财务会计题库TheFinancialStatements

Financial Accounting, 7eHarrison/HorngrenTest Item FileCHAPTER 1: THE FINANCIAL STATEMENTS1.1-1Bookkeeping is a type of accounting used primarily by proprietorships.Answer: FalseLO: 1-1Diff: 2EOC: QC 11.1-2The three forms of business organizations are proprietorships, partnerships, and for-profit organizations.Answer: FalseLO: 1-1Diff: 1EOC: E1-131.1-3To convince an investor to invest money in a particular company, relevant and reliable accounting information is required. Answer: TrueLO: 1-1Diff: 1EOC: E1-141.1-4Limited Liability Companies (LLCs) have members instead of stockholders.Answer: TrueLO: 1-1Diff: 1EOC: E1-131.1-5All business owners are personally liable for the debts of their businesses.Answer: FalseLO: 1-1Diff: 1EOC: E1-131.1-6A proprietorship is a distinct and separate entity from the proprietor, from both an accounting and a legal viewpoint.Answer: FalseLO: 1-1Diff: 2EOC: E1-131.1-7The two types of accounting are:A.profit and nonprofit.B.financial and managerial.C.internal and external.D.bookkeeping and decision-oriented.Answer: BLO: 1-1Diff: 2EOC: E1-131.1-8According to the author, potential investors need information that is:A.relevant and reliable.B.fair and future-oriented.C.accurate and truthful.D.audited and complete.Answer: ALO: 1-1Diff: 2EOC: E1-141.1-9Who ultimately controls a corporation?A.Board of DirectorsB.The Chief Executive Officer (CEO)C.The stockholdersD.The PresidentAnswer: CLO: 1-1Diff: 2EOC: E1-131.1-10Financial statements are:A.standard documents issued by outside consultants who are hired to analyze key operations of the business in financial terms.B.standard documents that tell us how well a business is performing and where it stands in financial terms.C.reports created by management that states it is responsible for the acts of the corporation.D.reports issued by outside consultants who are hired to analyze key operations of the business.Answer: BLO: 1-1 Diff: 1EOC: E1-261.1-11For which form of business ownership are the owners of a business legally distinct from the business?A.CorporationB.PartnershipC.ProprietorshipD.All of the aboveAnswer: ALO: 1-1Diff: 1EOC: E1-131.1-12All of the following are forms of business organizations EXCEPT:A.proprietorship.B.limited partnership.C.limited proprietorship.D.limited liability company.Answer: CLO: 1-1Diff: 1EOC: E1-131.1-13The largest organization of professional accountants in the United States is the:A.Financial Accounting Standards Board.B.Securities and Exchange Commission.C.American Institute of Certified Public Accountants.D.Auditing Standards Board.Answer: CLO: 1-1Diff: 2EOC: P1-53B1.2-1Generally accepted accounting principles, or GAAP, are the rules and procedures established by the Financial Accounting Standards Board, or the FASB. Answer: TrueLO: 1-2Diff: 1EOC: QC 11.2-2 The entity concept is the most basic accounting concept.Answer: TrueLO: 1-2Diff: 1EOC: S1-31.2-3 The stable monetary unit concept means that the type of currency used for the financial statements is NOT expected to change.Answer: FalseLO: 1-2Diff: 2EOC: E1-141.2-4 Since cost is a reliable measure to use in financial accounting, the objectivity principle states that assets and services should be recorded at their actual cost.Answer: FalseLO: 1-2Diff: 2EOC: E1-141.2-5The Financial Accounting Standards Board is responsible for establishing:A. the code of professional conduct for accountants.B. the Securities and Exchange Commission.C. generally accepted accounting principles.D. the American Institute of Certified Public Accountants.Answer: CLO: 1-2Diff: 2EOC: QC 11.2-6The acronym GAAP stands for:A. generally acceptable authorized pronouncements.B. government authorized accountant principles.C. generally accepted accounting principles.D. government audited accounting pronouncements.Answer: CLO: 1-2Diff: 2EOC: E1-271.2-7All of the following are characteristics of useful accounting information EXCEPT:A.informative.B.relevant.C.consistent.D.reliable.Answer: ALO: 1-2Diff: 2EOC: E1-141.2-8The objectivity principle of accounting:A.holds that the entity will remain in operation for the foreseeable future.B.enables accountants to ignore the effect of inflation in the accounting records.C. maintains that each organization or section of an organization stands apart from other organizations and individuals.D. ensures that accounting records and statements are based on the most reliable data available.Answer: DLO: 1-2Diff: 2EOC: E1-141.2-9The stable-monetary-unit concept of accounting:A.ensures that accounting records and statements are based