Accounting Quiz 1
Which one of the following statements is true concerning assets? a.Accountants use the term historical cost to refer to the original cost of an asset. b.They are recorded at market value and then adjusted for inflation. c.They are recorded at market value for financial reporting purposes as historical cost may be arbitrary. d.Assets are used using the time-period approach.
A
Which of the following statements would be true if you own stock in a company? a.You have a claim to the assets of the business b.You have the right to receive interest on an annual basis. c.You are an owner of the retained earnings and capital stock of the company. d.You have the right to a portion of the company's revenues each accounting period.
A.
Which one of the following is not one of the three activities included in the definition of accounting? a.Operating b.Identifying c.Communicating d.Measuring
A.
Which one of the following items appears on a balance sheet? a.Sales revenue b.Accounts payable c.Cost of goods sold d.Utilities expense
B
Which one of the following financial statements reports an entity's financial position at a specific date? a.Statement of retained earnings b.Both the income statement and the balance sheet c.Balance sheet d.Income statement
C.
You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern? a.Income statement b.Statement of public accounting c.Balance sheet d.Statement of retained earnings
C.
Domenico Enterprises purchased land for $2,000,000 in 1999. In 2016, an independent appraiser assessed the value at $4,400,000. What amount should appear on the financial statements in 2016 with respect to the land? a.Whatever amount the company believes is the best indicator of the true value of the land. b.$4,400,000 c.$2,400,000 d.$2,000,000
D.
How is the balance sheet linked to the other financial statements? a.The amount of retained earnings reported on the balance sheet is equal to net income. b.There is no link between the balance sheet and other statements, as each contains different accounts and provides different information. c.Retained earnings is added to total assets and reported on the balance sheet. d.Net income increases retained earnings on the statement of retained earnings, which ultimately increases retained earnings on the balance sheet.
D.
The Securities and Exchange Commission (SEC) is concerned with a.All domestic and international companies that issue accounting reports. b.Accounting reports issued by government entities. c.All companies in the US regardless of size. d.Companies that issue securities to the general public.
D.
Which one of the following is a correct expression of the accounting equation? a.Assets = Liabilities - Owners' Equity b.Assets + Owners' Equity = Liabilities c.Assets + Liabilities = Owners' Equity d.Assets = Liabilities + Owners' Equity
D.