WorksheetsAccounting Chapter 1 Review
Total questions: 55
Worksheet time: 28mins
Which is not one of the 3 forms of business organization?
Sole proprietorship
Creditorship
Partnership
Corporation
What is an advantage of corporations relative to partnerships and sole proprietorships?
Increased difficulty of raising funds
Harder to transfer ownership
Reduced legal liability for investors
Most common form of organization
Easy transfer of ownership is a characteristic of which form of business organization?
Sole proprietorship
Partnership
Corporation
All of these choices are correct
In which forms of business organization are the owners personally liable for all the debts of the businesses?
Sole proprietorships and corporations
Sole proprietorships and partnerships
Partnership and corporation
All of these answer choices are correct
The sole proprietorship form of business organization
must have at least 2 owners in most states
generally receives favorable tax treatment relative to a corporation
combines the records of the business with the personal records of the owner
is classified as a separate legal entity
Which forms of business organizations are considered to be separate accounting entities?
Sole proprietorships and partnerships only
Partnerships and corporations only
Only corporations
Sole proprietorships, corporations, and partnerships
To which of the following questions will internal users want answers
What selling price will maximize the company's net income?
Which product line is most profitable?
Is cash sufficient to pay dividends to stockholders?
All of these answer choices are correct
Which of the following is not an external user of accounting data?
Labor unions
Customers
Economic planners
Chief Financial Officer
Which statement about users of accounting information is incorrect?
Management is considered an internal user
Taxing authorities are considered external users
Present creditors are considered external users
Regulatory authorities are considered internal users
Which of the following did not result from the Sarbanes-Oxley Act?
Top management must certify the accuracy of financial information
Penalties for fraudulent activity increased
Auditors cannot provide non-audit services to the same client
Tax on corporations increased
Which of the following is the most appropriate definition of accounting information?
The information system that identifies, records, and communicates the economic events of an organization to interested users
A means of collecting information
The interconnected network of subsystems necessary to operate a business
Electronic collection and organization of vast amounts of financial information
Which of the following is required as a result of SOX?
Public companies must present audited financial statements
Companies that go bankrupt must repay shareholders for loss investments
All shareholders now have an oversight role of the company's financial activities
Top management must certify the financial statements for their company
Paying interest expense and receiving interest revenue are examples of
operating activities
financing activities
investing activities
delivery activities
The payment of dividends is an example of a(n)
operating activity
financing activity
investing activity
delivery activity
Which of the following is not one of the 3 primary business activities?
Financing
Operating
Advertising
Investing
Which of the following is an example of a financing activity?
Issuing shares of common stock
Selling goods on account
Buying delivery equipment
Buying inventory
Resources owned by a business are referred to as
stockholders' equity
liabilities
assets
revenues
In terms of the principal types of business activities, paying salaries expense is an example of
operating activities
financing activities
investing activities
advertising activities
What kind of classification is cost of goods sold?
Asset
Expense
Liability
Revenue
Which of the following would not appear on the income statement?
Service revenue
Interest expense
Net income
Dividends paid
Which of the following would not appear on the retained earnings statement?
Beginning retained earnings balance
Dividends
Service revenue
Net income
Net income will result during a time period when
assets exceed liabilities
assets exceed revenues
expenses exceed revenues
revenues exceed expenses
The financial statements for Harold Corporation contained the following information:
Accounts receivable $5000
Sales revenue $75000
Cash $15000
Salaries and wages expense $20000
Rent expense $10000
How much was Harold's net income?
$60,000
$15,000
$65,000
$45,000
In which of the following sequences are the financial statements usually prepared?
Income statement, balance sheet, retained earnings statement, and statement of cash flows
Balance sheet, retained earnings statement, statement of cash flows, and income statement
Balance sheet, statement of cash flows, income statement and retained earnings statement
Income statement, retained earnings statement, balance sheet, and statement of cash flows
Saria's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year was $215,000. How much was stockholders' equity at the end of the year?
$130,000
$110,000
$150,000
$135,000
Which statement present information as of a specific point in time?
Income statement
Balance sheet
Statement of cash flows
Retained earnings statement
How is the issuance of common stock reported on the statement of cash flows?
Financing activity
Investing activity
Operating activity
Marketing activity
What section of a cash flow statement shows the cash spent on new equipment during the past accounting period?
The investing section
The operating section
The financing section
The cash flow statement does not give this information
Which financial statements reports assets, liabilities, and stockholders' equity?