on the most reliable data available.B.holds that the entity will remain in operation for the foreseeable future.c. maintains that each organization or section of an organization stands apart from other organizations and individuals.d. enables accountants to ignore the effect of inflation in the accounting records.Answer: DLO: 1-2Diff: 2EOC: E1-141.2-10The going-concern concept of accounting:A.enables accountants to ignore the effect of inflation in the accounting records.B.holds that the entity will remain in operation for the foreseeable future.c. maintains that each organization or section of an organization stands apart from other organizations and individuals.d. ensures that accounting records and statements are based on the most reliable data available.Answer: BLO: 1-2Diff: 2EOC: P1-43A1.2-11The principle which states that assets acquired by the business should be recorded at their actual price is the:A.cost principle.B.objectivity principle.C.reliability principle.D.stable dollar principle.Answer: ALO: 1-2Diff: 1EOC: Q1-301.2-12The reliability principle is also called the:A. relevance concept.B.truthfulness concept.C. objectivity principle.D. full and fair principle.Answer: CLO: 1-2Diff: 2EOC: E1-141.2-13Which of the following statements is FALSE?A. Reliable data may be supported by objective evidence.B.The informed opinion of owners is an important source of objective evidence.C.An independent appraisal, conducted by a licensed professional, is usually considered reliable.D.Reliable data are verifiable.Answer: BLO: 1-2 Diff: 2EOC: E1-141.2-14The relevant measure of the value of the assets of a company that is going out of business is the:A. book value.B. current market value.C.historical cost.D.recorded value.Answer: BLO: 1-2Diff: 2EOC: P1-43A1.2-15The CEO of a business owns a residence in Flagstaff. The company the CEO works for owns a residence in Chandler used for strategic planning meetings by its executives. Which of these properties is considered an asset(s) of the business?A.The Flagstaff residence onlyB.The Chandler residence onlyC.Both the Flagstaff and Chandler residencesD.Neither the Flagstaff nor Chandler residencesAnswer: BLO: 1-2Diff: 2EOC: S1-31.2-16An Oklahoma City business paid $15,000 cash for equipment used in the business. At the time of purchase, the equipment had a list price of $20,000. When the balance sheet was prepared, the value of the equipment later rose to $22,000. What is the relevant measure of the value of the equipment?A.Historical cost, $15,000B.Fair market cost, $20,000 C.Current market cost, $22,000D.$15,000 on the day of purchase, $22,000 on balance sheet dateAnswer: ALO: 1-2Diff: 2EOC: Q1-301.3-1The accounting equation expresses the idea that Resources - Insider claims = Outsider claims. Answer: TrueLO: 1-3Diff: 3EOC: S1-51.3-2The accounting equation must always be in balance.Answer: TrueLO: 1-3Diff: 1EOC: S1-11.3-3Liabilities are divided into outsider claims and insider claims.Answer: FalseLO: 1-3Diff: 2 EOC: S1-51.3-4Net assets, as stockholders equity is often referred to, represents the residual amount of business assets which can be claimed by the owners.Answer: TrueLO: 1-3Diff: 2EOC: QC 121.3-5Common stock and retained earnings are the main components of paid-in capital.Answer: FalseLO: 1-3Diff: 2EOC: S1-101.3-6Retained earnings do not represent cash that is available to a company for future operations and expansion.Answer: TrueLO: 1-3Diff: 3EOC: E1-271.3-7Net income appears on both the income statement and the statement of retained earnings.Answer: TrueLO: 1-3Diff: 2EOC: Q1-391.3-8The statement of cash flows is organized in terms of the organizations operating, investing, and financing activities.Answer: TrueLO: 1-3Diff: 2EOC: E1-251.3-9Expenses are increases in retained earnings that result from operations.Answer: FalseLO: 1-3Diff: 2EOC: S1-71.3-10Dividend payments are NOT classified as expenses.Answer: TrueLO: 1-3Diff: 2EOC: S1-91.3-11The calculation of ending retained earnings considers current net income or net loss and dividends.Answer: TrueLO: 1-3Diff: 2EOC: S1-91.3-12The owners equity of proprietorships and partnerships is the same.Answer: FalseLO: 1-3Diff: 2EOC: S1-91.3-13The accounting equation can be stated as:A.Assets + Stockholders Equity = Liabilities B.Assets - Liabilities = Stockholders EquityC.Assets = Liabilities - Stockholders EquityD.Assets - Stockholders Equity + Liabilities = ZeroAnswer: BLO: 1-3Diff: 1EOC: QC 31.3-14Which of the following best describes a liability? Liabilities are:A.a form of paid-in capital.B.future economic benefits to