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 + Liabilities = Stockholders’ Equity.
B.   Assets + Stockholders’ Equity = Liabilities.
C.   Assets = Liabilities + Stockholders’ Equity.
D.   Liabilities – Assets = 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.   Companies that sell merchandise to customers.
B.   Professional service firms that traditionally focus on auditing and tax preparation.
C.   Government-controlled companies.
D.   Firms that have stocks listed on an exchange.
Question #4
Expenses represent:
A.   Cash paid to investors.
B.   Sales of products or services to customers.
C.   Costs of providing products or services to customers.
D.   Cash paid for the purchase of the company’s long-term resources.
Question #5
The term GAAP stands for:
A.   Generally Accepted Auditing Principles.
B.   Generally Accepted Accounting Principles.
C.   General Accounting and Audit Principles.
D.   General Accounting Accountability 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.   Relevance, truthfulness.
B.   Relevance, faithful representation.
C.   Relevance, comparability.
D.   Truthfulness, clearness.
Question #8
The financial statement that shows the financial position of a company at a specific point in time is called the:
A.   Balance Sheet.
B.   Income Statement.
C.   Statement of Cash Flows.
D.   Statement of Stockholders’ Equity.
Question #9
Which of the following represents an obligation of the company?
A.   Dividends.
B.   Expenses.
C.   Assets.
D.   Liabilities.
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.   Auditors.
B.   Creditors.
C.   Stockholders.
D.   Management.
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.   Balance Sheet.
B.   Income Statement.
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.   Tax preparation.
B.   Business consulting.
C.   Evaluation of internal controls.
D.   Audit of financial statements.
Question #16
Amounts owed to creditors are reported as:
A.   Liabilities.
B.   Stockholders’ equity.
C.   Assets.
D.   Revenues.
Question #17
Traditional careers in public accounting include:
A.   Auditors.
B.   Tax preparers/planners.
C.   Business consultants.
D.   Auditors, Business consultants and Tax preparers/planners
Question #18
Which of the following best describes financial accounting?
A.   Mathematical procedure.
B.   Artistic presentation.
C.   Information measurement/communication process.
D.   Behavioral psychology.
Question #19
Which of the following best describes an important function of financial accounting?
A.   To increase the number of customers for a company.
B.   To support government initiatives through taxation of company profits.
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.   Government officials.
B.     
C.   Tax regulators.
D.   Investors and creditors.
E.   Suppliers and customers.
Question #21
Which of the following represents a resource of the company?
A.   Asset.
B.   Liability.
C.   Dividend.
D.   Expense.
Question #22
Which of the following describes the cost of selling to customers?
A.   Dividends.
B.   Liabilities.
C.   Assets.
D.   Expenses.
Question #23
Financial accounting information is essential to:
A.   Quality of the work environment for employees.
B.   Paying the appropriate amount of taxes.
C.   Marketing the company’s products to customers.
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.   Conceptual framework.
C.   Securities and Exchange Commission.
D.   Auditor’s report.
Question #25
Financial accounting is often referred to as a:
A.   Language of business.
B.   Tax allocation system.
C.   Mathematical system of equations.
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.   Financial Accounting Standards Board (FASB).
D.   International Accounting Standards Board (IASB).
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.   Income earned during the current period minus dividends distributed to stockholders’ during the current period.
B.   Income earned during the current period.
C.   The amount of income earned by the company over its life.
D.   The amount of income earned over the company’s life minus the dividends paid to shareholders over the company’s 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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