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.   Liabilities – Assets = Stockholders’ Equity.
B.   Assets = Liabilities + Stockholders’ Equity.
C.   Assets + Liabilities = Stockholders’ Equity.
D.   Assets + Stockholders’ Equity = Liabilities.
Question #2
In which financial statement does a company report its revenues?
A.   Balance Sheet.
B.   Statement of Stockholders’ Equity.
C.   Statement of Cash Flows.
D.   Income Statement.
Question #3
Public accounting firms refer to:
A.   Companies that sell merchandise to customers.
B.   Government-controlled companies.
C.   Professional service firms that traditionally focus on auditing and tax preparation.
D.   Firms that have stocks listed on an exchange.
Question #4
Expenses represent:
A.   Costs of providing products or services to customers.
B.   Cash paid to investors.
C.   Cash paid for the purchase of the company’s long-term resources.
D.   Sales of products or services to customers.
Question #5
The term GAAP stands for:
A.   General Accounting and Audit Principles.
B.   General Accounting Accountability Principles.
C.   Generally Accepted Auditing 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, comparability.
B.   Truthfulness, clearness.
C.   Relevance, faithful representation.
D.   Relevance, truthfulness.
Question #8
The financial statement that shows the financial position of a company at a specific point in time is called the:
A.   Statement of Cash Flows.
B.   Income Statement.
C.   Statement of Stockholders’ Equity.
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.   Geographic location.
B.   Total number of employees.
C.   Net income
D.   Total sales to customers.
Question #11
Who ultimately is responsible for properly applying GAAP? The company’s:
A.   Management.
B.   Auditors.
C.   Creditors.
D.   Stockholders.
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.   Income Statement.
B.   Balance Sheet.
C.   Statement of Stockholders’ Equity.
D.   Statement of Cash Flows.
Question #14
Which financial statement shows a company’s revenues and expenses?
A.   Balance Sheet.
B.   Statement of Cash Flows.
C.   Statement of Stockholders’ Equity.
D.   Income Statement.
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.   Assets.
C.   Revenues.
D.   Liabilities.
Question #17
Traditional careers in public accounting include:
A.   Tax preparers/planners.
B.   Auditors, Business consultants and Tax preparers/planners
C.   Auditors.
D.   Business consultants.
Question #18
Which of the following best describes financial accounting?
A.   Information measurement/communication process.
B.   Artistic presentation.
C.   Mathematical procedure.
D.   Behavioral psychology.
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.   To support government initiatives through taxation of company profits.
C.     
D.   To support the efficient distribution of society’s 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.   Tax regulators.
D.   Investors and creditors.
E.     
Question #21
Which of the following represents a resource of the company?
A.   Dividend.
B.   Liability.
C.   Asset.
D.   Expense.
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.   Paying the appropriate amount of taxes.
B.   Marketing the company’s products to customers.
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.   Generally accepted rules.
B.   Securities and Exchange Commission.
C.   Auditor’s report.
D.   Conceptual framework.
Question #25
Financial accounting is often referred to as a:
A.   Tax allocation system.
B.   Mathematical system of equations.
C.   Language of business.
D.   Internal reporting structure.
Question #26
Which body has the primary responsibility for the establishment of Generally Accepted Accounting Principles?
A.   American Institute of Certified Public Accountants (AICPA).
B.   Securities and Exchange Commission (SEC).
C.   International Accounting Standards Board (IASB).
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.   Measuring a company’s business activities and communicating those measurements to external parties.
C.   Procedures designed to enhance the company’s image to potential investors.
D.   A system of maintaining communication with a company’s customers and suppliers.
Question #28
The balance in retained earnings represents:
A.   Income earned during the current period minus dividends distributed to stockholders’ during the current period.
B.   The amount of income earned by the company over its life.
C.   The amount of income earned over the company’s life minus the dividends paid to shareholders over the company’s life.
D.   Income earned during the current period.
Question #29
Financial accounting helps with:
A.   Exchange of goods and services among individuals.
B.   Development of more complex societies.
C.   Maintaining records of multiple business transactions.
D.   Maintaining records of multiple business transactions, development of more complex societies and exchange of goods and services among individuals.

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