ACCOUNTING 1010 EXAMS 1, 2 & 3 COMBINED (PDF) | 2026
EXAM QUESTIONS AND ANSWERS | STUDY GUIDE | 100%
CORRECT
The proprietorship form of business organization... - ANSWER -generally receives favorable tax
treatment relative to a corporation.
A business organized as a corporation... - ANSWER -is owned by its stockholders.
Which of the following is NOT one of the three forms of business organizations? - ANSWER -
Investors
Which of the following is NOT an advantage of the corporate form of business organization? -
ANSWER -Favorable Tax Treatment
A small neighborhood barber shop that is operated by its owner would likely be organized as a...
- ANSWER -Proprietorship
All of the following are advantages for choosing a proprietorship for a business EXCEPT... -
ANSWER -transfer of ownership is easily achieved through stock sales.
External users of accounting information, like the Internal Revenue Service, are most commonly
known as... - ANSWER -taxing authorities
Which of the following statements is NOT our regarding the Sarbanes-Oxley Act (SOX)? -
ANSWER -The Act calls for decreased independence of outside auditors reviewing corporate
financial statements.
Which of the following would NOT be considered an internal user of accounting data for a
company? - ANSWER -Creditor of a company
External users want answers to all of the following questions EXCEPT... - ANSWER -Will the
company be able to afford employee pay raises this year?
The right to receive money in the future is called a(n)... - ANSWER -Accounts Receivable
The common characteristic possessed by all assets is... - ANSWER -future economic benefit
Resources owned by a business are referred to as... - ANSWER -assets
When expenses exceed revenues, which of the following is TRUE? - ANSWER -a net loss
results
Which of the following is NOT a liability? - ANSWER -Accounts Receivable
To show how successfully your business performed during a period of time, you would report its
revenues and expenses in the... - ANSWER -Income Statement
, Which of the following financial statements is concerned with the company at a point in time? -
ANSWER -Balance Sheet
Henson Company began the year with retained earnings of $330,000. During the year, the
company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000.
What was Henson's retained earnings at the end of the year? - ANSWER -
The accounting equation may be expressed as... - ANSWER -Assets = Liabilities + Stockholders'
Equity
Liabilities... - ANSWER -are debts and obligations
Stockholders' equity is comprised of... - ANSWER -common stock and retained earnings
The primary purpose of the statement of cash flows is to report... - ANSWER -information about
cash receipts and cash payments of a company
In a classified balance sheet, assets are usually classified as... - ANSWER -current assets; long-
term investments; property, plant, and equipment; and intangible assets.
Which of the following is not classified properly as a current asset? - ANSWER -A receivable
from the sale of an asset to be collected in two years.
Liabilities are generally classified on a balance sheet as... - ANSWER -current liabilities and
long-term liabilities
Equipment is classified on the balance sheet as... - ANSWER -property, plant, and equipment
Dividends appear on... - ANSWER -
Issuing new shares of common stock will... - ANSWER -
The primary purpose of the trial balance is to... - ANSWER -prove the equality of the debit and
credit amounts after posting
All of the following are characteristics of every accounting information system EXCEPT it is a
system... - ANSWER -of data storage hardware for the chart of accounts
Which one of the following is NOT a part of an account? - ANSWER -Trial balance
The right side of an account... - ANSWER -is the credit side
A debit to an asset account indicates a(n)... - ANSWER -increase in the asset
The normal balance of any account is the... - ANSWER -side which increases that account
Which accounts normally have credit balances? - ANSWER -Revenues, liabilities, and retained
earnings
Which of the following is NOT part of the recording process? - ANSWER -Preparing a trial
balance
EXAM QUESTIONS AND ANSWERS | STUDY GUIDE | 100%
CORRECT
The proprietorship form of business organization... - ANSWER -generally receives favorable tax
treatment relative to a corporation.
A business organized as a corporation... - ANSWER -is owned by its stockholders.
Which of the following is NOT one of the three forms of business organizations? - ANSWER -
Investors
Which of the following is NOT an advantage of the corporate form of business organization? -
ANSWER -Favorable Tax Treatment
A small neighborhood barber shop that is operated by its owner would likely be organized as a...
- ANSWER -Proprietorship
All of the following are advantages for choosing a proprietorship for a business EXCEPT... -
ANSWER -transfer of ownership is easily achieved through stock sales.
External users of accounting information, like the Internal Revenue Service, are most commonly
known as... - ANSWER -taxing authorities
Which of the following statements is NOT our regarding the Sarbanes-Oxley Act (SOX)? -
ANSWER -The Act calls for decreased independence of outside auditors reviewing corporate
financial statements.
Which of the following would NOT be considered an internal user of accounting data for a
company? - ANSWER -Creditor of a company
External users want answers to all of the following questions EXCEPT... - ANSWER -Will the
company be able to afford employee pay raises this year?
The right to receive money in the future is called a(n)... - ANSWER -Accounts Receivable
The common characteristic possessed by all assets is... - ANSWER -future economic benefit
Resources owned by a business are referred to as... - ANSWER -assets
When expenses exceed revenues, which of the following is TRUE? - ANSWER -a net loss
results
Which of the following is NOT a liability? - ANSWER -Accounts Receivable
To show how successfully your business performed during a period of time, you would report its
revenues and expenses in the... - ANSWER -Income Statement
, Which of the following financial statements is concerned with the company at a point in time? -
ANSWER -Balance Sheet
Henson Company began the year with retained earnings of $330,000. During the year, the
company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000.
What was Henson's retained earnings at the end of the year? - ANSWER -
The accounting equation may be expressed as... - ANSWER -Assets = Liabilities + Stockholders'
Equity
Liabilities... - ANSWER -are debts and obligations
Stockholders' equity is comprised of... - ANSWER -common stock and retained earnings
The primary purpose of the statement of cash flows is to report... - ANSWER -information about
cash receipts and cash payments of a company
In a classified balance sheet, assets are usually classified as... - ANSWER -current assets; long-
term investments; property, plant, and equipment; and intangible assets.
Which of the following is not classified properly as a current asset? - ANSWER -A receivable
from the sale of an asset to be collected in two years.
Liabilities are generally classified on a balance sheet as... - ANSWER -current liabilities and
long-term liabilities
Equipment is classified on the balance sheet as... - ANSWER -property, plant, and equipment
Dividends appear on... - ANSWER -
Issuing new shares of common stock will... - ANSWER -
The primary purpose of the trial balance is to... - ANSWER -prove the equality of the debit and
credit amounts after posting
All of the following are characteristics of every accounting information system EXCEPT it is a
system... - ANSWER -of data storage hardware for the chart of accounts
Which one of the following is NOT a part of an account? - ANSWER -Trial balance
The right side of an account... - ANSWER -is the credit side
A debit to an asset account indicates a(n)... - ANSWER -increase in the asset
The normal balance of any account is the... - ANSWER -side which increases that account
Which accounts normally have credit balances? - ANSWER -Revenues, liabilities, and retained
earnings
Which of the following is NOT part of the recording process? - ANSWER -Preparing a trial
balance
