Accounting Chapter 1

The payment of dividends is an example of a(n)? (a)Financing activity. (b)Investing activity. (c)Delivery activity. (d)Operating activity.

(a)Financing activity.

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.

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 forms of business organization are considered to be separate accounting entities? (a)Sole proprietorships, corporations, and partnerships. (b)Partnerships and corporations only. (c)Sole proprietorships and partnerships only. (d)Only corporations.

(a)Sole proprietorships, corporations, and partnerships.

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.

Only Certified Public Accountants may perform audits. (a)True. (b)False.

(a)True.

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 opinion. (c)balance sheet. (d)comparative statements.

(b)Auditor's opinion.

Which statement presents information as of 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 organization? (a)Sole proprietorship. (b)Creditorship. (c)Partnership. (d)Corporation.

(b)Creditorship.

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

(b)Expense.

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 stockholders' 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.

Which is not a required part of an annual report of a publicly traded company? (a)Statement of cash flows. (b)Notes to the financial statements. (c)Management discussion and analysis. (d)All of these are required.

(d)All of these are required.

Stockholders' 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.

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 external users. (d)Regulatory authorities are considered internal users.

(d)Regulatory authorities are considered internal users.

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

(d)Revenues exceed expenses.

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.