Intro to accounting Chapters 1, 2, 3 UPDATED ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS
Question 1.
An individual who has met certain criteria and is thus allowed to perform audits of corporations
ANSWER
Certified Public Accountant ( CPA )
Question 2.
Payments of cash from a corporation to its stockholders.
ANSWER
Dividends
Question 3.
The cost of assets consumed or services used in the process of generating revenues.
ANSWER
Expenses
Question 4.
Amounts owed to creditors in the form of debts and other obligations.
ANSWER
Liabilities
Question 5.
A section of the annual report that presents management's views on the company's ability to pay near-
term obligations, its ability to fund operations and expansion, and its results of operations.
ANSWER
Management Discussion and Analysis ( MD&A)
,Question 6.
The amount by which expenses exceed revenues
ANSWER
Net Loss
Question 7.
The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of
services in the normal course of business
ANSWER
Revenue
Question 8.
Regulations passed by Congress to reduce unethical corporate behavior.
ANSWER
Sarbanes-Oxley Act ( SOX )
Question 9.
The owner's claim to the assets of the business is called ________.
ANSWER
Stockholders Equity
Question 10.
Basic Accounting Equation
ANSWER
Assets = Liabilities + Stockholders' Equity
Question 11.
Management discussion and analysis (MD&A) examples
ANSWER
1. Description of ability to pay near-term obligations 2. Description of favorable and
unfavorable trends
, Question 12.
Auditor's Report examples
ANSWER
1. Unqualified opinion
2. Certified public accountant (CPA)
Question 13.
What does a financial statement include?
ANSWER
1. Details concerning liabilities, too voluminous to be included in the statements
2. Descriptions of significant accounting policies
Question 14.
What would you find on a Balance Sheet?
ANSWER
1. Cash
2. Common stock
3 Accounts receivable
4. Inventory
5. Equipment
6. Total stockholders equity
7. Bank loan payable
Question 15.
What would you find on statement of cash flow ?
ANSWER
1. Cash provided by operating activities
2. Net cash used by investing activities
Question 16.
What would you find on a retained earning statement ?
ANSWER
1. Dividends
2. Retained earnings, beginning of period
EXAM QUESTIONS AND CORRECT ANSWERS
Question 1.
An individual who has met certain criteria and is thus allowed to perform audits of corporations
ANSWER
Certified Public Accountant ( CPA )
Question 2.
Payments of cash from a corporation to its stockholders.
ANSWER
Dividends
Question 3.
The cost of assets consumed or services used in the process of generating revenues.
ANSWER
Expenses
Question 4.
Amounts owed to creditors in the form of debts and other obligations.
ANSWER
Liabilities
Question 5.
A section of the annual report that presents management's views on the company's ability to pay near-
term obligations, its ability to fund operations and expansion, and its results of operations.
ANSWER
Management Discussion and Analysis ( MD&A)
,Question 6.
The amount by which expenses exceed revenues
ANSWER
Net Loss
Question 7.
The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of
services in the normal course of business
ANSWER
Revenue
Question 8.
Regulations passed by Congress to reduce unethical corporate behavior.
ANSWER
Sarbanes-Oxley Act ( SOX )
Question 9.
The owner's claim to the assets of the business is called ________.
ANSWER
Stockholders Equity
Question 10.
Basic Accounting Equation
ANSWER
Assets = Liabilities + Stockholders' Equity
Question 11.
Management discussion and analysis (MD&A) examples
ANSWER
1. Description of ability to pay near-term obligations 2. Description of favorable and
unfavorable trends
, Question 12.
Auditor's Report examples
ANSWER
1. Unqualified opinion
2. Certified public accountant (CPA)
Question 13.
What does a financial statement include?
ANSWER
1. Details concerning liabilities, too voluminous to be included in the statements
2. Descriptions of significant accounting policies
Question 14.
What would you find on a Balance Sheet?
ANSWER
1. Cash
2. Common stock
3 Accounts receivable
4. Inventory
5. Equipment
6. Total stockholders equity
7. Bank loan payable
Question 15.
What would you find on statement of cash flow ?
ANSWER
1. Cash provided by operating activities
2. Net cash used by investing activities
Question 16.
What would you find on a retained earning statement ?
ANSWER
1. Dividends
2. Retained earnings, beginning of period
