Chapter 1

Financial Accounting

Business
174
Questions
46
True/False
100
Choices
28
Essay
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Questions

Q1
Free

Accounting is a system of maintaining records of a company's operations and communicating this information to decision makers.

True/False
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A) True.
B) False.
Answer:
True
Q2
Free

Accounting information is used by investors to decide whether to invest in a company's stock.

True/False
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A) True.
B) False.
Answer:
True
Q3
Free

Accounting information is used by creditors to decide whether to invest in a company's stock.

True/False
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A) True.
B) False.
Answer:
False
Q4

The primary functions of financial accounting are to measure business activities of a company and to communicate those measurements to internal parties for decision-making purposes.

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A) True.
B) False.
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Q5

Financing activities are transactions involving externals sources of funding.

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A) True.
B) False.
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Q6

Investing activities include the purchase and sale of (1) long-term resources and (2) any resources not directly related to a company's normal operations.

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A) True.
B) False.
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Q7

Operating activities include transactions that relate to the primary operations of the company.

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A) True.
B) False.
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Q8

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

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B) False.
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Q9

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

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A) True.
B) False.
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Q10

Amounts owed to suppliers, workers, governments, and utility companies are examples of liabilities.

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A) True.
B) False.
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Q11

If total assets of a company equal $12,000 and total stockholders' equity equals $4,000, then total liabilities equal $8,000.

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A) True.
B) False.
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Q12

If total liabilities of a company equal $16,000 and total stockholders' equity equals $9,000, then total assets equal $7,000.

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B) False.
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Q13

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

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B) False.
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Q14

The costs of advertising, utilities, and salaries in the current reporting period are examples of liabilities.

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B) False.
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Q15

The difference between revenues and expenses is referred to as net income or net loss.

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B) False.
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Q16

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

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B) False.
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Q17

Expenses are regular cash payments by a corporation to its stockholders.

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B) False.
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Q18

Dividends represent a return of the company's profits to its owners, the stockholders.

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A) True.
B) False.
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Q19

One of the differences between a partnership and a corporation is that owners of a partnership have limited liability.

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A) True.
B) False.
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Q20

Limited liability means the stockholders are not held personally responsible for the financial obligations of the corporation.

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A) True.
B) False.
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Q21

One advantage of the corporate form of business is double taxation.

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A) True.
B) False.
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Q22

Double taxation refers to a corporation's income being taxed twice—first when the company earns it and pays corporate income taxes on it, and then again when stockholders pay personal income taxes on any amounts the firm distributes to them as dividends.

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B) False.
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Q23

Financial statements are periodic reports published by the company for the purpose of providing information to managers.

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B) False.
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Q24

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

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B) False.
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Q25

The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity over an interval of time.

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A) True.
B) False.
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Q26

The two primary components of stockholders' equity include common stock and revenue.

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B) False.
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Q27

Common stock represents an external source of stockholders' equity, whereas retained earnings represents an internal source.

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B) False.
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Q28

Retained earnings represents the cumulative amount of net income earned over the life of the company that has not been distributed to stockholders as dividends.

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B) False.
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Q29

Dividends are considered an expense in running the business and reported in the income statement.

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A) True.
B) False.
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Q30

All cash transactions reported in the statement of cash flows are classified as either (1) operating activities, (2) investing activities, or (3) financing activities.

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B) False.
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Q31

Investing cash flows generally include cash receipts and cash payments for transactions involving revenues and expenses.

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B) False.
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Q32

Operating cash flows generally include cash transactions for the purchase and sale of investments and productive long-term assets.

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A) True.
B) False.
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Q33

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.

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A) True.
B) False.
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Q34

Any transaction that affects the income statement ultimately affects the balance sheet through the balance of retained earnings.

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B) False.
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Q35

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

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B) False.
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Q36

Investors and creditors rely heavily on financial accounting information in making investment and lending decisions.

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B) False.
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Q37

In general, if a company's net income is increasing, so will its stock price.

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B) False.
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Q38

The rules of financial accounting are called Generally Accepted Accounting Principles (GAAP).

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B) False.
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Q39

Today, financial accounting and reporting standards in the United States are established primarily by the Financial Accounting Standards Board (FASB).

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A) True.
B) False.
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Q40

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

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A) True.
B) False.
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Q41

The 1934 act gives the Securities and Exchange Commission (SEC) the power to require companies with publicly traded securities to prepare periodic financial statements for distribution to investors and creditors.

