Tema 1

1. 1The statement of cash flows would disclose the payment of a dividend

   1. Ain the operating activities section.
   2. Bin the investing activities section.
   3. Cin the financing activities section.
   4. Dnowhere on the statement.
2. 2Ashley’s Accessory Shop started the year with total assets of $70,000 and total liabilities of $40,000. During the year the business recorded $110,000 in revenues, $55,000 in expenses, and dividends of $20,000. Stockholders’ equity at the end of the year was:

   1. A$ 55,000.
   2. B$ 60,000.
   3. C$ 65,000.
   4. D$ 35.000
3. 3Expenses are incurred

   1. Ato produce assets.
   2. Bto generate revenues.
   3. Conly on rare occasions.
   4. Dto produce liabilities.
4. 4Buying assets needed to operate a business is an example of a:

   1. Afinancing activity.
   2. Binvesting activity.
   3. Cdelivering activity.
   4. Doperating activity.
5. 5Issuing shares of stock in exchange for cash is an example of a:

   1. Afinancing activity.
   2. Binvesting activity.
   3. Cdelivering activity.
   4. Doperating activity.
6. 6Which financial statement would best indicate whether the company relies on debt or stockholders’ equity to finance its assets?

   1. AIncome Statement.
   2. BBalance Sheet.
   3. CStatement of Cash Flows.
   4. DRetained Earnings Statement.
7. 7External users want answers to all of the following questions except

   1. AIs the company earning satisfactory income?
   2. BHow does the company compare in profitability with competitors?
   3. CWill the company be able to afford employee pay raises this year?
   4. DWill the company be able to pay its debts as they come due?
8. 8Jimmy’s Repair Shop started the year with total assets of $ 150,000 and total liabilities of $ 120,000. During the year the business recorded $ 315,000 in revenues, $ 165,000 in expenses, and dividends of $ 30,000. Stockholders’ equity at the end of the year was
   

   1. A$ 120,000.
   2. B$ 135,000.
   3. C$ 180,000.
   4. D$ 150,000.
9. 9The balance sheet

   1. Asummarizes the changes in retained earnings for a specific period of time.
   2. Breports the assets, liabilities, and stockholders’ equity at a specific date.
   3. Cpresents the revenues and expenses for a specific period of time.
   4. Dreports the changes in assets, liabilities, and stockholders’ equity over a period of time.
10. 10Why should the income statement be prepared first?

    1. ANet income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet.
    2. BThe statement of cash flows should be prepared first because it determines the sources of cash. That information is then used in preparing the income statement.
    3. CNone of these statements is correct.
    4. DThe income statement does not have to be prepared first. Financial statements can be prepared in any order.

11. 11Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

    1. ALower taxes.
    2. BReduced legal liability for investors.
    3. CMost common form of organization.
    4. DHarder to transfer ownership.
12. 12Which of the following is the most appropriate and modern definition of accounting?

    1. AThe interconnected network of subsystems necessary to operate a business
    2. BA means of collecting information
    3. CElectronic collection, organization, and communication of vast amounts of information.
    4. DThe information system that identifies, records, and communicates the economic events of an organization to interested users
13. 13Debt and obligations of a business are referred to as

    1. Aexpenses.
    2. Bequities
    3. Cassets.
    4. Dliabilities.
14. 14The common characteristic possessed by all assets is

    1. Agreat monetary value.
    2. Blong life.
    3. Cfuture economic benefit.
    4. Dtangible nature.
15. 15If the retained earnings account decreases from the beginning of the year to the end of the year, then

    1. Anet income is less than dividends.
    2. Badditional investments are less than net losses.
    3. Cnet income is greater than dividends.
    4. Dthere was a net income and no dividends.
16. 16.

    

    1. A$ 58,000
    2. B$ 18,000
    3. C$ 14,000
    4. D$ 54,000
17. 17A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate?

    1. Adesire to limit the owner’s personal liability
    2. Bability to raise capital for expansion
    3. Cthe prestige of operating as a corporation
    4. Dthe ease in transferring shares of the corporation’s stock

Description

Finantial Accounting Quiz on Tema 1, created by Ainhoa Andreu on 12/03/2017.

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Ainhoa Andreu

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Created on 12 Mar 2017 · updated on 12 Mar 2017

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