Question 1

Liabilities are best defined as:

Accepted Answer

A)  Amounts the company expects to collect in the future from customers.
B)  Debts or obligations the company owes resulting from past transactions.
C)  The amounts that owners have invested in the business.
D)  Payments to stockholders.E) A) and D)
F) A) and C)

Question 2

A corporation is an entity that is legally separate from its owners.

Accepted Answer

A) True 
 B)False

Question 3

The 1934 Securities Exchange Act gives the Securities and Exchange Commission (SEC)the power to require companies with publicly traded securities to prepare periodic financial statements for distribution to investors and creditors.

Accepted Answer

A) True 
 B)False

Question 4

The two categories of stockholders' equity usually found in the balance sheet of a corporation are:

Accepted Answer

A)  Common stock and liabilities.
B)  Assets and liabilities.
C)  Common stock and retained earnings.
D)  Revenues and expenses.E) None of the above
F) All of the above

Question 5

Which of the following is not a balance sheet item?

Accepted Answer

A)  Assets.
B)  Retained Earnings.
C)  Expenses.
D)  Liabilities.E) C) and D)
F) A) and C)

Question 6

The costs of providing goods and services to customers are referred to as:

Accepted Answer

A)  Assets.
B)  Expenses.
C)  Liabilities.
D)  Revenues.E) A) and C)
F) B) and C)

Question 7

Match each business activity with its example.

Accepted Answer

The answer of Match each business activity with its example....

Question 8

The form of business organization that is legally separate from its owners is a:

Accepted Answer

A)  Partnership.
B)  Sole proprietorship.
C)  Corporation.
D)  Separation entity.E) B) and D)
F) C) and D)

Question 9

Which accounting amount best represents value created for stockholders during the current period?

Accepted Answer

A)  Retained earnings.
B)  Total assets.
C)  Net income.
D)  Stockholders' equity.E) B) and D)
F) A) and D)

Question 10

The accounting equation is defined as:

Accepted Answer

A)  Common Stock + Retained Earnings = Stockholders' Equity.
B)  Revenues - Expenses = Net Income.
C)  Revenues - Expenses - Dividends = Retained Earnings.
D)  Assets = Liabilities + Stockholders' Equity.E) None of the above
F) A) and D)

Question 11

Expenses are regular cash payments by a corporation to its stockholders.

Accepted Answer

A) True 
 B)False

Question 12

If total assets of a company equal $12,000 and total stockholders' equity equals $4,000,then total liabilities equal $8,000.

Accepted Answer

A) True 
 B)False

Question 13

DW has an ending Retained Earnings balance of $51,100.If during the year DW paid dividends of $4,300 and had net income of $22,500,then what was the beginning Retained Earnings balance?

Accepted Answer

A)  $24,300.
B)  $32,900.
C)  $300.
D)  $69,300.E) None of the above
F) B) and D)

Question 14

The equation best describing the income statement is:

Accepted Answer

A)  RevenuesExpenses = Net Income.
B)  Assets = RevenuesExpenses.
C)  Assets = Liabilities + Stockholders' Equity.
D)  Revenues + Expenses = Net Income.E) All of the above
F) None of the above

Question 15

The financial statement that represents activity over the entire life of the company is the:

Accepted Answer

A)  Income statement.
B)  Balance sheet.
C)  Statement of financial accounting.
D)  Statement of cash flows.E) B) and C)
F) A) and C)

Question 16

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is an operating activity?

Accepted Answer

A)  Issuing common stock.
B)  Paying dividends.
C)  Borrowing cash from a bank to acquire a factory.
D)  Paying electricity bills for the month.E) None of the above
F) C) and D)

Question 18

Limited liability means:

Accepted Answer

A)  Stockholders of a corporation are not obligated to pay the corporation's debts out of their own pocket.
B)  Liabilities of a company cannot exceed its assets.
C)  Companies are not allowed to borrow unless they are profitable.
D)  Companies are less likely to be sued if they are formed as a corporation.E) B) and C)
F) All of the above

Question 19

McGill purchases additional office equipment to better serves its customers.This purchase is classified as what type of activity?

Accepted Answer

A)  Company activity.
B)  Financing activity.
C)  Investing activity.
D)  Operating activity.E) A) and C)
F) B) and C)

Question 20

Operating activities include transactions that relate to the primary operations of the company.

Accepted Answer

A) True 
 B)False

Exam 1: A Framework for Financial Accounting

Which accounting amount best represents value created for stockholders during the current period?

Correct AnswerverifiedShow Answer

Expenses are regular cash payments by a corporation to its stockholders.

Correct AnswerverifiedShow Answer

Limited liability means:

Correct AnswerverifiedShow Answer

The 1934 Securities Exchange Act gives the Securities and Exchange Commission (SEC)the power to require companies with publicly traded securities to prepare periodic financial statements for distribution to investors and creditors.

Correct AnswerverifiedShow Answer

DW has an ending Retained Earnings balance of $51,100.If during the year DW paid dividends of $4,300 and had net income of $22,500,then what was the beginning Retained Earnings balance?

Correct AnswerverifiedShow Answer

Which of the following is not a balance sheet item?

Correct AnswerverifiedShow Answer

McGill purchases additional office equipment to better serves its customers.This purchase is classified as what type of activity?

Correct AnswerverifiedShow Answer

A corporation is an entity that is legally separate from its owners.

Correct AnswerverifiedShow Answer

If total assets of a company equal $12,000 and total stockholders' equity equals $4,000,then total liabilities equal $8,000.

Correct AnswerverifiedShow Answer

The accounting equation is defined as:

Correct AnswerverifiedShow Answer

Which of the following is an operating activity?

Correct AnswerverifiedShow Answer

The form of business organization that is legally separate from its owners is a:

Correct AnswerverifiedShow Answer

The two categories of stockholders' equity usually found in the balance sheet of a corporation are:

Correct AnswerverifiedShow Answer

The financial statement that represents activity over the entire life of the company is the:

Correct AnswerverifiedShow Answer

Operating activities include transactions that relate to the primary operations of the company.

Correct AnswerverifiedShow Answer

The equation best describing the income statement is:

Correct AnswerverifiedShow Answer

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

Correct AnswerverifiedShow Answer

The costs of providing goods and services to customers are referred to as:

Correct AnswerverifiedShow Answer

Match each business activity with its example.

Correct AnswerverifiedShow Answer

Liabilities are best defined as:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified