CA Midterm Review 2026

Accounting is the information system that

• measures business activities

• communicates the results to decision makers

• processes information into reports

• All of the above

Which of the following is not an external user of a business's financial information?

• Taxing authorities

• Customers

• Employees

• Investors

Generally Accepted Accounting Principles (GAAP) are currently formulated by the

• Financial Accounting Standards Board (FASB)

• Securities and Exchange Commission (SEC)

• Institute of Management Accountants

  (IMA)

• American Institute of Certified Public Accountants (AICPA)

Which type of business organization is owned by only one owner?

• Corporation

• Partnership

• Sole Proprietorship

• All of the above

Which best describes a corporation

• Business with a single owner

• Not taxed

• Stockholders not personally liable

• Not a separate taxable entity

Which requires that accounting information be complete, neutral and free from error?

• Faithful respresentation concept

• Cost principle

• Economic entity assumption

• Going concern assumption

At the end of the year, Global Cleaning had total assets of $3,630 and equity of $2,280. How much were Global Cleaning's liabilities?

• $5,910

• $3,630

• $1,350

• $2,280

Global Cleaning sold and performed services on account for $6,400 and paid expenses totalling $2,500. What is Global Cleaning's net income or net loss?

• Net income of $3,900

• Net loss of $3,900

• Net income of $6,400

• Net income of $8,900

Global Cleaning performed cleaning services for a department store on account for $180. What is the impact on the accounting equation?

• Increase both assets and liabilities by $180

• Increase both assets and equity by $180

• Increase both liabilities and equities by $180

• Decrease liabilities by $180 and increase equity by $180

The balance sheet reports the

• Financial position on a specific date

• The results of operations on a specific date

• Financial position for a specific period

• Results of operations for a specific period