Self Tests - Set 1C1

Communication consists of keeping a chronological diary of measured events in an orderly and systematic manner.

• True

• False

Answer explanation

Recording, not communication is being described by this statement (“What Is Accounting”).

Which of the following is not one of the major fields of the accounting profession?

• Public accounting

• Personal accounting

• Not-for-Profit accounting

• Private accounting

Which of the following financial statements is prepared as of a specific date?

• Balance Sheet.

• Income Statement.

• Retained Earnings Statement.

• Statement of Cash Flows.

Answer explanation

The income statement is a "period-of-time" statement rather than a "point-in-time" statement (“Financial Statements”).

The ending balances of all stockholders' equity accounts is/are shown on the

• balance sheet.

• retained earnings statement only.

• statement of cash flows.

• income statement.

Revenues and expenses are reported on the

• balance sheet.

• income statement.

• retained earnings statement.

• statement of cash flows.

The investment of cash by the stockholder

• increases revenues.

• increases stockholders' equity.

• decreases expenses.

• decreases assets.

An example of an internal transaction is the

• purchase of an asset.

• payment of a liability.

• performance of services.

• use of office supplies.

Net income results when

• investments exceed drawings.

• revenues exceed drawings.

• revenues exceed expenses.

• expenses exceed revenues.

The resources owned by a business are called

• revenues.

• owner's equity.

• liabilities.

• assets.

A business organized as a separate legal entity under state law having ownership divided into shares of stock is a

• proprietorship.

• partnership.

• corporation.

• sole proprietorship.