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B) False.
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Q42

The role of auditors is to help ensure that management has in fact appropriately applied Generally Accepted Accounting Principles (GAAP) in preparing the company's financial statements.

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A) True.
B) False.
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Q43

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.

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A) True.
B) False.
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Q44

The primary objective of financial reporting is to provide useful information to managers in making decisions.

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A) True.
B) False.
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Q45

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

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B) False.
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Q46

The Financial Accounting Standards Board's conceptual framework does not prescribe Generally Accepted Accounting Principles. It provides an underlying foundation for the development of accounting standards and interpretation of accounting information.

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B) False.
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Q47

Check the attachment

Multiple Choice
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A) Option a
B) Option b
C) Option c
D) Option d
Answer:

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Q48

What is the primary purpose of financial accounting?

Multiple Choice
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A) Determine the amount of tax liability owed to the government
B) Communicate business transactions to internal management
C) Measure business transactions and communicate those measures to external users to make decisions
D) Measure the profitability of the company in order to assist employees with making decisions
Answer:

A) You need to subscribe to get the answer.

Q49

Financial accounting does not deal with which of the following?

Multiple Choice
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A) Measuring a company's economic activity
B) Preparing financial reports
C) Making business decisions
D) Communicating financial results to investors
Answer:

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Q50

Which of the following groups is not among the external users for whom financial statements are prepared?

Multiple Choice
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A) Creditors
B) Regulators
C) Investors
D) Managers
Answer:

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Q51

Financial accounting:

Multiple Choice
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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) Is primarily used to compute a company's tax obligation
Answer:

A) You need to subscribe to get the answer.

Q52

The accounting equation is defined as:

Multiple Choice
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A) Assets = Liabilities + Stockholders' Equity
B) Assets = Liabilities -Stockholders' Equity
C) Net Income = Revenues -Expenses
D) Liabilities + Revenues = Assets
Answer:

A) You need to subscribe to get the answer.

Q53

Which statement below best describes the accounting equation?

Multiple Choice
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A) The change in retained earnings equals net income less dividends
B) Equality of revenue and expense transactions over time
C) Resources of the company equal creditors' and owners' claims to those resources
D) Financing activities equal investing and operating activities
Answer:

A) You need to subscribe to get the answer.

Q54

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

Multiple Choice
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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
Answer:

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Q55

Emmitt had the following final balances after the first year of operations: assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the amount of Emmitt's liabilities?

Multiple Choice
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A) $55,000
B) $30,000
C) $13,000
D) $7,000
Answer:

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Q56

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

Multiple Choice
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A) Investing activities
B) Financing activities
C) External activities
D) Operating activities
Answer:

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Q57

Transactions of a company that include the purchase and sale of long-term productive assets are referred to as:

Multiple Choice
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A) Investing activities
B) Financing activities
C) Expenditure activities
D) Operating activities
Answer:

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Q58

McGill purchases additional office equipment to better serves its customers. This purchase is classified as what type of activity?

Multiple Choice
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A) Company activity
B) Financing activity
C) Investing activity
D) Operating activity
Answer:

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Q59

Transactions related to the primary business activities of the company, such as selling goods and services to customers, are referred to as:

Multiple Choice
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A) Investing activities
B) Management activities
C) Operating activities
D) Financing activities
Answer:

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Q60

Check the attached image

Multiple Choice
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A) $6,000
B) $2,000
C) $7,000
D) $1,500
Answer:

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Q61

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

Multiple Choice
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A) Partnership
B) Sole proprietorship
C) Corporation
D) Separation entity
Answer:

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Q62

Which business form has the advantage of limited liability?

Multiple Choice
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A) Corporation
B) Sole proprietorship
C) Partnership
D) All business forms share equal limited liability
Answer:

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Q63

Limited liability means:

Multiple Choice
expand_more
A) Stockholders of a corporation are not obligated to pay the corporation's debts out of their own pocket
B) Liabilities of a company cannot exceed its assets
C) Companies are not allowed to borrow unless they are profitable
D) Companies are less likely to be sued if they are formed as a corporation
Answer:

A) You need to subscribe to get the answer.

