Question 1

Financial accounting does not deal with which of the following?

Accepted Answer

A)  Measuring a company's economic activity.
B)  Providing information to internal users.
C)  Preparing financial reports.D) All of the above
E) B) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

The assumption that amounts are reported using a common scale (such as the dollar in the United States) is the:

Accepted Answer

A)  Monetary unit assumption.
B)  Periodicity assumption.
C)  Economic entity assumption.D) All of the above
E) None of the above

Question 5

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?

Accepted Answer

A)  $24,300.
B)  $32,900.
C)  $300.D) B) and C)
E) All of the above

Question 6

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

Accepted Answer

A)  1,2,3.
B)  3,2,1.
C)  1,3,2.
D)  2,3,1.E) A) and B)
F) A) and C)

Question 7

Which financial statement best reveals to investors and creditors information about a company's debt?

Accepted Answer

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

Question 8

The term "cooking the books" refers to:

Accepted Answer

A)  Purposely providing misleading financial information to investors and creditors.
B)  Hiring an auditor to provide independent verification of the fairness of financial statements.
C)  Filing all tax-related statements by the required deadline.D) A) and C)
E) B) and C)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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

Accepted Answer

A)  Common stock and liabilities.
B)  Assets and liabilities.
C)  Common stock and retained earnings.D) All of the above
E) A) and B)

Question 12

Constraints on qualitative characteristics of accounting information include:

Accepted Answer

A)  Freedom from material error.
B)  Going concern.
C)  Neutrality.
D)  Cost effectiveness.E) B) and C)
F) None of the above

Question 13

Amounts owed to suppliers for supplies purchased on account are defined as a(n) :

Accepted Answer

A)  Revenue.
B)  Asset.
C)  Liability.D) All of the above
E) A) and B)

Question 14

The equation best describing the balance sheet is:

Accepted Answer

A)  Assets = Liabilities + Stockholders' Equity.
B)  Revenues - Expenses = Net Income.
C)  Ending Retained Earnings + Dividends = Net Income.D) All of the above
E) None of the above

Question 15

Which business form has the advantage of limited liability?

Accepted Answer

A)  Corporation.
B)  Sole proprietorship.
C)  Partnership.D) All of the above
E) None of the above

Exam 1: A Framework for Financial Accounting

Net income can best be described as:

Correct Answer
verified

Constraints on qualitative characteristics of accounting information include:

Correct Answer
verified

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

Correct Answer
verified

Which business form has the advantage of limited liability?

Correct Answer
verified

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?

Correct Answer
verified

Financial accounting does not deal with which of the following?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The equation best describing the balance sheet is:

Correct Answer
verified

Which financial statement best reveals to investors and creditors information about a company's debt?

Correct Answer
verified

Amounts owed to suppliers for supplies purchased on account are defined as a(n) :

Correct Answer
verified

The term "cooking the books" refers to:

Correct Answer
verified

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

Correct Answer
verified

The assumption that amounts are reported using a common scale (such as the dollar in the United States) is the:

Correct Answer
verified

Exam 1: A Framework for Financial Accounting

Net income can best be described as:

Correct AnswerverifiedShow Answer

Constraints on qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which business form has the advantage of limited liability?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Financial accounting does not deal with which of the following?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The equation best describing the balance sheet is:

Correct AnswerverifiedShow Answer

Which financial statement best reveals to investors and creditors information about a company's debt?

Correct AnswerverifiedShow Answer

Amounts owed to suppliers for supplies purchased on account are defined as a(n) :

Correct AnswerverifiedShow Answer

The term "cooking the books" refers to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The assumption that amounts are reported using a common scale (such as the dollar in the United States) is the:

Correct AnswerverifiedShow Answer

Correct Answer
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