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The distinction between a current asset and other assets: a. is based on how long the asset has been owned b. is based on when the asset is expected to be converted to cash or used to benefit the entity c. is based on the ability to determine the current fair value of the asset d. is based on amounts that will be paid to other entities within a year

B

The Balance Sheet might also be called a. Statement of Changes in Financial Position b. Statement of Assets C. Statement of Financial Position D. None of These

C. Statement of Financial Position

A fiscal year: a. must end on the last day of the month b. Must always end on the same date each year c. Is always the same as the calendar year d. is frequently selected based on the firm's operating cycle

D

The balance sheet equation can be represented by: a. assets - liabilities = stock holders equity b. assets = liabilities + stockholders' equity c. net assets = stockholders' equity d. all of these

D

Expenses are: a) decreases in net assets resulting from usual operating activities. b) decreases in net assets from dividends to stockholders. c) cash disbursements. d) decreases in net assets from uninsured accidents.

a. decreases in net assets resulting from usual operating activities

Revenues are: a) increases in net assets from selling a product. b) cash receipts. c) increases in net assets from occasional sales of equipment. d) increases in net assets from selling common stock.

a. increases in net assets from selling a product

The time frame associated with an income statement is a) a future period of time. b) a past period of time. c) a point in time in the past. d) a function of the information included in it.

b. a past period of time

Retained Earnings represents: a) the amount invested in the entity by the stockholders. b) cumulative net income that has not been distributed to stockholders as dividends c) par value of common stock outstanding. d) cash that is available for dividends.

b. cumulative net income that has not been distributed to stockholders as dividends

Accrual accounting: a) results in the balance sheet showing the fair value of the entity's assets. b) is designed to match revenues and expenses. c) cannot result in the entity having net income unless cash is received from customers. d) means that expenses are recorded when they are paid.

b. is designed to match revenues and expenses

The Statement of Cash Flows: a) is an optional financial statement. b) shows how cash changed during the period c) shows the dividends that will be paid in the future. d) shows the change in the fair value of the entity's common stock during the period.

b. shows how cash changed during the period

Transactions are summarized in: a) The independent auditor's opinion letter. b) The entity's accounts. c) The notes for the financial statements. d) None of these.

b. the entity's accounts

Which of the following accounting methods accomplishes much of the matching of revenues and expenses? a) Cash accounting. b) Full disclosure accounting. c) Accrual accounting. d) Match accounting.

c. accrual accounting

The purpose of the income statement is to show the: a) change in the fair value of the assets from the prior income statement. b) market value per share of stock at the date of the statement. c) net income or net loss for the period covered by the statement.

c. net income or net loss for the period covered by the statement

Paid-in Capital represents: a) earnings retained for use in the business. b) fair value of the entity's common stock. c) the amount invested in the entity by the stockholders. d) net assets of the entity at the date of the statement.

c. the amount invested in the entity by the stockholders

The principle of consistency means that: a) the same accounting methods are used by all firms in an industry. b) the accounting methods used by an entity never change. c) the effect of any change in an accounting method will be disclosed in the financial statements or notes thereto d) there are no alternative methods of accounting for the same transaction

c. the effect of any change in an accounting method will be disclosed in the financial statements or notes thereto

The going concern concept refers to a presumption that: a) the entity will not be involved in a merger within a year. b) the entity will be profitable in the coming year. c) the entity will continue to operate in the foreseeable future. d) top management of the entity will not change in the coming year

c. the entity will continue to operate in the foreseeable future

Matching revenues and expenses refers to: a) recording revenues when cash is received. b) having revenues equal expenses. c) recording revenues when a product is sold or a service is rendered. d) accurately reflecting the results of operations for a fiscal period

d. accurately reflecting the results of operations for a fiscal period

Stockholders' equity refers to which of the following? a. The ownership right of the stockholder(s) of the entity b. a listing of the organization's assets and liabilities c. Probable future sacrifices of economic benefits d. none of these

A

The income statement shows amounts for: a. revenues, gains, expenses, and losses b. revenues, assets, gains, and losses c. revenues, expenses, gains, and fair value per share d. revenues, expenses, losses, and liabilities

A

The time frame associated with a balance sheet is: a. a point in the past b. a one-year past period of time c. a single date in the future d. a function of the information included

A