A100 FINAL EXAM IU QUESTIONS
AND CORRECT ANSWERS
Which of the following is primarily responsible for the information
provided in the financial statements?
A) Board of Directors
B) Internal Accounting Staff
C) Company Top Management
D) External Auditors - correct answer- Company Top
Management
Which of the following describes the primary objective of financial
accounting?
A) To provide information about a business' future business strategies.
B) To provide useful financial information only to stockholders.
C) To provide useful financial information about a business to help
external parties make informed decisions.
D) To provide useful financial information about a business to help internal
parties make informed decisions. - correct answer- To provide useful
financial information about a business to help external parties make
informed decisions.
Financial accounting standards are known collectively as GAAP. What
does that acronym stand for?
,A) Generally Authorized Auditing Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Accepted Accounting Principles - correct answer- Generally
Accepted Accounting Principles
For accounting information to be useful, it must be which of the following?
A) It must be comparable and reliable.
B) It must be consistent and comparable.
C) It must be a faithful representation and relevant.
D) It must be relevant and consistent. - correct answer- It must be a
faithful representation and relevant.
Which of the following best describes the purpose of an audit?
A) To audit every transaction that an entity entered into.
B) To establish that a corporation's stock is a sound investment.
C) To prove the accuracy of an entity's financial statements.
D) To lend credibility to an entity's financial statements. - correct answer-
To lend credibility to an entity's financial statements.
Which of the following is considered to be an expense on the income
statement?
, A) Prepaid Expenses.
B) Wages payable.
C) Notes payable.
D) Cost of goods sold. - correct answer- Cost of goods sold.
At the beginning of 2020, a corporation had assets of $270,000 and
liabilities of $160,000. During 2020, assets increased
$25,000 and liabilities increased $5,000. What was stockholders' equity at
December 31, 2020?
A) $130,000.
B) $190,000.
C) $140,000.
D) $80,000. - correct answer- $130,000.
Which of the following would not be reported in the operating activities
section of a cash flow statement?
A) Cash paid for interest expense.
B) Cash paid for dividends to stockholders.
C) Cash paid for employee wages.
D) Cash received from customers. - correct answer- Cash paid for
dividends to stockholders.
Seitz Trucking's retained earnings increased $20,000 during the current
year. What was Seitz Trucking's current year net income or loss given
that Seitz Trucking declared $25,000 of dividends during this year?
AND CORRECT ANSWERS
Which of the following is primarily responsible for the information
provided in the financial statements?
A) Board of Directors
B) Internal Accounting Staff
C) Company Top Management
D) External Auditors - correct answer- Company Top
Management
Which of the following describes the primary objective of financial
accounting?
A) To provide information about a business' future business strategies.
B) To provide useful financial information only to stockholders.
C) To provide useful financial information about a business to help
external parties make informed decisions.
D) To provide useful financial information about a business to help internal
parties make informed decisions. - correct answer- To provide useful
financial information about a business to help external parties make
informed decisions.
Financial accounting standards are known collectively as GAAP. What
does that acronym stand for?
,A) Generally Authorized Auditing Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Accepted Accounting Principles - correct answer- Generally
Accepted Accounting Principles
For accounting information to be useful, it must be which of the following?
A) It must be comparable and reliable.
B) It must be consistent and comparable.
C) It must be a faithful representation and relevant.
D) It must be relevant and consistent. - correct answer- It must be a
faithful representation and relevant.
Which of the following best describes the purpose of an audit?
A) To audit every transaction that an entity entered into.
B) To establish that a corporation's stock is a sound investment.
C) To prove the accuracy of an entity's financial statements.
D) To lend credibility to an entity's financial statements. - correct answer-
To lend credibility to an entity's financial statements.
Which of the following is considered to be an expense on the income
statement?
, A) Prepaid Expenses.
B) Wages payable.
C) Notes payable.
D) Cost of goods sold. - correct answer- Cost of goods sold.
At the beginning of 2020, a corporation had assets of $270,000 and
liabilities of $160,000. During 2020, assets increased
$25,000 and liabilities increased $5,000. What was stockholders' equity at
December 31, 2020?
A) $130,000.
B) $190,000.
C) $140,000.
D) $80,000. - correct answer- $130,000.
Which of the following would not be reported in the operating activities
section of a cash flow statement?
A) Cash paid for interest expense.
B) Cash paid for dividends to stockholders.
C) Cash paid for employee wages.
D) Cash received from customers. - correct answer- Cash paid for
dividends to stockholders.
Seitz Trucking's retained earnings increased $20,000 during the current
year. What was Seitz Trucking's current year net income or loss given
that Seitz Trucking declared $25,000 of dividends during this year?
