Question 1

The statement of cash flows reports all of the following except:

Accepted Answer

A)  Cash flows from operating activities.
B)  Cash flows from investing activities.
C)  Cash flows from financing activities.
D)  The net increase or decrease in assets for the period reported.
E)  The net increase or decrease in cash for the period reported.F) None of the above
G) B) and C)

Question 2

Ethical behavior requires that:

Accepted Answer

A)  Auditors' pay not depend on the success of the client's business.
B)  Auditors invest in businesses they audit.
C)  Analysts report information favorable to their companies.
D)  Managers use accounting information to benefit themselves.
E)  Auditors' pay depends on the success of the client's business.F) A) and E)
G) A) and B)

Question 3

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and Dividends by the company of $12,000. Calculate the ending equity.

Accepted Answer

A)  $(5,000) .
B)  $29,000.
C)  $5,000.
D)  $99,000.
E)  $75,000.F) A) and D)
G) A) and E)

Question 4

The first section of the income statement reports cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 5

In a business decision where there are ethical concerns, the preferred course of action should be one that:

Accepted Answer

A)  Is agreed upon by the most managers.
B)  Maximizes the company's profits.
C)  Results in maintaining operations at the current level.
D)  Costs the least to implement.
E)  Avoids casting doubt on the decision maker and upholds trust.F) A) and E)
G) B) and D)

Question 6

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:

Accepted Answer

A)  Business entity assumption.
B)  Revenue recognition principle.
C)  Going-concern assumption.
D)  Time-period assumption.
E)  Objectivity principle.F) None of the above
G) A) and D)

Question 7

Charlie's Chocolates Inc.'s stockholders made investments of $50,000 and dividends of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Accepted Answer

A)  $30,000.
B)  $83,000.
C)  $64,000.
D)  $19,000.
E)  $49,000.F) A) and E)
G) C) and D)

Question 8

Prepare a December 31 balance sheet in proper form for Smokey River Supplies, Inc. from the following list of the accounts:

Accepted Answer

The answer of Prepare a December 31 balance sheet in...

Question 9

__________________ is an information and measurement system that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

Accepted Answer

The answer of __________________ is an information and measurement system...

Question 10

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Accepted Answer

A)  Assets, $30,000 increase; equity, $30,000 increase.
B)  Assets, $30,000 decrease; liabilities, $30,000 decrease.
C)  Assets, $30,000 decrease; liabilities, $30,000 increase.
D)  Liabilities, $30,000 decrease; equity, $30,000 increase.
E)  Assets, $30,000 decrease; equity $30,000 decreasE.Assets = Liabilities + Stockholders' EquityF) C) and D)
G) B) and C)

Question 11

Jet Styling, Inc. has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

Accepted Answer

The answer of Jet Styling, Inc. has the following beginning...

Question 12

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Accepted Answer

A)  Increased $22,000.
B)  Decreased $22,000.
C)  Increased $89,000.
D)  Decreased $156,000.
E)  Increased $156,000.F) B) and E)
G) A) and D)

Question 13

The balance sheet is based on the accounting equation.

Accepted Answer

A) True 
 B)False

Question 14

Prevor Corporation reports the following account balances at the end of its first year of operation:  Prevor's total assets equal:

Accepted Answer

A)  $70,500.
B)  $72,500.
C)  $205,500.
D)  $22,500.
E)  $106,000.F) D) and E)
G) B) and D)

Question 15

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Accepted Answer

A)  $45,000.
B)  $92,000.
C)  $98,000.
D)  $210,000.
E)  $282,000.F) B) and D)
G) A) and E)

Question 16

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of May 31 of the current year?

Accepted Answer

A)  $8,300
B)  $13,050
C)  $20,500
D)  $31,100
E)  $40,400F) All of the above
G) None of the above

Question 17

A net loss occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 18

The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

Accepted Answer

A) True 
 B)False

Question 19

Increases in equity from a company's sales of products or services are:

Accepted Answer

A)  Assets.
B)  Revenues.
C)  Liabilities.
D)  Stockholders' Equity.
E)  Expenses.F) A) and E)
G) C) and D)

Question 20

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

Accepted Answer

A)  Revenue activity.
B)  Operating activity.
C)  Expense activity.
D)  Investing activity.
E)  Financing activity.F) B) and D)
G) D) and E)

Exam 1: Introducing Financial Accounting

In a business decision where there are ethical concerns, the preferred course of action should be one that:

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Jet Styling, Inc. has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

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Prepare a December 31 balance sheet in proper form for Smokey River Supplies, Inc. from the following list of the accounts:

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Ethical behavior requires that:

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The statement of cash flows reports all of the following except:

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The balance sheet is based on the accounting equation.

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If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

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A net loss occurs when revenues exceed expenses.

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The first section of the income statement reports cash flows from operating activities.

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A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

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Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and Dividends by the company of $12,000. Calculate the ending equity.

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__________________ is an information and measurement system that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

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A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

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Prevor Corporation reports the following account balances at the end of its first year of operation: Prevor's total assets equal:

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The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

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Increases in equity from a company's sales of products or services are:

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Charlie's Chocolates Inc.'s stockholders made investments of $50,000 and dividends of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

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The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:

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Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

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On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of May 31 of the current year?

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