Q64

One disadvantage of the corporate form of business is:

Multiple Choice
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A) Limited liability
B) Access to more capital
C) Smaller in size
D) Double taxation
Answer:

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Q65

The costs of providing goods and services to customers are referred to as:

Multiple Choice
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A) Assets
B) Expenses
C) Liabilities
D) Revenues
Answer:

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Q66

The accounts which represent the resources of the company are called:

Multiple Choice
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A) Liabilities
B) Revenues
C) Expenses
D) Assets
Answer:

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Q67

An alternative form of the accounting equation is:

Multiple Choice
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A) Net Income = Revenues -Expenses
B) Stockholders' Equity = Assets + Liabilities
C) Assets = Liabilities -Stockholders' Equity
D) Assets -Liabilities = Stockholders' Equity
Answer:

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Q68

The owners' interest in a corporation is called:

Multiple Choice
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A) Dividends
B) Assets
C) Liabilities
D) Stockholders' equity
Answer:

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Q69

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

Multiple Choice
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A) Dividends
B) Assets
C) Liabilities
D) Stockholders' equity
Answer:

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Q70

Net income can best be described as:

Multiple Choice
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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 owned by a company
Answer:

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Q71

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

Multiple Choice
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A) $6,000
B) $8,000
C) $4,000
D) $14,000
Answer:

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Q72

Liabilities are best defined as:

Multiple Choice
expand_more
A) Amounts the company expects to collect in the future from customers
B) Debts or obligations the company owes resulting from past transactions
C) The amounts that owners have invested in the business
D) Payments to stockholders
Answer:

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Q73

Which of the following best describes a revenue?

Multiple Choice
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A) Resources owned
B) Cash received from a customer
C) Amounts earned from providing goods and services to a customer
D) Dividends paid to stockholders
Answer:

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Q74

The account type that represents payments to stockholders is called:

Multiple Choice
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A) Liabilities
B) Assets
C) Stockholders' equity
D) Dividends
Answer:

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Q75

Which of the following accounts appears in the statement of stockholders' equity?

Multiple Choice
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A) Supplies
B) Cash
C) Salaries Payable
D) Retained Earnings
Answer:

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Q76

Sooner Company has had a net income of $8,000, $5,000, $12,000, and $10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $3,000, what is the ending retained earnings balance?

Multiple Choice
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A) $47,000
B) $35,000
C) $23,000
D) $7,000
Answer:

A) You need to subscribe to get the answer.

Q77

The equation best describing the income statement is:

Multiple Choice
expand_more
A) Revenues -Expenses = Net Income
B) Assets = Revenues -Expenses
C) Assets = Liabilities + Stockholders' Equity
D) Revenues + Expenses = Net Income
Answer:

A) You need to subscribe to get the answer.

Q78

On January 1, 2012, Gucci Brothers Inc. started the year with a $492,000 balance in Retained Earnings and a $605,000 balance in Common Stock. During 2012, the company earned net income of $92,000, paid a dividend of $15,200, and issued more common stock for $27,500. What is total stockholders' equity on December 31, 2012?

Multiple Choice
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A) $1,231,700
B) $1,097,000
C) $1,201,300
D) $1,588,300
Answer:

A) You need to subscribe to get the answer.

Q79

The financial statement that represents activity over the entire life of the company is the:

Multiple Choice
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A) Income statement
B) Statement of financial accounting
C) Balance sheet
D) Statement of cash flows
Answer:

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Q80

Which of the following is the correct order for preparing the financial statements?

Multiple Choice
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A) Balance sheet, statement of stockholders' equity, and income statement
B) Balance sheet, income statement, and statement of stockholders' equity
C) Statement of stockholders' equity, income statement, and balance sheet
D) Income statement, statement of stockholders' equity, and balance sheet
Answer:

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Q81

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

Multiple Choice
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A) Income statement
B) Balance sheet
C) Balance sheet and income statement
D) Income statement and statement of cash flows
Answer:

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Q82

Which of the following items would not appear in an income statement?

Multiple Choice
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A) Salaries expense
B) Advertising expense
C) Service revenue
D) Cash
Answer:

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Q83

The two categories of stockholders' equity usually found in the balance sheet of a corporation are:

Multiple Choice
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A) Common stock and liabilities
B) Assets and liabilities
C) Common stock and retained earnings
D) Revenues and expenses
Answer:

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Q84

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

Multiple Choice
expand_more
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) A statement of cash flows shows cash inflows and outflows from operating, investing, and financing activities
Answer:

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Q85

Which of the following is not a balance sheet item?

