Question 1

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

Question 2

Financial accounting:

Accepted Answer

A)  Provides information primarily for external decision makers.
B)  Provides information primarily for a company's employees.
C)  Provides information primarily for the use of managers of the company.D) A) and B)
E) None of the above

Question 3

If a company reports revenues of $17,000 and expenses of $12,000,then net income equals $5,000.

Accepted Answer

A) True 
 B)False

Question 4

The form of business organization that is legally separate from its owners is a:

Accepted Answer

A)  Partnership.
B)  Sole proprietorship.
C)  Corporation.D) B) and C)
E) A) and C)

Question 5

Which of the following statements is NOT correct about the financial statements?

Accepted Answer

A)  An income statement reports revenues,expenses,and net income information.
B)  The statement of stockholders' equity presents common stock,dividends,and retained earnings information.
C)  A balance sheet reports assets,liabilities,revenues,and expenses.D) B) and C)
E) A) and C)

Question 6

Creditors' claims to a corporation's resources are referred to as:

Accepted Answer

A)  Dividends.
B)  Assets.
C)  Liabilities.D) A) and B)
E) All of the above

Question 7

Transactions of a company involving external sources of funding are referred to as:

Accepted Answer

A)  Investing activities.
B)  Financing activities.
C)  External activities.D) A) and B)
E) A) and C)

Question 8

The International Accounting Standards Board:

Accepted Answer

A)  Is governed by the U.S.Securities and Exchange Commission.
B)  Can overrule the FASB when their policies disagree.
C)  Promotes the use of high-quality,understandable global accounting standards.D) A) and B)
E) A) and C)

Question 9

The assets of a company represent:

Accepted Answer

A)  Amounts owed to creditors.
B)  Sales of goods or services to customers.
C)  Resources that will be used to benefit the company.D) A) and C)
E) A) and B)

Question 10

The financial statement(s) that record activity over an interval of time include the:

Accepted Answer

A)  Income statement.
B)  Balance sheet.
C)  Balance sheet and income statement.
D)  Income statement and statement of cash flows.E) A) and D)
F) A) and C)

Question 11

A corporation is an entity that is legally separate from its owners.

Accepted Answer

A) True 
 B)False

Question 12

The major underlying assumptions of accounting include all of the following except:

Accepted Answer

A)  Economic entity.
B)  Monetary unit.
C)  Legal liability.D) All of the above
E) A) and C)

Question 13

The conceptual framework's qualitative characteristic of faithful representation includes:

Accepted Answer

A)  Predictive value.
B)  Neutrality.
C)  Confirmatory value.D) A) and B)
E) A) and C)

Question 14

Nina Corp.had the following net income (loss) the first three years of operation: $7,100, ($1,600) ,and $3,600.If the Retained Earnings balance at the end of year three is $1,100,what was the total amount of dividends paid over these three years?

Accepted Answer

A)  $500.
B)  $0.
C)  $9,100.
D)  $8,000.E) A) and B)
F) A) and C)

Question 15

Which of the following statements regarding financial reports is not correct?

Accepted Answer

A)  A balance sheet contains assets,liabilities,and stockholders' equity information.
B)  An income statement shows revenues and expenses.
C)  A statement of stockholders' equity reports revenues,net income,and dividends information.D) None of the above
E) A) and B)

Question 16

Cash,inventory,supplies,and buildings are examples of liabilities.These are examples of assets.

Accepted Answer

A) True 
 B)False

Question 17

Accountants are responsible for measuring various operating,investing and financing activities.Which of the following correctly matches the activity with its type?

Accepted Answer

A)  Investing - paying utilities for the month.
B)  Investing - purchasing land.
C)  Operating - paying dividends to stockholders.D) B) and C)
E) A) and B)

Question 18

Stockholders' claims to the company's resources are referred to as:

Accepted Answer

A)  Stockholders' equity.
B)  Revenues.
C)  Assets.D) A) and B)
E) A) and C)

Question 19

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

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: A Framework for Financial Accounting

Stockholders' claims to the company's resources are referred to as:

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The assets of a company represent:

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Creditors' claims to a corporation's resources are referred to as:

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If a company reports revenues of $17,000 and expenses of $12,000,then net income equals $5,000.

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The conceptual framework's qualitative characteristic of faithful representation includes:

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Financial accounting:

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

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

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

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Transactions of a company involving external sources of funding are referred to as:

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Which of the following statements regarding financial reports is not correct?

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The major underlying assumptions of accounting include all of the following except:

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Accountants are responsible for measuring various operating,investing and financing activities.Which of the following correctly matches the activity with its type?

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A corporation is an entity that is legally separate from its owners.

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The form of business organization that is legally separate from its owners is a:

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Nina Corp.had the following net income (loss) the first three years of operation: $7,100, ($1,600) ,and $3,600.If the Retained Earnings balance at the end of year three is $1,100,what was the total amount of dividends paid over these three years?

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The International Accounting Standards Board:

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The financial statement(s) that record activity over an interval of time include the:

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Cash,inventory,supplies,and buildings are examples of liabilities.These are examples of assets.

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Which of the following statements is NOT correct about the financial statements?

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