyday business decisions as well as wide-ranging economic consequences.

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Net income (loss) appears in which two financial statements?

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Given the information below about Thomas Corporation,what was the amount of dividends the company paid in the current period?

Correct AnswerverifiedShow Answer

Financing cash flows include cash transactions with lenders,such as borrowing money and repaying debt,and with stockholders,such as issuing stock and paying dividends.

Correct AnswerverifiedShow Answer

Which business form has the advantage of limited liability?

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Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

Correct AnswerverifiedShow Answer

If a company has stockholders' equity of $60,000 at the end of the year,which of the following statements must be true?

Correct AnswerverifiedShow Answer

Auditors are trained individuals hired by a company as an independent party to express a professional opinion of the accuracy of that company's financial statements.

Correct AnswerverifiedShow Answer

Liabilities can be best described as:

Correct AnswerverifiedShow Answer

Net income can best be described as:

Correct AnswerverifiedShow Answer

Generally Accepted Accounting Principles (GAAP) are best defined as:

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Use the following appropriate amounts to calculate net income: Revenues,$12,000;Liabilities,$5,000;Expenses,$4,000;Assets,$19,000;Dividends,$4,000.

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If accounting information is considered to have faithful representation,then which of the following is true?

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Which of the following is not a balance sheet item?

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The account type that represents payments to stockholders is called:

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Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

Correct AnswerverifiedShow Answer

At the end of the current period,Rogers Company reports the following amounts: Assets = $25,000;Liabilities = $15,000;Dividends = $3,000;Revenues = $20,000;Expenses = $13,000.Calculate net income and stockholders' equity at the end of the period.

Correct AnswerverifiedShow Answer

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