Multiple Choice
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A) Assets
B) Common stock
C) Retained earnings
D) Revenues
Answer:

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Q86

In what order are the following financial statements prepared: (1) balance sheet, (2) income statement, and (3) statement of stockholders' equity?

Multiple Choice
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A) 1, 2, 3
B) 3, 2, 1
C) 1, 3, 2
D) 2, 3, 1
Answer:

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Q87

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?

Multiple Choice
expand_more
A) $500
B) $0
C) $9,100
D) $8,000
Answer:

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Q88

Aikman Company has paid dividends of $2,410, $0, $1,570 and $1,060 over the first four years of the company's existence. If Retained Earnings after year four has an ending balance of $9,700, what is the average annual amount of net income (loss) over the past four years for Aikman?

Multiple Choice
expand_more
A) $3,685
B) $14,740
C) $840
D) $1,260
Answer:

A) You need to subscribe to get the answer.

Q89

The equation best describing the balance sheet is:

Multiple Choice
expand_more
A) Assets = Liabilities + Stockholders' Equity
B) Revenues -Expenses = Net Income
C) Ending Retained Earnings + Dividends = Net Income
D) Revenues + Expenses = Net Income
Answer:

A) You need to subscribe to get the answer.

Q90

DW has an ending Retained Earnings balance of $51,100. If during the year DW paid dividends of $4,300 and had net income of $22,500, then what was the beginning Retained Earnings balance?

Multiple Choice
expand_more
A) $24,300
B) $300
C) $32,900
D) $69,300
Answer:

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Q91

The ending Retained Earnings balance of Boomer Inc. decreased by $1.0 million from the beginning of the year. The company declared a dividend of $5.4 million during the year. What was the net income earned during the year?

Multiple Choice
expand_more
A) $7
B) $6
C) $4
D) $1
Answer:

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Q92

Which financial statement is typically prepared first?

Multiple Choice
expand_more
A) Balance sheet
B) Income statement
C) Statement of stockholders' equity
D) Statement of cash flows
Answer:

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Q93

Expenses are shown in which of the following statements?

Multiple Choice
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A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of stockholders' equity
Answer:

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Q94

Given the information below about Thomas Corporation, what was the amount of dividends the company

Multiple Choice
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A) $13,000
B) $110,000
C) $28,000
D) $18,000
Answer:

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Q95

Retained earnings at the end of the year is calculated using:

Multiple Choice
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A) Beginning retained earnings, net income, and dividends
B) Common stock and dividends
C) Stockholders' equity, net income, and dividends
D) Net income and dividends
Answer:

A) You need to subscribe to get the answer.

Q96

The financial statement that represents the accounting equation is the:

Multiple Choice
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A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of stockholders' equity
Answer:

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Q97

Which of the following is not a major section in the statement of cash flows?

Multiple Choice
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A) Cash flows from operating activities
B) Cash flows from financing activities
C) Cash flows from customers
D) Cash flows from investing activities
Answer:

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Q98

Given the information below about David Corporation, what was the amount of dividends the company

Multiple Choice
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A) $140,000
B) $0
C) $30,000
D) $20,000
Answer:

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Q99

Liabilities are shown in which of the following statements?

Multiple Choice
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A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of stockholders' equity
Answer:

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Which accounting amount best represents value created for stockholders during the current period?

Multiple Choice
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A) Retained earnings
B) Total assets
C) Net income
D) Stockholders' equity
Answer:

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Which accounting number has the single greatest impact on stock prices?

Multiple Choice
expand_more
A) Total dividends
B) Total assets
C) Total revenues
D) Net income
Answer:

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GAAP is an abbreviation for:

Multiple Choice
expand_more
A) Generally authorized accounting procedures
B) Generally applied accounting procedures
C) Generally accepted auditing practices
D) Generally accepted accounting principles
Answer:

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

Multiple Choice
expand_more
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
Answer:

A) You need to subscribe to get the answer.

Today, financial accounting and reporting standards in the United States are established primarily by the:

Multiple Choice
expand_more
A) Securities and Exchange Commission
B) International Accounting Standards Board
C) Financial Accounting Standards Board
D) U
Answer:

A) You need to subscribe to get the answer.

