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 = 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.   Income Statement.
D.   Statement of Cash Flows.
Question #3
Public accounting firms refer to:
A.   Government-controlled companies.
B.   Companies that sell merchandise to customers.
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 for the purchase of the company’s long-term resources.
C.   Cash paid to investors.
D.   Sales of products or services to customers.
Question #5
The term GAAP stands for:
A.   General Accounting and Audit Principles.
B.   Generally Accepted Auditing Principles.
C.   General Accounting Accountability Principles.
D.   Generally Accepted Accounting Principles.
Question #6
In which financial statement does a company report its expenses?
A.   Statement of Stockholders’ Equity.
B.   Balance Sheet.
C.   Income Statement.
D.   Statement of Cash Flows.
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 Stockholders’ Equity.
B.   Statement of Cash Flows.
C.   Income Statement.
D.   Balance Sheet.
Question #9
Which of the following represents an obligation of the company?
A.   Dividends.
B.   Assets.
C.   Liabilities.
D.   Expenses.
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.   Management.
B.   Auditors.
C.   Creditors.
D.   Stockholders.
Question #12
A component/aspect of relevant accounting information includes:
A.   Predictive value.
B.   Comparability.
C.   Faithful representation.
D.   Consistency.
Question #13
Which financial statement reports a company’s assets and liabilities?
A.   Statement of Cash Flows.
B.   Income Statement.
C.   Statement of Stockholders’ Equity.
D.   Balance Sheet.
Question #14
Which financial statement shows a company’s revenues and expenses?
A.   Income Statement.
B.   Balance Sheet.
C.   Statement of Cash Flows.
D.   Statement of Stockholders’ Equity.
Question #15
The most lucrative activity of public accountants typically is:
A.   Audit of financial statements.
B.   Evaluation of internal controls.
C.   Business consulting.
D.   Tax preparation.
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.   Auditors.
B.   Auditors, Business consultants and Tax preparers/planners
C.   Tax preparers/planners.
D.   Business consultants.
Question #18
Which of the following best describes financial accounting?
A.   Information measurement/communication process.
B.   Mathematical procedure.
C.   Behavioral psychology.
D.   Artistic presentation.
Question #19
Which of the following best describes an important function of financial accounting?
A.   To support the efficient distribution of society’s resources.
B.   To support government initiatives through taxation of company profits.
C.   To increase the number of customers for a company.
D.     
E.   To provide managers with useful information related to human resources.
Question #20
Financial accounting provides information primarily to:
A.     
B.   Investors and creditors.
C.   Government officials.
D.   Suppliers and customers.
E.   Tax regulators.
Question #21
Which of the following represents a resource of the company?
A.   Asset.
B.   Dividend.
C.   Expense.
D.   Liability.
Question #22
Which of the following describes the cost of selling to customers?
A.   Liabilities.
B.   Expenses.
C.   Assets.
D.   Dividends.
Question #23
Financial accounting information is essential to:
A.   Paying the appropriate amount of taxes.
B.   Quality of the work environment for employees.
C.   Making good business decisions.
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.   Auditor’s report.
B.   Conceptual framework.
C.   Securities and Exchange Commission.
D.   Generally accepted rules.
Question #25
Financial accounting is often referred to as a:
A.   Internal reporting structure.
B.   Mathematical system of equations.
C.   Tax allocation system.
D.   Language of business.
Question #26
Which body has the primary responsibility for the establishment of Generally Accepted Accounting Principles?
A.   International Accounting Standards Board (IASB).
B.   Securities and Exchange Commission (SEC).
C.   American Institute of Certified Public Accountants (AICPA).
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.   A system of maintaining communication with a company’s customers and suppliers.
D.   Procedures designed to enhance the company’s image to potential investors.
Question #28
The balance in retained earnings represents:
A.   Income earned during the current period.
B.   The amount of income earned over the company’s life minus the dividends paid to shareholders over the company’s life.
C.   The amount of income earned by the company over its life.
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.

Need help with your exam preparation?

Existing Quiz Clients Login here