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

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