Question 1

The balance sheet uses all of the following account titles to describe assets except

Accepted Answer

A)   accounts receivable.
B)   cash.
C)   inventory.
D)   current assets.
E)   deferred income taxes.F) B) and C)
G) A) and E)

Question 2

The accounting cycle collects,records,and analyzes raw data constantly through the business's life cycle.

Accepted Answer

A) True 
 B)False

Question 3

What is owners' equity? How can stock issues complicate how the owners' equity account is recorded?

Accepted Answer

Owners' equity includes the owners' cont...

Question 4

All of the following could be expense accounts except

Accepted Answer

A)   interest expense.
B)   retained expense.
C)   general and administrative expense.
D)   research and development expense.
E)   depreciation expense.F) B) and E)
G) B) and D)

Question 5

Small businesses do not have a need for the financial information compiled by accountants.

Accepted Answer

A) True 
 B)False

Question 6

CPA stands for

Accepted Answer

A)   Certified Private Accountant.
B)   Credentialed Private Accountant.
C)   Credentialed Public Accountant.
D)   Certified Public Accountant.
E)   Certified Professional Accountant.F) A) and B)
G) A) and E)

Question 7

All of the following represent assets except

Accepted Answer

A)   cash.
B)   inventory.
C)   land.
D)   equipment.
E)   a bank loan.F) B) and D)
G) All of the above

Question 8

Which of the following equations is equivalent to the accounting equation?

Accepted Answer

A)   Equity = liabilities - assets
B)   Owners' equity = assets - liabilities
C)   Revenues - expenses = net income
D)   Net income = expenses - revenues + taxes
E)   Profit = sales - revenuesF) C) and D)
G) A) and D)

Question 9

Accounting is the recording,measurement,and interpretation of financial information.

Accepted Answer

A) True 
 B)False

Question 10

What is the last step that must be done before a firm's books can be closed for an accounting cycle?

Accepted Answer

A)   The annual reports must be prepared.
B)   The journal must be filled out.
C)   The information from the journal must be transferred to the ledger.
D)   A CPA must attest that good principles were used in the preparation of the document.
E)   The trial balance must be verified.F) C) and D)
G) A) and B)

Question 11

Morgan was asked to extend trade credit to a restaurant she hadn't serviced before.She asked to see its balance sheet to determine if it could pay its bills.She divided its current assets by current liabilities to get its

Accepted Answer

A)   current ratio.
B)   receivable turnover.
C)   inventory turnover.
D)   earnings per share.
E)   book value per share.F) All of the above
G) B) and D)

Question 12

Net income is the profit (or sometimes loss)after all expenses,excluding taxes,have been deducted from revenue.

Accepted Answer

A) True 
 B)False

Question 13

In double-entry bookkeeping,after gathering together and analyzing source documents and recording each financial transaction in a journal,a financial manager,bookkeeper,or accountant next

Accepted Answer

A)   closes out the books.
B)   posts transactions in a journal.
C)   posts transactions in a ledger.
D)   prepares a trial balance.
E)   balances the accounting equation.F) B) and D)
G) A) and E)

Question 14

When a company wants to place a value on a physical asset for its balance sheet,it must

Accepted Answer

A)   reduce the value by the amount the asset has depreciated.
B)   auction the asset off.
C)   ask its competitors what the asset is worth.
D)   price a new one.
E)   increase the value by the amount the asset has appreciated.F) D) and E)
G) B) and C)

Question 15

The terms accounting and bookkeeping are interchangeable because they mean almost the same thing.

Accepted Answer

A) True 
 B)False

Question 16

All of the following would be considered owners' equity accounts except

Accepted Answer

A)   common stock.
B)   preferred stock.
C)   stockholders' equity.
D)   accounts payable.
E)   retained earnings.F) None of the above
G) A) and B)

Question 17

All business transactions can be classified as assets,liabilities,or owner's equity.

Accepted Answer

A) True 
 B)False

Question 18

Why are income statements temporary in nature?

Accepted Answer

Gross profit,earnings before interest an...

Question 19

A company's short-term financial obligations are called its

Accepted Answer

A)   current assets.
B)   equity.
C)   net profit.
D)   current liabilities.
E)   accounts payable.F) B) and D)
G) B) and C)

Question 20

Define double-entry bookkeeping and explain how to use it,keeping the accounting equation in balance.

Accepted Answer

Double-entry bookkeeping is a system of ...

Exam 14: Accounting and Financial Statements

Net income is the profit (or sometimes loss)after all expenses,excluding taxes,have been deducted from revenue.

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All of the following would be considered owners' equity accounts except

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Why are income statements temporary in nature?

Correct AnswerverifiedGross profit,earnings before interest an...View AnswerShow Answer

Which of the following equations is equivalent to the accounting equation?

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In double-entry bookkeeping,after gathering together and analyzing source documents and recording each financial transaction in a journal,a financial manager,bookkeeper,or accountant next

Correct AnswerverifiedShow Answer

A company's short-term financial obligations are called its

Correct AnswerverifiedShow Answer

Accounting is the recording,measurement,and interpretation of financial information.

Correct AnswerverifiedShow Answer

All of the following could be expense accounts except

Correct AnswerverifiedShow Answer

What is owners' equity? How can stock issues complicate how the owners' equity account is recorded?

Correct AnswerverifiedOwners' equity includes the owners' cont...View AnswerShow Answer

CPA stands for

Correct AnswerverifiedShow Answer

What is the last step that must be done before a firm's books can be closed for an accounting cycle?

Correct AnswerverifiedShow Answer

When a company wants to place a value on a physical asset for its balance sheet,it must

Correct AnswerverifiedShow Answer

All of the following represent assets except

Correct AnswerverifiedShow Answer

The terms accounting and bookkeeping are interchangeable because they mean almost the same thing.

Correct AnswerverifiedShow Answer

The accounting cycle collects,records,and analyzes raw data constantly through the business's life cycle.

Correct AnswerverifiedShow Answer

The balance sheet uses all of the following account titles to describe assets except

Correct AnswerverifiedShow Answer

Small businesses do not have a need for the financial information compiled by accountants.

Correct AnswerverifiedShow Answer

Morgan was asked to extend trade credit to a restaurant she hadn't serviced before.She asked to see its balance sheet to determine if it could pay its bills.She divided its current assets by current liabilities to get its

Correct AnswerverifiedShow Answer

All business transactions can be classified as assets,liabilities,or owner's equity.

Correct AnswerverifiedShow Answer

Define double-entry bookkeeping and explain how to use it,keeping the accounting equation in balance.

Correct AnswerverifiedDouble-entry bookkeeping is a system of ...View AnswerShow Answer

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Gross profit,earnings before interest an...
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Owners' equity includes the owners' cont...
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Double-entry bookkeeping is a system of ...
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