Accounting 120 SI Test 1 practice

Which of the following is not one of the four basic financial statements?

• The balance sheet

• The statement of cash flows

• The audit report

• The income statement

Which of the following statements is FALSE regarding the balance sheet?

• The accounts shown in a balance sheet represent the basic accounting equation for a particular business.

• The retained earnings account shown on a balance sheet must agree with the end retained earnings balance shown on the Statement of Retained Earnings.

• The balance sheet summarizes the net changes in specific account balances over a period of time.

• The balance sheet reports the amount of assets, liabilities, and stockholders equity a company has at a point in time.

Which of the following is FALSE regarding retained earnings

• Retained Earnings is increased by Net Income

• Retained Earnings is a component of Stockholders Equity on the balance sheet

• Retained Earnings is an asset on the balance sheet

• Retained earnings represents earnings not yet distributed to stockholders in the form of dividends

Which of the following is NOT one of the items required to be shown on the heading of a financial statement?

• The financial statement preparer's name

• The title of the financial statement

• The financial reporting date or period

• The name of the business entity

Which of the following regarding GAAP is true?

• GAAP is an abbreviation for generally applied accounting principles

• Changes in GAAP always affect the amount of income reported by a company

• GAAP is the abbreviation for generally accepted accounting principles

• Changes to GAAP must be approved by the Senate Finance Committee

Which of the following is NOT an asset account?

• Cash

• Land

• Equipment

• Common Stock

Which of the following statements describes transactions that would be recorded in the accounting system?

• An exchange of an asset for a promise to pay

• An exchange of a promise for another promise

• Both of the above

• None of the above

The T account is used to summarize which of the following?

• Increases and decreases to a single account in the accounting system

• Debits and credits to a single account in the accounting system

• changes to a specific account balance over time

• All of the above describe how T accounts are used by accountants

If a publicly traded company is trying to maximize its perceived value to decision makers external to the company, the company is most likely to report too small of a value for which of the following on its balance sheet?

• Assets

• Liabilities

• Retained Earnings

• Common Stock

Which of the following statements would be true regarding the balance sheet?

• In any given transaction, the total dollar amount of the debits and the total dollar amount of the credits must be equal.

• Debits decrease certain accounts and credits decrease certain accounts

• Liabilities and stockholders' equity accounts usually end in credit balances, while assets usually end up in debit balances

• All of the above are true