CPU Business and Technology Financial and Managerial Accounting Chapter End Self-Test Questions with Answers

1) Which one of the following sentences does NOT explain the distinction between financial accounting and management accounting? A. Financial accounting is primarily for external users and management accounting is primarily for internal users. B. Financial accounting is normally produced annually and management accounting is normally produced monthly. C. Financial accounting is more accurate than management accounting. D. Financial accounting is audited by management whereas management accounting is audited by external auditors. 2) Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? A. Monetary unit assumption B. Economic entity assumption C. Time period assumption D. Going concern assumption E. None of the options listed 3) Businesses can take the following form(s) A. Sole Proprietorship. B. Corporations. C. Partnership. D. All of the above 4) A brand new company has machinery costing $7,500, a building costing $13,000, notes payable of $7,000 and cash of $2,500. If the owner adds $8,500 of inventory, assets are now equal to: A. $20,500 B. $31,500 C. $9,500 D. $11,000 5) The primary objective of financial accounting is: A. To help organizations keep track of financing activities. B. To provide financial statements to help users analyze an organization's activities. C. To help an organization define its ideas, goals, and actions. D. To help an organization keep track of its buying and selling of resources. Chapter 2 Basic Financial Statements 6) The primary purpose of the statement of cash flows is to provide information A. Regarding the results of operations for a period of time. B. Regarding a company’s financial position at the end of an accounting period. C. About a company’s cash receipts and cash payments during an accounting period. D. About a company’s investing and financing activities. 7) Which of the following financial statements is concerned with the financial position of an enterprise at a point in time? A. Retained Earnings Statement. B. Balance Sheet. C. Income Statement. D. Statement of Cash Flows. 8)Which of the following is not true of a corporation? A. It may buy, own, and sell property. B. It may sue and be sued. C. The acts of its owners bind the corporation. D. It may enter into binding legal contracts in its own name. 9) Accumulated depreciation should be shown on the Statement of financial position: A. As a deduction from current assets. B. As a current liability. C. As part of owner's equity. D. As a deduction from the cost of corresponding fixed assets. 10) Interest on a 3-month, 10 percent, $10,000 note receivable is A. $ 250. B. $2,500. C. $ 288. D. $1,000. Chapter Three The Accounting Cycle: Capturing Economic Events 11) What is an account title? A. The name given to an account B. The statement provided to a company C. A third party expense report D. A statement indicating balances, profits and losses 12) Which of the following accounts will have a credit balance? A. Utilities Expense account B. Machineries account C. Prepaid account D. Sales account 13) If the effect of a transaction is that it reduced both the assets and the liabilities of a business by $100,000, which of the following is that transaction likely to be? A. Disposal of an asset B. Sale of goods C. Introduction of additional capital by the owner D. Discharge of a loan 14) When a magazine company receives advance payment for a subscription, it A. Debits Cash and credits Subscriptions Revenue. B. Debits Cash and credits Unearned Subscriptions Revenue. C