Financial reporting objectives do not include providing information:

Multiple Choice
expand_more
A) Useful to investors and creditors in making decisions
B) To determine market values, assess profit potential, and evaluate management
C) Helpful to investors in predicting cash flows
D) That tells about a company's economic resources and claims to those resources
Answer:

A) You need to subscribe to get the answer.

Of the following, the most important objective for financial reporting is to provide information useful for:

Multiple Choice
expand_more
A) Predicting cash flows
B) Determining taxable income
C) Providing accountability
D) Increasing future profits
Answer:

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The International Accounting Standards Board:

Multiple Choice
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A) Is governed by the U
B) Can overrule the FASB when their policies disagree
C) Promotes the use of high-quality, understandable global accounting standards
D) Is the primary standard-setting body in the United States
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Independent auditors express an opinion on the:

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A) Fairness of financial statements
B) Amount of income taxes a company owes to the government
C) Quality of the company's products
D) Quality of a company's workforce
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The assumption that a business can continue to remain in operation into the future is the:

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A) Monetary unit assumption
B) Periodicity assumption
C) Economic entity assumption
D) Going concern assumption
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The qualitative characteristic that says accounting information can influence users' decisions by allowing them to assess past performance is:

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A) Timeliness
B) Neutrality
C) Confirmatory value
D) Predictive value
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The major underlying assumptions of accounting include all of the following except:

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A) Economic entity
B) Monetary unit
C) Legal liability
D) Going concern
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The assumption that the assets and liabilities of the business are accounted for on the books of the company but not included in the records of the owner is the:

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A) Monetary unit assumption
B) Going concern assumption
C) Economic entity assumption
D) Periodicity assumption
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Accounting information that does not provide measurement bias in favor of a particular set of companies has the characteristic of:

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A) Relevance
B) Consistency
C) Materiality
D) Neutrality
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If accounting information is considered to have faithful representation, then which of the following is true?

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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
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For accounting information to be relevant, it must have which of the following characteristics?

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A) Predictive value or confirmatory value
B) Large in amount and timely
C) Comparability or consistency
D) Freedom from material error, neutrality, or completeness
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Materiality is based upon which factor(s)?

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A) Timeliness of an item
B) Amount and nature of an item
C) Consistency of an item
D) Relevance of an item
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If a company has gone bankrupt, its financial statements likely violate the:

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A) Periodicity assumption
B) Monetary unit assumption
C) Going concern assumption
D) Economic entity assumption
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The conceptual framework's qualitative characteristic of relevance includes:

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A) Predictive value
B) Verifiability
C) Completeness
D) Neutrality
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The conceptual framework's qualitative characteristic of faithful representation includes:

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A) Predictive value
B) Neutrality
C) Confirmatory value
D) Comparability
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Constraints on qualitative characteristics of accounting information include:

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A) Freedom from material error
B) Going concern
C) Neutrality
D) Cost effectiveness
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Primary qualitative characteristics of accounting information are:

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A) Relevance and comparability
B) Comparability and consistency
C) Faithful representation and relevance
D) Faithful representation and consistency
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Enhancing qualitative characteristics of accounting information include:

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A) Relevance and comparability
B) Comparability and consistency
C) Faithful representation and relevance
D) Cost effectiveness and materiality
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For each transaction, indicate whether a company would classify the related account as an asset, liability,

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Account classifications include assets, liabilities, stockholders' equity, dividends, revenues, and expenses.

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Indicate whether a company would classify the transaction as financing, investing, or operating.

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Below are typical transactions for a company. Indicate whether each transaction is classified as a financing,

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Below are typical transactions for a company. Indicate whether each transaction is classified as a financing,

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At the end of the current period, Maltese, Inc. reports the following amounts: Assets = $50,000; Liabilities = $28,000; Dividends = $4,000; Revenues = $22,000; Expenses = $16,000. Calculate net income and stockholders' equity at the end of the period.

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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.

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Below are the account balances for Huffman Corporation at the end of December. Use only the appropriate

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At the beginning of the year (January 1), Maurice and Sons has $12,000 of common stock outstanding and retained earnings of $4,200. During the year, the company reports net income of $3,200 and pays dividends of $1,200. In addition, the company issues additional common stock for $5,000. Prepare the statement of stockholders' equity at the end of the year (December 31).

