Accounting 101 - Financial Accounting » Spring 2021 » Chapter 1 Quiz

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Question #1
Which of the following equations correctly represents the fundamental accounting equation?
A.   Assets + Liabilities = Stockholders’ Equity.
B.   Assets = Liabilities + Stockholders’ Equity.
C.   Liabilities – Assets = Stockholders’ Equity.
D.   Assets + Stockholders’ Equity = Liabilities.
Question #2
In which financial statement does a company report its revenues?
A.   Statement of Cash Flows.
B.   Balance Sheet.
C.   Statement of Stockholders’ Equity.
D.   Income Statement.
Question #3
Public accounting firms refer to:
A.   Government-controlled companies.
B.   Firms that have stocks listed on an exchange.
C.   Professional service firms that traditionally focus on auditing and tax preparation.
D.   Companies that sell merchandise to customers.
Question #4
Expenses represent:
A.   Cash paid for the purchase of the company’s long-term resources.
B.   Sales of products or services to customers.
C.   Cash paid to investors.
D.   Costs of providing products or services to customers.
Question #5
The term GAAP stands for:
A.   General Accounting Accountability Principles.
B.   Generally Accepted Auditing Principles.
C.   General Accounting and Audit Principles.
D.   Generally Accepted Accounting Principles.
Question #6
In which financial statement does a company report its expenses?
A.   Statement of Stockholders’ Equity.
B.   Balance Sheet.
C.   Income Statement.
D.   Statement of Cash Flows.
Question #7
The fundamental qualitative characteristics of accounting information identified by the FASB are:
A.   Truthfulness, clearness.
B.   Relevance, comparability.
C.   Relevance, truthfulness.
D.   Relevance, faithful representation.
Question #8
The financial statement that shows the financial position of a company at a specific point in time is called the:
A.   Income Statement.
B.   Statement of Cash Flows.
C.   Balance Sheet.
D.   Statement of Stockholders’ Equity.
Question #9
Which of the following represents an obligation of the company?
A.   Assets.
B.   Expenses.
C.   Liabilities.
D.   Dividends.
Question #10
Which single piece of information best explains most companies’ stock price performance?
A.   Total number of employees.
B.   Net income
C.   Total sales to customers.
D.   Geographic location.
Question #11
Who ultimately is responsible for properly applying GAAP? The company’s:
A.   Stockholders.
B.   Management.
C.   Creditors.
D.   Auditors.
Question #12
A component/aspect of relevant accounting information includes:
A.   Comparability.
B.   Consistency.
C.   Predictive value.
D.   Faithful representation.
Question #13
Which financial statement reports a company’s assets and liabilities?
A.   Balance Sheet.
B.   Statement of Cash Flows.
C.   Income Statement.
D.   Statement of Stockholders’ Equity.
Question #14
Which financial statement shows a company’s revenues and expenses?
A.   Statement of Stockholders’ Equity.
B.   Balance Sheet.
C.   Statement of Cash Flows.
D.   Income Statement.
Question #15
The most lucrative activity of public accountants typically is:
A.   Business consulting.
B.   Evaluation of internal controls.
C.   Tax preparation.
D.   Audit of financial statements.
Question #16
Amounts owed to creditors are reported as:
A.   Assets.
B.   Revenues.
C.   Liabilities.
D.   Stockholders’ equity.
Question #17
Traditional careers in public accounting include:
A.   Tax preparers/planners.
B.   Business consultants.
C.   Auditors, Business consultants and Tax preparers/planners
D.   Auditors.
Question #18
Which of the following best describes financial accounting?
A.   Information measurement/communication process.
B.   Mathematical procedure.
C.   Artistic presentation.
D.   Behavioral psychology.
Question #19
Which of the following best describes an important function of financial accounting?
A.   To support the efficient distribution of society’s resources.
B.   To support government initiatives through taxation of company profits.
C.     
D.   To provide managers with useful information related to human resources.
E.   To increase the number of customers for a company.
Question #20
Financial accounting provides information primarily to:
A.   Government officials.
B.   Suppliers and customers.
C.     
D.   Investors and creditors.
E.   Tax regulators.
Question #21
Which of the following represents a resource of the company?
A.   Liability.
B.   Expense.
C.   Dividend.
D.   Asset.
Question #22
Which of the following describes the cost of selling to customers?
A.   Expenses.
B.   Assets.
C.   Liabilities.
D.   Dividends.
Question #23
Financial accounting information is essential to:
A.   Quality of the work environment for employees.
B.   Paying the appropriate amount of taxes.
C.   Making good business decisions.
D.   Marketing the company’s products to customers.
Question #24
The underlying foundation for the development of accounting standards and interpretation of accounting information is referred to as the:
A.   Auditor’s report.
B.   Generally accepted rules.
C.   Securities and Exchange Commission.
D.   Conceptual framework.
Question #25
Financial accounting is often referred to as a:
A.   Language of business.
B.   Internal reporting structure.
C.   Tax allocation system.
D.   Mathematical system of equations.
Question #26
Which body has the primary responsibility for the establishment of Generally Accepted Accounting Principles?
A.   International Accounting Standards Board (IASB).
B.   American Institute of Certified Public Accountants (AICPA).
C.   Securities and Exchange Commission (SEC).
D.   Financial Accounting Standards Board (FASB).
Question #27
Which definition best describes financial accounting?
A.   A process of measuring income taxes owed to the government.
B.   A system of maintaining communication with a company’s customers and suppliers.
C.   Measuring a company’s business activities and communicating those measurements to external parties.
D.   Procedures designed to enhance the company’s image to potential investors.
Question #28
The balance in retained earnings represents:
A.   The amount of income earned over the company’s life minus the dividends paid to shareholders over the company’s life.
B.   The amount of income earned by the company over its life.
C.   Income earned during the current period minus dividends distributed to stockholders’ during the current period.
D.   Income earned during the current period.
Question #29
Financial accounting helps with:
A.   Maintaining records of multiple business transactions, development of more complex societies and exchange of goods and services among individuals.
B.   Exchange of goods and services among individuals.
C.   Maintaining records of multiple business transactions.
D.   Development of more complex societies.

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