Question 1

Which of the following actions would be considered unethical?

Accepted Answer

A)  A company does not distribute any of its profits to stockholders.
B)  A company rounds the revenues and expenses that it reports on the income statement.
C)  An unintentional mistake made by a new accountant.
D)  Receiving a paycheck for double the amount due to you and not reporting it to your employer.E) All of the above
F) B) and D)

Question 2

You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt.The company owes $10 million dollars to its creditors.As a result of the bankruptcy,you are responsible for paying $100,000 (or $10 million × 1%)of the amount owed to the creditors.

Accepted Answer

A) True 
 B)False

Question 3

In this period,Andrew,Inc.recorded Sales Revenue of $100,000 from sales of goods to customers who agreed to pay later.In the next period,Andrew received payment from customers of $90,000.Which of the following statements is correct?

Accepted Answer

A)  Revenue for this period is $90,000.
B)  Accounts Receivable at the end of this period is $100,000.
C)  Accounts Payable at the end of this period is $10,000.
D)  Expenses for next period will increase by $10,000.E) None of the above
F) A) and C)

Question 4

Which of the following statements about a fiscal year is correct?

Accepted Answer

A)  Companies can choose to end their fiscal year on any date they feel is most relevant.
B)  Companies must end their fiscal year on March 31,June 30,September 30,or December 31.
C)  Companies can select any date except a holiday to end their fiscal year.
D)  Companies must end their fiscal year on December 31.E) B) and D)
F) A) and B)

Question 5

An investor who is looking at a company's financial statements cannot determine whether the:

Accepted Answer

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

Question 6

Match the business activity to the appropriate category.
-The purchase of a new line of assembly equipment

Accepted Answer

A)  Financing activity
B)  Operating activity
C)  Investing activityD) A) and C)
E) B) and C)

Question 7

During Year 5,a company's assets increase by $112,000 and its liabilities increase by $76,000.If no dividends were paid and there were no changes in the amount of common stock issued during the year,net income for Year 5 was:

Accepted Answer

A)  $112,000.
B)  $36,000.
C)  $188,000.
D)  $76,000.E) A) and B)
F) None of the above

Question 8

Investors and creditors look at the balance sheet to see whether the company:

Accepted Answer

A)  is profitable.
B)  can maintain its existing product line.
C)  owns enough assets to pay all that it owes to creditors.
D)  has had positive cash flows from operating activities.E) B) and C)
F) All of the above

Question 9

Which of the following is the set of laws enacted by the government to strengthen corporate reporting in response to the Enron,WorldCom and other frauds?

Accepted Answer

A)  Sarbanes-Oxley Act
B)  Professional Code of Ethics
C)  Internal Revenue Code
D)  Securities and Exchange Commission ActE) All of the above
F) B) and C)

Question 10

Robin Hood's statement of cash flows contained the following: Cash flows from operating activities in the amount of $34,800
Cash flows from investing activities in the amount of $36,000
Cash flows from (used by) financing activities in the amount of ($54,000) 
What was Robin Hood's change in cash for the period?

Accepted Answer

A)  $16,800 increase
B)  $18,000 increase
C)  $16,800 decrease
D)  $18,000 decreaseE) B) and C)
F) A) and B)

Question 11

Match the business activity to the appropriate category.
-The purchase of office supplies

Accepted Answer

A)  Financing activity
B)  Operating activity
C)  Investing activityD) B) and C)
E) A) and C)

Question 12

Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?

Accepted Answer

A)  Investors: Dividends;Creditors: Sufficient cash to make loan payments
B)  Investors: Cash flows from investing activities;Creditors: Dividends
C)  Investors: Sufficient cash to make loan payments;Creditors: Cash flows from investing activities
D)  Investors: Sufficient cash to make loan payments;Creditors: Stock pricesE) A) and B)
F) A) and C)

Question 13

Which of the following is not correct?

Accepted Answer

A)  Assets = Liabilities + Stockholders' Equity
B)  Liabilities = Assets − Stockholders' Equity
C)  Stockholders' Equity + Liabilities - Assets = 0
D)  Assets = Liabilities − Stockholders' EquityE) None of the above
F) C) and D)

Question 14

Which one of the following statements regarding the balance sheet for Anonymous Inc.is correct?

Accepted Answer

A)  Retained Earnings is misclassified;it should be reported in the Assets section of the balance sheet.
B)  The $207,100 shown as Retained Earnings on the balance sheet represents the cumulative amount of dividends distributed.
C)  Anonymous,Inc.is owed $310,500 from customers who have purchased goods or services from the company,but have not yet paid for them.
D)  The amount of retained earnings reported on this balance sheet represents the retained earnings at the beginning of the year.E) B) and C)
F) A) and D)

Question 15

The separate entity assumption requires that:

Accepted Answer

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

Question 16

All corporations acquire financing by issuing stock for sale on public stock exchanges.

Accepted Answer

A) True 
 B)False

Question 17

What do independent auditors provide for companies who hire them?