which a company is entitled.C.payables of the corporation.D.economic obligations to owners to be paid at some future date by the corporation.Answer: CLO: 1-3Diff: 1EOC: S1-51.3-15The owners interest in the assets of a corporation is known as:A. common stock.B.stockholders equity.C.long-term assets.D.operating expenses.Answer: BLO: 1-3Diff: 2EOC: S1-51.3-16Claims held by the stockholders of a corporation are also known as:A.retained earnings.B.paid-in capital.C.paid-in capital plus retained earnings.D.net income.Answer: CLO: 1-3Diff: 3EOC: S1-51.3-17Payables are classified as:A.increases in earnings.B.decreases in earnings.C.liabilities.D.assets.Answer: CLO: 1-3Diff: 1EOC: S1-61.3-18Receivables are classified as:A.increases in earnings.B.decreases in earnings.C.liabilities.D.assets.Answer: DLO: 1-3Diff: 1EOC: S1-61.3-19The sum of outsider claims plus insider claims equals:A. net income.B. total liabilities.C.total assets.D.total stockholders equity.Answer: CLO: 1-3Diff: 3EOC: S1-51.3-20Revenues are:A. decreases in assets resulting from delivering goods or services to customers.B.increases in liabilities resulting from delivering goods or services to customers.C.increases in retained earnings resulting from delivering goods or services to customers.D.decreases in retained earnings resulting from delivering goods or services to customers.Answer: CLO: 1-3Diff: 2EOC: S1-41.3-21How do revenues for a period relate to the beginning and ending balances in retained earnings?A.Revenues will increase the beginning balance of retained earnings for the period.B.Revenues will increase the ending balance of retained earnings for the period.C.Revenues less expenses will either increase or decrease the beginning balance of retained earnings for the period.D.None of these answers are correct.Answer: CLO: 1-3Diff: 2EOC: S1-91.3-22Expenses are:A. increases in liabilities resulting from purchasing assets.B.increases in assets resulting from operations.C.increases in retained earnings resulting from operations.D.decreases in retained earnings resulting from operations.Answer: DLO: 1-3Diff: 2EOC: S1-41.3-23Dividends:A.are expenses.B.always affect net income.C.are distributions to stockholders of assets (usually cash) generated by net income.D.are distributions to stockholders of assets (usually cash) generated by a favorable balance in retained earnings.Answer: CLO: 1-3Diff: 2EOC: E1-161.3-24A corporations paid-in capital consists ofA.revenues and expenses.B.assets and liabilities.C. common stock. D.net income. Answer: CLO: 1-3Diff: 2EOC: S1-101.3-25Net income is computed as:A.revenues expenses dividends.B.revenues + expenses.C.revenues expenses.D. revenues expenses + dividends.Answer: CLO: 1-3Diff: 2EOC: QC 81.3-26Which of the following must be added to beginning Retained Earnings to compute ending Retained Earnings?A.Net incomeB.ExpensesC.DividendsD.All of these answers are correct.Answer: ALO: 1-3Diff: 2EOC: P1-44A1.3-27At the end of the current accounting period, account balances were as follows: Cash, $180,000; Accounts Receivable, $75,000; Common Stock, $20,000; Retained Earnings, $65,000. Liabilities for the period were:A.$ 70,000.B.$170,000.C.$190,000.D.$210,000.Answer: BLO: 1-3Diff: 2EOC: S1-11.3-28On January 1, 2009, total assets for Liftoff Technologies were $125,000; on December 31, 2009, total assets were $145,000. On January 1, 2009, total liabilities were $110,000; on December 31, 2009, total liabilities were $115,000. What is the amount of the change and the direction of the change in Liftoff Technologies stockholders equity for 2009?A.Decrease of $15,000B.Increase of $15,000C.Increase of $30,000D.Decrease of $30,000Answer: BLO: 1-3Diff: 2EOC: QC 121.3-29Revenues were $170,000, expenses were $90,000, and cash dividends were $30,000. What was the net income and the change in retained earnings for the period? A.Net income was $50,000; change in retained earnings was $50,000B. Net income was $80,000; change in retained earnings was $50,000C. Net income was $80,000; change in retained earnings was $80,000D. Net income was $250,000; change in retained earnings was $250,000Answer: BLO: 1-3Diff: 2EOC: E1-231.3-30At the beginning of the period, assets were $490,000 and stockholders equity was $240,000. During the year, assets increased by $60,000, liabilities increased by $40,000, and stockholders equity increased by $20,000. Beginning liabilities must have been:A.$230,000.B.$250,000.C.$280,000.D.