Accounting Chapter 1: Intro to Financial Statements

Which of the following is an example of a financing activity? a. Issuing shares of common stock b. Selling goods on account c. Buying delivery equipment d. Buying inventory

a. Issuing shares of common stock

What section of a statement of cash flows indicates the cash spent on new equipment during the past accounting period? a. The investing activities section b. The operating activities section c. The financing activities section d. The statement of cash flows does not give this information

a. The investing activities section

The element of a corporation's annual report that describes the corporation's accounting methods is/are the: a. notes to the financial statements b. management discussion and analysis c. auditor's report d. income statement

a. notes to the financial statements

Which statement presents information as a specific point in time? a. Income statement b. Balance sheet c. Statement of cash flows d. Retained earnings statement

b. Balance sheet

Which is not one of the three forms of business? a. Sole Proprietorship b. Creditorship c. Partnership d. Corporation

b. Creditorship

What kind of classification is cost of goods sold? a. Asset b. Expense c. Liability d. Revenue

b. Expense

The element of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the: a. income statement b. auditor's report c. balance sheet d. comparative statement

b. auditor's report

As of December 31, 2017, Rockford Corporations has assets of $3,500 and stockholder's equity of $1,500. What are the liabilities for Rockford Corporation as of December 31, 2017? a. $1,500 b. $1,000 c. $2,500 d. $2,00

c. $2,500

Which is not one of the three primary business activities? a. Financing b. Operating c. Advertising d. Investing

c. Advertising

Which financial statement reports assets, liabilities, and stockholder's equity? a. Income statement b. Retained earnings statement c. Balance sheet d. Statement of cash flows

c. Balance sheet

Which is an advantage of corporations relative to partnerships and sole proprietorships? a. Lower taxes b. Harder to transfer ownership c. Reduced legal liability for investors d. Most common form of organization

c. Reduced legal liability for investors

The financial statements for Macias Corporation contained the following information Accounts receivable $5,000 Sales revenue 75,000 Cash 15,000 Salaries and wages exp. 20,000 Rent expense 10,000 What was Macias Corporation's net income? a. $60,000 b. $15,000 c. $65,000 d. $45,000

d. $45,000

Which statement about users of accounting information is incorrect ? a. Management is considered an internal user b. Taxing authorities are considered external users c. Present creditors are considered are considered external users d. Regulatory authorities are considered internal users

d. Regulatory authorities are considered internal users

Which of the following did not result from the Sarbanes-Oxley Act? a. Top management must now certify the accuracy of financial information b. Penalties for fraudulent activity increased c. Independence of auditors increased d. Tax rates on corporations increased

d. Tax rates on corporations increased

Stockholder's equity represents a. claims of creditors b. claims of employees c. the difference between revenues and expenses d. claims of owners

d. claims of owners

Net income will result during a time period when: a. assets exceed liability b. assets exceed revenues c. expenses exceed revenues d. revenues exceed expenses

d. revenues exceed expenses