ACCT 2010 Exam 1 Practice Questions

A single-step income statement includes which of the following? (Select all that apply.)

• Retained Earnings

• Net Income

• Revenues

• Liabilities

• Expenses

Which group is responsible for creating the US GAAP?

• The Securities and Exchange Commission (SEC)

• Internal Revenue Service (IRS)

• Financial Accounting Standards Board (FASB)

• Internal Accounting Standards Board (IASB)

Three common forms of business organizations include _____. (Select all that apply.)

• Taxable Company

• Corporation

• Unlimited Liability

• Partnership

• Sole Proprietorship

The statement of retained earnings is:

• necessary only if there have been recent owner contributions

• not required if the company has prepared an income statement

• not required if the company has prepared a balance sheet which shows Retained Earnings

• one of the 4 financial statements

• not required if the company has not paid a dividend this year

True or False: The order of the heading of an income statement indicates the name of the statement first, the period of time covered, and the name of the company third.

• true

• false

A corporation earns profits for its stockholders by _____. (Check all that apply.)

• issuing stock to them for cash

• ensuring revenues are less than expenses

• providing services at more than cost

• selling goods at more than their cost

An income statement is referred to as a single-step income statement because _____.

• the format separates total revenues from expenses and reports a single measure of income

• the assets are reported separately from liabilities and reports a single measure of stockholders' equity

• it is the first statement prepared of the 4 financial statements

• it reports only one accounting period of activity

The underlying rules of accounting in the US are called _____.

• financial accounting standards board

• generally accepted accounting principles (GAAP)

• general accounting acts and policies (GAAP)

• internal revenue code (IRC)

The statement of retained earnings reports the amount:

• of earnings kept by the company

• owed to the company's creditors

• of earnings distributed to the company's owners during the accounting period

• of economic resources owned by the company

Which transactions are recorded in the accounting system?

• external exchanges only

• transactions are not recorded in the accounting system

• internal events only

• both external exchanges and internal events