ACCOUNTING 201- EXAM 1 QUESTIONS
AND ANSWERS
An annual report includes all of the following except:
a) notes to the financial statements
b) salary information for all the executives
c) management discussion and analysis section
d) an auditor's report - ANS b) salary information for all the executives
Finney Company began the year by issuing $40,000 of common stock for cash. The company
recorded revenues of $370,000, expenses of $320,000, and paid dividends of $20,000. What
was Finney's net income for the year?
a) $90,000
b) $50,000
c) $30,000
d) $70,000 - ANS b) $50,000
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?
a) $790,000
b) $410,000
c) $450,000
d) $490,000 - ANS b) $410,000
COPYRIGHT © 2025 BRAINBARTER ALL RIGHTS RESERVED 1
, Which activities involve acquiring the resources to run the business?
a) investing
b) operating
c) financing
d) delivering - ANS a) investing
Which of the following is an advantage of corporations relative to partnerships and sole
proprietorships?
a) harder to transfer ownership
b) most common form of organization
c) lower taxes
d) reduced legal liability for investors - ANS d) reduced legal liability for investors
Characteristics associated with relevant accounting information are:
a) predictive value and confirmatory value
b) consistency and understandability
c) comparability and timeliness
d) neutral and verifiable - ANS a) predictive value and confirmatory value
On a classified balance sheet, companies usually list current assets:
a) in the order in which they are expected to be converted into cash
b) in the order of acquisition
c) with the largest dollar amounts first
d) in alphabetical order - ANS a) in the order in which they are expected to be converted into
cash
Working capital is:
a) calculated by subtracting current assets from current liabilities
COPYRIGHT © 2025 BRAINBARTER ALL RIGHTS RESERVED 2
AND ANSWERS
An annual report includes all of the following except:
a) notes to the financial statements
b) salary information for all the executives
c) management discussion and analysis section
d) an auditor's report - ANS b) salary information for all the executives
Finney Company began the year by issuing $40,000 of common stock for cash. The company
recorded revenues of $370,000, expenses of $320,000, and paid dividends of $20,000. What
was Finney's net income for the year?
a) $90,000
b) $50,000
c) $30,000
d) $70,000 - ANS b) $50,000
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?
a) $790,000
b) $410,000
c) $450,000
d) $490,000 - ANS b) $410,000
COPYRIGHT © 2025 BRAINBARTER ALL RIGHTS RESERVED 1
, Which activities involve acquiring the resources to run the business?
a) investing
b) operating
c) financing
d) delivering - ANS a) investing
Which of the following is an advantage of corporations relative to partnerships and sole
proprietorships?
a) harder to transfer ownership
b) most common form of organization
c) lower taxes
d) reduced legal liability for investors - ANS d) reduced legal liability for investors
Characteristics associated with relevant accounting information are:
a) predictive value and confirmatory value
b) consistency and understandability
c) comparability and timeliness
d) neutral and verifiable - ANS a) predictive value and confirmatory value
On a classified balance sheet, companies usually list current assets:
a) in the order in which they are expected to be converted into cash
b) in the order of acquisition
c) with the largest dollar amounts first
d) in alphabetical order - ANS a) in the order in which they are expected to be converted into
cash
Working capital is:
a) calculated by subtracting current assets from current liabilities
COPYRIGHT © 2025 BRAINBARTER ALL RIGHTS RESERVED 2
