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.   Statement of Cash Flows.
B.   Balance Sheet.
C.   Income Statement.
D.   Statement of Stockholders’ Equity.
Question #3
Public accounting firms refer to:
A.   Professional service firms that traditionally focus on auditing and tax preparation.
B.   Government-controlled companies.
C.   Companies that sell merchandise to customers.
D.   Firms that have stocks listed on an exchange.
Question #4
Expenses represent:
A.   Cash paid to investors.
B.   Costs of providing products or services to customers.
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.   Generally Accepted Accounting Principles.
B.   General Accounting Accountability Principles.
C.   Generally Accepted Auditing Principles.
D.   General Accounting and Audit Principles.
Question #6
In which financial statement does a company report its expenses?
A.   Balance Sheet.
B.   Income Statement.
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.   Truthfulness, clearness.
B.   Relevance, truthfulness.
C.   Relevance, comparability.
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.   Statement of Cash Flows.
B.   Balance Sheet.
C.   Income Statement.
D.   Statement of Stockholders’ Equity.
Question #9
Which of the following represents an obligation of the company?
A.   Dividends.
B.   Expenses.
C.   Liabilities.
D.   Assets.
Question #10
Which single piece of information best explains most companies’ stock price performance?
A.   Net income
B.   Total number of employees.
C.   Geographic location.
D.   Total sales to customers.
Question #11
Who ultimately is responsible for properly applying GAAP? The company’s:
A.   Creditors.
B.   Stockholders.
C.   Auditors.
D.   Management.
Question #12
A component/aspect of relevant accounting information includes:
A.   Predictive value.
B.   Faithful representation.
C.   Comparability.
D.   Consistency.
Question #13
Which financial statement reports a company’s assets and liabilities?
A.   Statement of Stockholders’ Equity.
B.   Income Statement.
C.   Balance Sheet.
D.   Statement of Cash Flows.
Question #14
Which financial statement shows a company’s revenues and expenses?
A.   Statement of Stockholders’ Equity.
B.   Balance Sheet.
C.   Income Statement.
D.   Statement of Cash Flows.
Question #15
The most lucrative activity of public accountants typically is:
A.   Evaluation of internal controls.
B.   Tax preparation.
C.   Business consulting.
D.   Audit of financial statements.
Question #16
Amounts owed to creditors are reported as:
A.   Stockholders’ equity.
B.   Revenues.
C.   Liabilities.
D.   Assets.
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.   Behavioral psychology.
B.   Artistic presentation.
C.   Information measurement/communication process.
D.   Mathematical procedure.
Question #19
Which of the following best describes an important function of financial accounting?
A.   To support government initiatives through taxation of company profits.
B.   To increase the number of customers for a company.
C.     
D.   To provide managers with useful information related to human resources.
E.   To support the efficient distribution of society’s resources.
Question #20
Financial accounting provides information primarily to:
A.   Suppliers and customers.
B.     
C.   Investors and creditors.
D.   Tax regulators.
E.   Government officials.
Question #21
Which of the following represents a resource of the company?
A.   Liability.
B.   Dividend.
C.   Expense.
D.   Asset.
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.   Making good business decisions.
D.   Quality of the work environment for employees.
Question #24
The underlying foundation for the development of accounting standards and interpretation of accounting information is referred to as the:
A.   Securities and Exchange Commission.
B.   Generally accepted rules.
C.   Auditor’s report.
D.   Conceptual framework.
Question #25
Financial accounting is often referred to as a:
A.   Mathematical system of equations.
B.   Language of business.
C.   Tax allocation system.
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.   Financial Accounting Standards Board (FASB).
C.   Securities and Exchange Commission (SEC).
D.   International Accounting Standards Board (IASB).
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.   A process of measuring income taxes owed to the government.
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 by the company over its life.
B.   Income earned during the current period.
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 minus dividends distributed to stockholders’ during the current period.
Question #29
Financial accounting helps with:
A.   Development of more complex societies.
B.   Exchange of goods and services among individuals.
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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