Accepted Answer

A)  Assurance that this year's financial statements are perfect
B)  A guarantee that next year's operations will be profitable
C)  Assurance that the financial statements follow Generally Accepted Accounting Principles
D)  Assurance that the company's stock is a good investmentE) B) and C)
F) A) and D)

Question 18

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

Accepted Answer

A)  an Italian monk in 1494.
B)  the U.S.Congress and the SEC.
C)  the PCAOB.
D)  the FASB on an ongoing basis.E) A) and B)
F) A) and C)

Question 19

Investors are mainly interested in the profitability of a company.

Accepted Answer

A) True 
 B)False

Question 20

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) 
-PCAOB

Accepted Answer

A)  The U.S.agency that must approve mergers between very large publicly owned corporations.
B)  The U.S.Board that approves the rules for auditing publicly owned companies.
C)  The organization that establishes business laws in the U.S.
D)  The Board that establishes the accounting rules that govern American owned corporations.
E)  This organization regulates activities associated with the stock market such as the reporting of financial data by publicly owned companies.F) The national professional organization of accountants.G) Rules of financial accounting created by the FASB for use in the United States.H) A set of laws established to strengthen corporate reporting in the United States.I) The Board that establishes international accounting standards.J) The U.S.agency that certifies foreign accounting firms to practice in the U.S.K) A) and J)
L) D) and E)

Exam 1: Business Decisions and Financial Accounting

What do independent auditors provide for companies who hire them?

Correct Answer
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Investors and creditors look at the balance sheet to see whether the company:

Correct Answer
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During Year 5,a company's assets increase by $112,000 and its liabilities increase by $76,000.If no dividends were paid and there were no changes in the amount of common stock issued during the year,net income for Year 5 was:

Correct Answer
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Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?

Correct Answer
verified

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

Correct Answer
verified

Which of the following actions would be considered unethical?

Correct Answer
verified

The separate entity assumption requires that:

Correct Answer
verified

You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt.The company owes $10 million dollars to its creditors.As a result of the bankruptcy,you are responsible for paying $100,000 (or $10 million × 1%)of the amount owed to the creditors.

Correct Answer
verified

In this period,Andrew,Inc.recorded Sales Revenue of $100,000 from sales of goods to customers who agreed to pay later.In the next period,Andrew received payment from customers of $90,000.Which of the following statements is correct?

Correct Answer
verified

An investor who is looking at a company's financial statements cannot determine whether the:

Correct Answer
verified

Which one of the following statements regarding the balance sheet for Anonymous Inc.is correct?

Correct Answer
verified

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) -PCAOB

Correct Answer
verified

Which of the following is not correct?

Correct Answer
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Which of the following is the set of laws enacted by the government to strengthen corporate reporting in response to the Enron,WorldCom and other frauds?

Correct Answer
verified

Correct Answer
verified

Match the business activity to the appropriate category. -The purchase of a new line of assembly equipment

Correct Answer
verified

Which of the following statements about a fiscal year is correct?

Correct Answer
verified

Investors are mainly interested in the profitability of a company.

Correct Answer
verified

All corporations acquire financing by issuing stock for sale on public stock exchanges.

Correct Answer
verified

Match the business activity to the appropriate category. -The purchase of office supplies

Correct Answer
verified

Exam 1: Business Decisions and Financial Accounting

What do independent auditors provide for companies who hire them?

Correct AnswerverifiedShow Answer

Investors and creditors look at the balance sheet to see whether the company:

Correct AnswerverifiedShow Answer

During Year 5,a company's assets increase by $112,000 and its liabilities increase by $76,000.If no dividends were paid and there were no changes in the amount of common stock issued during the year,net income for Year 5 was:

Correct AnswerverifiedShow Answer

Aspects of the financial statements may have different relevance to investors and creditors.Which of the following types of information are consistent with the concerns of these two parties?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following actions would be considered unethical?

Correct AnswerverifiedShow Answer

The separate entity assumption requires that:

Correct AnswerverifiedShow Answer

You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt.The company owes $10 million dollars to its creditors.As a result of the bankruptcy,you are responsible for paying $100,000 (or $10 million × 1%)of the amount owed to the creditors.

Correct AnswerverifiedShow Answer

In this period,Andrew,Inc.recorded Sales Revenue of $100,000 from sales of goods to customers who agreed to pay later.In the next period,Andrew received payment from customers of $90,000.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

An investor who is looking at a company's financial statements cannot determine whether the:

Correct AnswerverifiedShow Answer

Which one of the following statements regarding the balance sheet for Anonymous Inc.is correct?

Correct AnswerverifiedShow Answer

Match the acronym with the description that best reflects it.(There are more descriptions than acronyms. ) -PCAOB

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Which of the following is the set of laws enacted by the government to strengthen corporate reporting in response to the Enron,WorldCom and other frauds?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match the business activity to the appropriate category. -The purchase of a new line of assembly equipment

Correct AnswerverifiedShow Answer

Which of the following statements about a fiscal year is correct?

Correct AnswerverifiedShow Answer

Investors are mainly interested in the profitability of a company.

Correct AnswerverifiedShow Answer

All corporations acquire financing by issuing stock for sale on public stock exchanges.

Correct AnswerverifiedShow Answer

Match the business activity to the appropriate category. -The purchase of office supplies

Correct AnswerverifiedShow Answer

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