Question 1

Which of the following has primary responsibility to develop Generally Accepted Accounting Principles?

Accepted Answer

A)  Financial Accounting Standards Board.
B)  Company Executives.
C)  Securities and Exchange Commission.
D)  Public Company Accounting Oversight Board.E) All of the above
F) None of the above

Question 2

Which of the following describes the amount of insurance expense reported on the income statement?

Accepted Answer

A)  The amount of cash paid for insurance in the current period.
B)  The amount of cash paid for insurance in the current period less any unpaid insurance at the end of the period.
C)  The amount of insurance used up (incurred) in the current period to help generate revenue.
D)  The amount of cash paid for insurance that is reported within the statement of cash flows.E) A) and B)
F) A) and C)

Question 3

For the current year,net income of Carol Company is $20,000 and dividends declared are $6,000;therefore,retained earnings have increased $26,000 during the year.

Accepted Answer

A) True 
 B)False

Question 4

Atlantic Corporation reported the following amounts at the end of the first year of operations  What are the retained earnings of Atlantic at the end of the year,and what amount of expenses were incurred during the year?

Accepted Answer

A)  Retained earnings are $80,000 and expenses incurred totaled $680,000.
B)  Retained earnings are $80,000 and expenses incurred totaled $720,000.
C)  Retained earnings are $280,000 and expenses incurred totaled $480,000.
D)  Retained earnings are $280,000 and expenses incurred totaled $520,000.E) None of the above
F) A) and B)

Question 5

Which of the following is a disadvantage of a corporation when compared to a partnership?

Accepted Answer

A)  The stockholders have limited liability.
B)  The corporation is treated as a separate legal entity from the stockholders.
C)  The corporation and its stockholders are subject to double taxation.
D)  The corporation must account for the transactions of the business as separate and apart from those of the owners.E) A) and B)
F) A) and C)

Question 6

What financial statement would you look at to determine the dividends declared by a business?

Accepted Answer

A)  Income statement.
B)  Statement of stockholders' equity.
C)  Statement of cash flows.
D)  Balance sheet.E) A) and D)
F) B) and D)

Question 7

Within which of the following would you find the inventory method(s) being used by a business entity?

Accepted Answer

A)  Balance sheet.
B)  Income statement.
C)  Notes to the financial statements.
D)  Headings of the financial statements.E) A) and D)
F) All of the above

Question 8

Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?

Accepted Answer

A)  Net income increases $20,000.
B)  Assets decrease $20,000.
C)  Stockholders' equity increases $20,000.
D)  Liabilities increase $20,000.E) None of the above
F) B) and C)

Question 9

Which of the following statements is true about a sole proprietorship?

Accepted Answer

A)  The owner and the business are separate legal entities but not separate accounting entities.
B)  The owner and the business are separate accounting entities but not separate legal entities.
C)  The owner and the business are separate legal entities and separate accounting entities.
D)  Most large businesses in this country are organized as sole proprietorships.E) A) and B)
F) B) and C)

Question 10

Which of the following would not be found within the investing activities section of the statement of cash flows?

Accepted Answer

A)  Cash paid to purchase a building for manufacturing facilities.
B)  Cash received from the sale of common stock to stockholders.
C)  Cash received from the sale of equipment used in manufacturing a product.
D)  Cash paid to purchase land.E) B) and D)
F) B) and C)

Exam 1: Financial Statements and Business Decisions

Atlantic Corporation reported the following amounts at the end of the first year of operations What are the retained earnings of Atlantic at the end of the year,and what amount of expenses were incurred during the year?

Correct Answer
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Which of the following is a disadvantage of a corporation when compared to a partnership?

Correct Answer
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Which of the following statements is true about a sole proprietorship?

Correct Answer
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Which of the following has primary responsibility to develop Generally Accepted Accounting Principles?

Correct Answer
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Which of the following describes the amount of insurance expense reported on the income statement?

Correct Answer
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Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?

Correct Answer
verified

Which of the following would not be found within the investing activities section of the statement of cash flows?

Correct Answer
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What financial statement would you look at to determine the dividends declared by a business?

Correct Answer
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Within which of the following would you find the inventory method(s) being used by a business entity?

Correct Answer
verified

For the current year,net income of Carol Company is $20,000 and dividends declared are $6,000;therefore,retained earnings have increased $26,000 during the year.

Correct Answer
verified

Exam 1: Financial Statements and Business Decisions

Atlantic Corporation reported the following amounts at the end of the first year of operations What are the retained earnings of Atlantic at the end of the year,and what amount of expenses were incurred during the year?

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of a corporation when compared to a partnership?

Correct AnswerverifiedShow Answer

Which of the following statements is true about a sole proprietorship?

Correct AnswerverifiedShow Answer

Which of the following has primary responsibility to develop Generally Accepted Accounting Principles?

Correct AnswerverifiedShow Answer

Which of the following describes the amount of insurance expense reported on the income statement?

Correct AnswerverifiedShow Answer

Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?

Correct AnswerverifiedShow Answer

Which of the following would not be found within the investing activities section of the statement of cash flows?

Correct AnswerverifiedShow Answer

What financial statement would you look at to determine the dividends declared by a business?

Correct AnswerverifiedShow Answer

Within which of the following would you find the inventory method(s) being used by a business entity?

Correct AnswerverifiedShow Answer

For the current year,net income of Carol Company is $20,000 and dividends declared are $6,000;therefore,retained earnings have increased $26,000 during the year.

Correct AnswerverifiedShow Answer

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Correct Answer
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