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 + Stockholders’ Equity = Liabilities.
B.   Liabilities – Assets = Stockholders’ Equity.
C.   Assets + Liabilities = Stockholders’ Equity.
D.   Assets = Liabilities + Stockholders’ Equity.
Question #2
In which financial statement does a company report its revenues?
A.   Income Statement.
B.   Balance Sheet.
C.   Statement of Cash Flows.
D.   Statement of Stockholders’ Equity.
Question #3
Public accounting firms refer to:
A.   Firms that have stocks listed on an exchange.
B.   Government-controlled companies.
C.   Companies that sell merchandise to customers.
D.   Professional service firms that traditionally focus on auditing and tax preparation.
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.   Sales of products or services to customers.
D.   Cash paid to investors.
Question #5
The term GAAP stands for:
A.   General Accounting Accountability Principles.
B.   General Accounting and Audit Principles.
C.   Generally Accepted Accounting Principles.
D.   Generally Accepted Auditing Principles.
Question #6
In which financial statement does a company report its expenses?
A.   Statement of Stockholders’ Equity.
B.   Statement of Cash Flows.
C.   Income Statement.
D.   Balance Sheet.
Question #7
The fundamental qualitative characteristics of accounting information identified by the FASB are:
A.   Truthfulness, clearness.
B.   Relevance, faithful representation.
C.   Relevance, truthfulness.
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.   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.   Expenses.
C.   Liabilities.
D.   Dividends.
Question #10
Which single piece of information best explains most companies’ stock price performance?
A.   Net income
B.   Geographic location.
C.   Total sales to customers.
D.   Total number of employees.
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.   Consistency.
D.   Faithful representation.
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.   Income Statement.
B.   Balance Sheet.
C.   Statement of Stockholders’ Equity.
D.   Statement of Cash Flows.
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.   Liabilities.
C.   Revenues.
D.   Assets.
Question #17
Traditional careers in public accounting include:
A.   Business consultants.
B.   Auditors.
C.   Tax preparers/planners.
D.   Auditors, Business consultants and Tax preparers/planners
Question #18
Which of the following best describes financial accounting?
A.   Information measurement/communication process.
B.   Artistic presentation.
C.   Behavioral psychology.
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 increase the number of customers for a company.
C.   To support the efficient distribution of society’s resources.
D.     
E.   To support government initiatives through taxation of company profits.
Question #20
Financial accounting provides information primarily to:
A.   Suppliers and customers.
B.   Tax regulators.
C.   Investors and creditors.
D.   Government officials.
E.     
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.   Liabilities.
B.   Expenses.
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.   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.   Auditor’s report.
B.   Generally accepted rules.
C.   Securities and Exchange Commission.
D.   Conceptual framework.
Question #25
Financial accounting is often referred to as a:
A.   Tax allocation system.
B.   Internal reporting structure.
C.   Language of business.
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.   American Institute of Certified Public Accountants (AICPA).
C.   International Accounting Standards Board (IASB).
D.   Securities and Exchange Commission (SEC).
Question #27
Which definition best describes financial accounting?
A.   A process of measuring income taxes owed to the government.
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.   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.   Income earned during the current period.
C.   Income earned during the current period minus dividends distributed to stockholders’ during the current period.
D.   The amount of income earned by the company over its life.
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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