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

Need help with your exam preparation?

Existing Quiz Clients Login here
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 Stockholders’ Equity.
B.   Balance Sheet.
C.   Statement of Cash Flows.
D.   Income Statement.
Question #3
Public accounting firms refer to:
A.   Companies that sell merchandise to customers.
B.   Firms that have stocks listed on an exchange.
C.   Government-controlled companies.
D.   Professional service firms that traditionally focus on auditing and tax preparation.
Question #4
Expenses represent:
A.   Cash paid for the purchase of the company’s long-term resources.
B.   Cash paid to investors.
C.   Costs of providing products or services to customers.
D.   Sales of products or services to customers.
Question #5
The term GAAP stands for:
A.   Generally Accepted Accounting Principles.
B.   General Accounting and Audit Principles.
C.   General Accounting Accountability Principles.
D.   Generally Accepted Auditing Principles.
Question #6
In which financial statement does a company report its expenses?
A.   Statement of Cash Flows.
B.   Income Statement.
C.   Statement of Stockholders’ Equity.
D.   Balance Sheet.
Question #7
The fundamental qualitative characteristics of accounting information identified by the FASB are:
A.   Relevance, truthfulness.
B.   Relevance, comparability.
C.   Truthfulness, clearness.
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 Stockholders’ Equity.
B.   Balance Sheet.
C.   Income Statement.
D.   Statement of Cash Flows.
Question #9
Which of the following represents an obligation of the company?
A.   Expenses.
B.   Liabilities.
C.   Assets.
D.   Dividends.
Question #10
Which single piece of information best explains most companies’ stock price performance?
A.   Net income
B.   Total number of employees.
C.   Total sales to customers.
D.   Geographic location.
Question #11
Who ultimately is responsible for properly applying GAAP? The company’s:
A.   Creditors.
B.   Management.
C.   Auditors.
D.   Stockholders.
Question #12
A component/aspect of relevant accounting information includes:
A.   Predictive value.
B.   Consistency.
C.   Faithful representation.
D.   Comparability.
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.   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.   Business consulting.
B.   Tax preparation.
C.   Audit of financial statements.
D.   Evaluation of internal controls.
Question #16
Amounts owed to creditors are reported as:
A.   Liabilities.
B.   Assets.
C.   Revenues.
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.   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 provide managers with useful information related to human resources.
B.   To support government initiatives through taxation of company profits.
C.   To support the efficient distribution of society’s resources.
D.     
E.   To increase the number of customers for a company.
Question #20
Financial accounting provides information primarily to:
A.   Tax regulators.
B.     
C.   Investors and creditors.
D.   Suppliers and customers.
E.   Government officials.
Question #21
Which of the following represents a resource of the company?
A.   Dividend.
B.   Liability.
C.   Expense.
D.   Asset.
Question #22
Which of the following describes the cost of selling to customers?
A.   Liabilities.
B.   Dividends.
C.   Expenses.
D.   Assets.
Question #23
Financial accounting information is essential to:
A.   Making good business decisions.
B.   Quality of the work environment for employees.
C.   Paying the appropriate amount of taxes.
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.   Generally accepted rules.
B.   Auditor’s report.
C.   Conceptual framework.
D.   Securities and Exchange Commission.
Question #25
Financial accounting is often referred to as a:
A.   Mathematical system of equations.
B.   Tax allocation system.
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.   Securities and Exchange Commission (SEC).
B.   International Accounting Standards Board (IASB).
C.   Financial Accounting Standards Board (FASB).
D.   American Institute of Certified Public Accountants (AICPA).
Question #27
Which definition best describes financial accounting?
A.   A system of maintaining communication with a company’s customers and suppliers.
B.   Procedures designed to enhance the company’s image to potential investors.
C.   A process of measuring income taxes owed to the government.
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 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.   Development of more complex societies.
B.   Maintaining records of multiple business transactions.
C.   Maintaining records of multiple business transactions, development of more complex societies and exchange of goods and services among individuals.
D.   Exchange of goods and services among individuals.

Need help with your exam preparation?

Existing Quiz Clients Login here