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Klein Interiors has the following account balances at the end of the year. Use only the appropriate accounts

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Thomason Financial has the following cash transactions for the year. Assume cash at the beginning of the

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Each of the following independent situations represents amounts shown on the four basic financial statements. Fill in the missing blanks using your knowledge of amounts that appear on the financial statements. 1. Revenues = $27,000; Expenses = $18,000; Net income = ____. 2. Increase in stockholders' equity = $20,000; Issuance of common stock = $12,000; Dividends = $5,000; Net income = ____. 3. Assets = $25,000; Liabilities = $13,000; Stockholders' equity = ____. 4. Total change in cash = $28,000; Net operating cash flows = $30,000; Net financing cash flows = $18,000; Net investing cash flows = ____.

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During its first five years of operations, Della Manufacturing reports net income and pays dividends as follows. Calculate the balance of retained earnings at the end of each year. Note that retained earnings will

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Below is information related to retained earnings for five independent situations. Calculate the answer to each. 1. A company reports an increase in retained earnings of $3,200 and net income of $4,800. What is the amount of dividends? 2. A company reports beginning retained earnings of $1,800, net income of $1,200, and $200 dividends. What is the amount of ending retained earnings? 3. A company reports an increase in retained earnings of $2,500 and dividends of $1,500. What is the amount of net income? 4. A company reports ending retained earnings of $2,700, net income of $900, and dividends of $500. What is the amount of beginning retained earnings? 5. A company reports an increase in retained earnings of $1,900 and net income of $1,200. What is the amount of dividends?

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Below is balance sheet information for five independent situations. Calculate the answer to each. 1. A company reports total assets of $2,000 and total liabilities of $900. What is the amount of stockholders' equity? 2. A company reports total liabilities of $2,400 and stockholders' equity of $1,100. What is the amount of total assets? 3. A company reports total assets of $2,700 and total stockholders' equity of $700. What is the amount of total liabilities? 4. A company reports an increase in assets of $1,700 and an increase in liabilities of $400. What is the amount of the change in stockholders' equity? 5. A company reports an increase in liabilities of $300 and a decrease in stockholders' equity of $800. What is the amount of the change in total assets?

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Below is cash flow information for five independent situations. Calculate the answer to each.

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Riley Incorporated reports the following amounts at the end of the year: In addition, the company had common stock of $65,000 at the beginning of the year and issued an additional $5,000 during the year. The company also had retained earnings of $20,700 at the beginning of the year and paid dividends of $2,000 during the year. Prepare the income statement, statement of stockholders' equity, and balance sheet.

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Below are incomplete financial statements for Beasley, Incorporated. Calculate the missing amounts.

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Use the following information available at the end of 2012 to prepare an income statement and balance sheet on December 31, 2012, for Goldie Company. Fees for services performed during the year, $120,000 Accounts payable, $18,500 Accounts receivable, $17,300 Miscellaneous costs for the year $8,700 Supplies on hand, $2,700 Notes payable outstanding $30,000 Interest cost on the note for the year, $3,000 Equipment 84,400 Cash on hand, 11,200 Salaries cost for the year, 71,500 Supplies cost for the year, $9,400 Rent cost for the year, $12,000 Common stock that has been issued, $60,000 Retained earnings at the end of the year, $7,100 The following answers point out the key phrases that should appear in students' answers. They are not intended to be examples of complete student responses. It might be helpful to provide detailed instructions to students on how brief or in-depth you want their answers to be.

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Define accounting. Describe the two primary functions of financial accounting and its role in our society.

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Describe the three fundamental business activities that accountants measure. What account classifications are typically associated with each type of business activity?

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List and describe the four financial statements most frequently provided to external users.

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How does the value of an audit affect financial statements?

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Define the four basic assumptions underlying Generally Accepted Accounting Principles: (a) economic entity, (b) going concern, (c) periodicity, (d) monetary unit.

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Match each account classification with its example.

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Match each business activity with its example.

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Match each financial statement with the accounts reported in it.

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Match each qualitative characteristic with its definition.

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The body of rules and procedures that guide the measurement and communication of financial accounting information is known as:

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A) Standards of Professional Compliance (SPC)
B) Generally Accepted Accounting Principles (GAAP)
C) Generally Accepted Auditing Standards (GAAS)
D) Rules of Financial Reporting (RFR)
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The independent, private-sector group that is primarily responsible for setting financial reporting standards in the United States is the:

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A) FASB
B) IASB
C) SEC
D) IRS
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Consider the following account balances of the Shattuck Law Firm as of December 31, 2012: Accounts Payable $4,400 Salaries Expense 12,800 Cash 1,700 Common Stock 2,400 Service Revenue 8,300 Supplies 4,300 Retained Earnings 1,100 Utilities Expenses 5,000 How many of these accounts would appear in Shattuck's 2012 income statement?

