Week One Practice Quiz

Which one of the following items appears on a balance sheet? service revenue unearned revenue dividends cash flow from operations

unearned revenue

Net Income appears on which financial statement(s)? Balance Sheet only Income Statement only Both the Balance Sheet and the Income Statement The Income Statement, Statement of Cash Flows and the Statement of Retained Earnings

The Income Statement, Statement of Cash Flows and the Statement of Retained Earnings

Which of the following best describes the term "retained earnings" of a company? The amount of total profits earned by a company since it began operations. The amount of claim that the owners have on the assets of the company. The future economic resources of a company. The accumulated net income of a company that has not been distributed to owners in the form of dividends.

The accumulated net income of a company that has not been distributed to owners in the form of dividends.

Which one of the following is an internal user of financial information? a. company management b. governments c. creditors d. investors

a. company management

Which financial statement would you refer to in order to determine how much resources (assets) the company owned? Balance Sheet Statement of Retained Earnings Income Statement Statement of Cash Flows

balance sheet

You are a potential creditor and are concerned that a particular company you are ready to give a loan to might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern? Balance Sheet Income Statement Statement of Retained Earnings Statement of Public Accounting

balance sheet

Which one of the following is not an external user of financial statements? Internal Revenue Service creditors stockholders the Company's President

company president

Which of the following is not a form of a business entity? sole proprietorship partnership cooperative corporation

cooperative

In which form of organization are the owners' legal responsibility for the debt of the business limited to the amount they invested in the business? cooperative corporation partnership proprietorship

corporation

What is the name for a person who lends funds to a business entity and expects repayment with interest? creditor owner proprietor stockholder

creditor

If assets are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year (if the operating cycle is shorter than one year), how are they reported on a classified balance sheet? property, plant, and equipment current assets intangible assets current liabilities

current assets

What is the name of the branch of accounting concerned with providing outside decision makers with information to assess the amounts, timing and uncertainties of the company's future cash flows? financial accounting auditing managerial accounting bookkeeping

financial accounting

Businesses engage in which of the following three main activity categories? Financing, Investing, Operating Cash, Credit, Noncash Financing, Credit, Operating Financing, Management, Operating

financing, investing, operating

On January 1, 2019, a company reported assets of $1,000,000 and liabilities of $600,000. During 2019, assets decreased by $100,000 and Stockholders' Equity decreased $200,000. What is the amount of liabilities at December 31, 2019? $200,000 $500,000 $600,000 $700,000

$700,000

Which one of the following is a correct fundamental accounting equation? Assets + Liabilities = Stockholders' Equity Assets + Retained Earnings = Stockholders' Equity Assets + Stockholders' Equity = Liabilities Assets = Liabilities + Stockholders' Equity

Assets = Liabilities + Stockholders' Equity

Which of the following best describes the term "current assets"? The amount of total profits earned by a business since it began operations plus all other resources. The amount of claim that the owners have in the business in the current year. Assets expected to be converted into cash within one year or one operating cycle, whichever is longer. The cumulative profits earned by a business less any dividends distributed in the current period.

Assets expected to be converted into cash within one year or one operating cycle, whichever is longer.

Which one of the following financial statements reports an entity's financial position at a specific date? Balance Sheet Statement of Retained Earnings Income Statement Both the Income Statement and the Balance Sheet

Balance Sheet

Which one of the following financial statements show the end of the year cash balance for a business entity? Income Statement and Statement of Retained Earnings Balance Sheet and Statement of Cash Flows Statement of Retained Earnings and Statement of Cash Flows Balance Sheet and Statement of Retained Earnings

Balance Sheet and Statement of Cash Flows

Which one of the following correctly represents one of the basic financial statement models? Assets − Liabilities = Net Income Assets + Liabilities = Total Assets Revenues + Expenses = Net Income Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings

Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings

Which set of items below are current assets? Accounts Receivable, Net Income, Inventory, and Dividends Cash, Accounts Receivable, Capital Stock, and Sales Net Income, Cash, Office Supplies, and Inventory Cash, Accounts Receivable, Inventory, and Office Supplies

Cash, Accounts Receivable, Inventory, and Office Supplies

T or F Current assets include all of the following: cash, inventory, equipment, supplies, and accounts receivable.

False

T or F The ending cash balance is shown on the Balance Sheet and the Statement of Retained Earnings.

False

T or F The income statement summarizes the assets, liabilities and stockholders' equity for a period of time.

False

T or F The owners of a sole proprietorship, partnership and corporations have limited liability.

False

Which statement summarizes the results of the company's operations? Statement of Cash Flows Statement of Retained Earnings Balance Sheet Income Statement

Income Statement

Which one of the following groups is considered an internal user of financial statements? A supplier considering selling to the company on credit. The labor union representing employees of a company that is involved in labor negotiations The financial analysts for a brokerage firm who are preparing recommendations for the firm's brokers on companies in a certain industry, Managers of the company that supervise production workers.

Managers of the company that supervise production workers.

Bennett Motors is facing the following business decisions. Which decision will least likely require financial information? A local bank is reviewing the company's loan application. The company is attempting to sell its stock to the public. The labor union representing the company's employees is negotiating a pay raise as part of a new labor agreement. The company's management is deciding whether to detail its vehicles today or tomorrow.

The company's management is deciding whether to detail its vehicles today or tomorrow.

Which of the following best describes the term "expenses"? The cost of assets used in the investing activities of a business. The amount of interest or claim that the owners have in the business. The future economic resources of a business entity. The cost of assets used in the operations of a business.

The cost of assets used in the operations of a business.

T or F Creditors use accounting information to evaluate whether to loan money to a company.

True

T or F Current liabilities are typically listed in the order in which they will be paid.

True

T or F Dividend payments appear on the Statement of Retained Earnings.

True

T or F Net loss reduces a company's retained earnings balance.

True

T or F One primary purpose of a classified balance sheet is to help users evaluate the working capital of a company.

True

T or F Stockholders equity is composed of contributed capital and retained earnings.

True

T or F The Statement of Cash Flows shows cash inflows and cash outflows for a period of time.

True

T or F The classifications in the balance sheet are to help users determine how a company obtained its resources.

True

T or F The purpose of financial reporting is to provide economic information to investors, creditors, and other financial statement users.

True

T or F The three main business activities are financing, operating, and investing.

True

T or F Three common categories of long-term assets are: 1) property, plant, and equipment, 2) long-term investments, and 3) intangibles.

True

Which financial statement would you analyze to assess a firm's operating performance for the past year? Balance Sheet Statement of Retained Earnings Income Statement Statement of Public Accounting

income statement

"Revenues" are best described as decreases in assets resulting from the sale of goods or services. increases in assets resulting from the sale of products or services. assets used or consumed in the sale of products or services. an increase in the financing activities.

increases in assets resulting from the sale of products or services.

What is unearned revenue? stockholders' equity liability asset revenue

liability

Which of the following are Noncurrent assets? machinery and equipment accounts receivable inventories unearned revenues

machinery and equipment

Which one of the following is not one of the three business activities? financing operating investing measuring

measuring

Which of the following invests funds into a business and is considered an owner? stockholders creditors bankers lenders

stockholders

Which one of the following items is a classification on the Classified Balance Sheet? operating accounts stockholders' equity revenues and expenses net income and dividends

stockholders' equity