Income statement
Retained earnings statement
Balance sheet
Statement of cash flows
The ending retained earnings balance appears on
the retained earnings statement only
the balance sheet only
the income statement and the retained earnings statement
both the retained earnings statement and the balance sheet
Saria's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much are the total liabilities at the end of the year?
$80,000
$90,000
$110,000
$105,000
The balance sheet
summarizes the changes in total equity for a specific period of time
reports the changes in assets, liabilities, and stockholders' equity over a period of time
reports the assets, liabilities, and stockholders' equity at a specific date
presents the revenues and expenses for a specific period of time
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
$20,000 increase
$10,000 decrease
$10,000 increase
$15,000 decrease
Stockholders' equity represents
claims of creditors
economic resources to be used in the future
the difference between revenues and expenses
claims of owners
As of December 31, 2017, Stoneland Corporation has assets of $3,500 and stockholders' equity of $2,000. How much are the liabilities for Stoneland Corporation as of December 31, 2017?
$1,500
$1,000
$2,500
$2,000
The segment of a corporation's annual report that describes the corporation's accounting methods is the
notes to the financial statements
management discussion and analysis
auditor's report
income statement
The segment of the annual report that presents an opinion regarding the fairness of presentation of the financial position and results of operations is/are the
income statement
auditor's opinion
balance sheet
financial statements
When the auditor is satisfied that the financial statements provide a fair representation of the company's financial position and results of operation in accordance with generally accepted accounting principles, the auditor will express
a qualified opinion
a disclaimer of opinion
unqualified opinion
an adverse opinion
An annual report includes all of the following except
a management discussion and analysis section
notes to the financial statements
an auditor's report
a listing of all the stockholders
Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion?
Financial statements
Management discussion and analysis
Notes to the financial statements
Auditor's report
Which of the following are not considered to be primary users of financial statements in countries outside the U.S.?
Private investors
Tax authorities
Economic advisors
Central government planners
The most common description of IFRS as contrasted to GAAP is that
GAAP is principles based and IFRS is rules based
GAAP is principles based and IFRS is concepts based
GAAP is rules based and IFRS is rules based
GAAP is rules based and IFRS is principles based
IFRS stands for:
International Financial Regulatory Schema
International Financial Reporting Standards
International Fiscal Regulatory Standards
International Finance Regulatory Stipulations
Which of the 5 elements of financial statements does the IASB's definitional structure recognize?
Assets, Liabilities, Equity, Income, Expenses
Assets, Lending balances, Equity, Investments, Expenses
Accumulated income, Liabilities, Equity, Income, Financing
Assets, Liabilities, Earnings, Income, Expenses
At December 31, 2017, Shorts Company had retained earnings of $2,184,000. During 2017, the company issued stock for $98,000, and paid dividends of $34,000. Net income for 2017 was $402,000. How much was the retained earnings balance at the beginning of 2017?
$2,552,000
$1,816,000
$1,914,000
$2,454,000
Issuing new shares of common stock will
increase retained earnings
decrease retained earnings
increase common stock
decrease common stock
In which forms of business organization are the owners personally liable for all the debts of the business?
Sole proprietorships and corporations
Sole proprietorships and partnerships
Partnership and corporation
All of these answer choices are correct
Which of the following is not an external user of accounting data?
Labor unions
Customers
Economic planners
Chief Financial Officer
Which of the following is required as a result of SOX?
Public companies must present audited financial statements
Companies that go bankrupt must repay shareholders for loss investments
All shareholders now have an oversight role of the company's financial activities
Top management must certify the financial statements for their company
Which of the following is not one of the 3 primary business activities?
Financing
Operating
Advertising
Investing
In terms of the principal types of business activities, paying salaries expense is an example of
operating activities
financing activities
investing activities
advertising activities
The financial statements for Harold Corporation contained the following information:
Accounts receivable $5,000
Sales revenue $75,000
Cash $15,000
Salaries and wages expense $20,000
Rent expense $10,000
How much was Harold's net income?
$60,000
$15,000
$65,000
$45,000
In which of the following sequences are the financial statements usually prepared?
Income statement, balance sheet, retained earnings statement, and statement of cash flows
Balance sheet, retained earnings statement, statement of cash flows, and income statement
Balance sheet, statement of cash flows, income statement and retained earnings statement
Income statement, retained earnings statement, balance sheet, and statement of cash flows
What section of a cash flow statement shows the cash spent on new equipment during the past accounting period?
The investing section
The operating section
The financing section
The cash flow statement does not give this information
Which of the following are not considered to be primary users of financial statements in countries outside the U.S.?
Private investors
Tax authorities
Economic advisors
Central government planners
