WorksheetsFinancial Accounting Practice Quiz 1
Total questions: 23
Worksheet time: 12hrs 30mins
The primary purpose of financial accounting is to:
Provide information for internal decision-making
Help investors and creditors assess a company’s performance
Prepare budgets for future planning
Minimize income taxes
Which of the following is NOT an external user of financial accounting?
Stockholders
Banks
Company managers
Government regulators
Which of the following best describes the difference between financial and managerial accounting?
Financial accounting focuses on future projections; managerial looks at historical performance
Financial accounting provides information for external users; managerial provides info for internal users
Financial accounting reports are optional; managerial reports are required by law
Financial accounting emphasizes cost control; managerial emphasizes external regulations
Which of the following is a disadvantage of a sole proprietorship?
Double taxation
Unlimited liability
Complex reporting requirements
Shared control between multiple owners
Which business form typically faces the most government regulation?
Sole proprietorship
Partnership
Corporation
Joint venture
In which form of business do owners have limited liability?
Corporation
Sole proprietorship
Partnership
Both sole proprietorship and partnership
Paying employee salaries is an example of which type of activity?
Investing
Financing
Operating
Equity
Which of the following is a financing activity?
Purchasing land
Borrowing from a bank
Paying utility bills
Selling products to customers
Selling equipment for cash would be classified as which type of activity?
Operating
Investing
Financing
Equity
Which of the following is a liability?
Accounts payable
Retained earnings
Service revenue
Building
Stockholders’ equity represents:
The resources a company owns
The owners’ claim to the company’s resources after liabilities are paid
Cash available for dividends
Long-term debts owed to creditors
Which of the following reduces stockholders’ equity?
Revenues
Expenses
Issuing common stock
Retained earnings
Dividends are classified as:
An expense
A distribution of profits to owners
A liability
A type of revenue
Which of the following equations is always true?
Assets = Liabilities – Equity
Assets = Liabilities + Equity
Assets = Revenues – Expenses
Assets = Cash + Dividends
Which financial statement shows revenues and expenses for a period of time?
Income Statement
Balance Sheet
Statement of Stockholders’ Equity
Statement of Cash Flows
Which statement is prepared first?
Balance Sheet
Income Statement
Statement of Stockholders’ Equity
Statement of Cash Flows
Which financial statement reports resources and claims to resources at a specific point in time?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Stockholders’ Equity
The Statement of Stockholders’ Equity includes which of the following?
Revenues and expenses
Assets and liabilities
Common stock and retained earnings
Cash inflows and outflows
Cash flows from purchasing equipment appear in which section of the Statement of Cash Flows?
Operating
Investing
Financing
Equity
The heading “For the Year Ended December 31, 2025” would appear on which financial statement?
Balance Sheet
Income Statement
Statement of Stockholders’ Equity
Statement of Cash Flows
Which organization has the authority to establish accounting rules in the U.S.?
SEC
FASB
IRS
PCAOB
GAAP refers to:
Generally Accepted Accounting Principles
Government Accounting and Auditing Practices
General Agency for Accounting Procedures
Global Accounting Authority Principles
The SEC’s main role in accounting is to:
Enforce reporting rules for publicly traded companies
Write new accounting standards
Prepare company tax returns
Provide auditing services
