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

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