$300,000.Answer: BLO: 1-3Diff: 3EOC: S1-11.3-31If assets increase $210,000 during a given period and liabilities increase $65,000 during the same period, stockholders equity must:A.increase $145,000.B.decrease $275,000.C.decrease $145,000.D.increase $275,000.Answer: ALO: 1-3Diff: 3EOC: P1-44A1.3-32If liabilities increase $120,000 during a given period and stockholders equity decreases $25,000 during the same period, assets must:A. increase $95,000.B. decrease $95,000.C.decrease $145,000.D.increase $145,000.Answer: ALO: 1-3Diff: 3EOC: P1-44A1.3-33Stockholders equity for Commerce-GA Corporation on 01/01/2008 and 12/31/2008 were $60,000 and $75,000, respectively. Assets on 01/01/2008 and 12/31/2008 were $115,000 and $105,000, respectively. Liabilities on 01/01/2008 were $55,000. What is the amount of liabilities on 12/31/2008?A.$40,000B.$15,000C.$30,000D.The amount is indeterminable from the given information.Answer: CLO: 1-3Diff: 3EOC: S1-11.4-1Ramos, Inc. has monthly revenues of $30,000 and monthly expenses of $18,000, and the company paid $4,000 in dividends; therefore net income for the month is $8,000.Answer: FalseLO: 1-4Diff: 2EOC: S1-81.4-2Able Co. has $500,000 in assets and $400,000 in liabilities; therefore the equity is $900,000.Answer: FalseLO: 1-4Diff: 1EOC: S1-11.4-3Yummy Inc. has beginning retained earnings of $10,000, net income of $50,000, and dividends paid of $5,000; therefore the ending retained Earnings is $65,000. Answer: FalseLO: 1-4Diff: 2EOC: S1-81.4-4Dividends appear on the:A.statement of retained earnings.B.both the statement of retained earnings and the income statement.C.income statement.D.balance sheet.Answer: ALO: 1-4Diff: 2EOC: S1-121.4-5Assets appear on the:A.balance sheet.B.income statement.C.statement of retained earnings.D.both balance sheet and the statement of retained earnings.Answer: ALO: 1-4Diff: 1EOC: S1-121.4-6Common stock appears on the:A.balance sheet.B.income statement.C.statement of cash flows and the statement of retained earnings.D.None of the above are correct.Answer: ALO: 1-4Diff: 1EOC: S1-121.4-7A companys gross profit for the period is reported on the: A. balance sheet.B. income statement.C.statement of cash flows.D.statement of retained earnings.Answer: BLO: 1-4Diff: 1EOC: S1-81.4-8Gains and losses appear on which of the financial statements listed below?A. Balance sheetB. Income statementC.Statement of cash flowsD.Statement of retained earningsAnswer: BLO: 1-4Diff: 1EOC: S1-81.4-9The ending balance in Retained Earnings appears on the:A.balance sheet only.B.balance sheet and statement of retained earnings.C.statement of retained earnings only.D.income statement and statement of cash flows.Answer: BLO: 1-4Diff: 2EOC: P1-49A1.4-10Cash dividends:A.decrease revenue on the income statement.B.decrease retained earnings on the statement of retained earnings.C.increase expenses on the income statement.D.decrease operating activities on the statement of cash flows.Answer: BLO: 1-4Diff: 2EOC: S1-91.4-11Which of the following financial statements shows the net increase or decrease in cash during the period?A.Balance sheet onlyB.Statement of operations C.Statement of retained earnings and balance sheetD.Statement of cash flowsAnswer: DLO: 1-4Diff: 1EOC: S1-121.4-12An investor wishing to assess a companys financial position at the end of the period would probably examine the:A.statement of cash flows and the income statement.B.income statement only.C.balance sheet.D.statement of retained earnings.Answer: CLO: 1-4Diff: 2EOC: E1-261.4-13A potential investor interested in evaluating a companys financial performance for the current period would probably examine which of the following financial statements?A.Balance sheet onlyB.Income statement onlyC.Statement of cash flows and income statementD.Statement of retained earnings and balance sheetAnswer: BLO: 1-4Diff: 2EOC: E1-261.4-14Which statement(s) summarizes the revenues and expenses of an entity?A.Balance sheet onlyB.Statement of cash flows and income statementC.Statement of retained earnings and statement of operationsD.Statement of operations onlyAnswer: DLO: 1-4Diff: 2EOC: S1-81.4-15Which financial statement provides a snapshot photo of one moment in time?A.Balance sheet onlyB.Income statement onlyC.Statement of retained earnings and income statementD.Statement of cash flows onlyAnswer: ALO: 1-4Diff: 2EOC: E1-261.4-16The income statement:A.is not dated.B.may cover a period of time or only one day in time, like a snapshot photograph.C.covers a defined period of time.D.reports the results of operations since the inception of the business.Answer: CLO: 1-4Diff: 2EOC: QC 51.4-17The income statement presents a summary of the:A.cash inflows and outflows of an entity.