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A) Five
B) Four
C) Three
D) Two
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Consider the following account balances of the Shattuck Law Firm as of December 31, 2012: Accounts Payable $4,400 Salaries Expense 12,800 Cash 1,700 Common Stock 2,400 Service Revenue 8,300 Retained Earnings 1,100 Utilities Expense 5,000 How many of these accounts would appear in Shattuck's 2012 balance sheet?

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A) Five
B) Four
C) Three
D) Two
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If total change in cash = $44,000, net operating cash flows = $22,000, and net investing cash flows = ($13,000); then net financing cash flows =

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A) $15,000
B) $25,000
C) $35,000
D) $45,000
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For the past five years, Mookie Consulting Services reported the following annual net income and dividend amounts: Year Net Income Dividends 1. $22,000 $2,000 2 17,000 2,000 3 9,000 1,000 4 14,000 3,000 5 25,000 4,000 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?

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A) $13,000
B) $25,000
C) $7,000
D) $1,000
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Which of the following items is reported in the statement of stockholders' equity?

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A) Total assets
B) Total expenses
C) Net income
D) Operating cash flows
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Which of the following statements is NOT correct about the financial statements?

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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) The statement of cash flows shows cash inflows and outflows from operating, financing, and investing activities
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The primary purpose(s) of financial accounting is (are) to:

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A) Measure and record business transactions
B) Prepare federal and state tax returns
C) Communicate financial results to investors and creditors
D) a and c
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The accounts that represent resources owed to creditors are called:

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A) Assets
B) Liabilities
C) Dividends
D) Stockholders' equity
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Which financial accounting number impacts stock prices more than any other single piece of information?

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A) Retained earnings
B) Net income
C) Common stock
D) Total assets
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The balance sheet depicts which of the following equations?

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A) Net income = revenue - expenses
B) Ending retained earnings = beginning retained earnings + net income - dividends
C) Assets = liabilities + stockholders' equity
D) Net cash flows = total cash inflows - total cash outflows
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Using the information below from the accounting records of Thomas Corporation, owners' claims to the company's resources amount to:

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A) $1,200,000
B) $800,000
C) $250,000
D) $400,000
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Which financial statement reports a company's retained earnings?

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A) Income statement
B) Balance sheet
C) Statement of cash flows
D) All of the above
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Which of the following is an operating activity?

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A) Issuing common stock
B) Paying dividends
C) Borrowing cash from a bank to acquire a factory
D) Paying electricity bills for the month
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How many of the following transactions are operating activities? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750 Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock

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A) 1
B) 2
C) 3
D) 4
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Which statement below best describes the objectives of financial accounting?

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A) Provide information that helps predict cash flows
B) Provide information about the economic resources, claims to resources and changes in resources and claims
C) Provide information that is useful in making decisions
D) All of the above are correct
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Net income appears in which two financial statements?

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A) Balance sheet and income statement
B) Statement of stockholders' equity and balance sheet
C) Income statement and statement of stockholders' equity
D) Net income appears in only one financial statement
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The costs associated with producing revenues are referred to as:

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A) Dividends
B) Assets
C) Liabilities
D) Expenses
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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) Investing - paying utilities for the month
B) Investing - purchasing land
C) Operating - paying dividends to stockholders
D) Financing - selling equipment for cash
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Which definition below best describes financial accounting?

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A) Process of measuring income taxes owed to the government
B) System of maintaining communication with a company's customers and suppliers
C) Procedures designed to enhance the company's image to potential investors
D) Measuring business activities and communicating them to external parties
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Which of the following accounts appears in the statement of stockholders' equity?

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A) Accounts Payable
B) Accounts Receivable
C) Common Stock
D) Supplies
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Which of the following accounts appears in the statement of stockholders' equity?

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A) Delivery expense
B) Accounts payable
C) Service revenue
D) Utilities expense
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Which of the following is not a balance sheet item?

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A) Assets
B) Retained Earnings
C) Expenses
D) Liabilities
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