ACC 201 ACTUAL UPDATED Exam
Questions and CORRECT Answers
Presently, the dominant body in the development of accounting principles is the
a. American Institute of Certified Public Accountants (AICPA)
b. American Accounting Association (AAA)
c. Financial Accounting Standards Board (FASB)
d. Institute of Management Accountants (IMA) - CORRECT ANSWER -c. Financial
Accounting Standards Board (FASB)
2. Which financial statement is primarily concerned with reporting the financial position of a
business at a particular time?
a. The balance sheet.
b. The income statement.
c. The statement of cash flows.
d. All three equally. - CORRECT ANSWER -a. The balance sheet.
3. The nature of an asset is best described as:
a. Something with physical form that is valued at cost in the accounting records.
b. An economic resource owned by a business and expected to benefit future operations.
c. An economic resource representing cash or the right to receive cash in the near future.
d. Something owned by a business that has a ready market value. - CORRECT
ANSWER -b. An economic resource owned by a business and expected to benefit future
operations.
The accounting standards and concepts used in the preparation of financial statements are called:
, a. Certified principles of accounting (CPA).
b. Generally accepted accounting principles (GAAP).
c. Federal accounting standards and bylaws (FASB).
d. Standards enforcing consistency (SEC). - CORRECT ANSWER -b. Generally accepted
accounting principles (GAAP).
5. How is the balance sheet linked to the other financial statements?
a. The beginning retained earnings balance on the statement of retained earnings becomes the
amount of retained earnings reported on the balance sheet.
b. Retained earnings is added to total assets and reported on the balance sheet.
c. Net income increases retained earnings on the statement of retained earnings, which ultimately
increases retained earnings on the balance sheet.
d. There is no link between the balance sheet and the other statements. - CORRECT
ANSWER -c. Net income increases retained earnings on the statement of retained
earnings, which ultimately increases retained earnings on the balance sheet.
6. During the current year, the assets of Chadwick's increased by $382,000, and the liabilities
increased by $240,000. The owners' equity in the business must have:
a. Decreased by $142,000.
b. Decreased by $622,000.
c. Increased by $142,000.
d. Increased by $622,000. - CORRECT ANSWER -c. Increased by $142,000.
7. The balance sheet item that represents the portion of owners' equity resulting from profitable
operation of the business is:
a. Accounts receivable.
b. Cash.
c. Capital stock.
Questions and CORRECT Answers
Presently, the dominant body in the development of accounting principles is the
a. American Institute of Certified Public Accountants (AICPA)
b. American Accounting Association (AAA)
c. Financial Accounting Standards Board (FASB)
d. Institute of Management Accountants (IMA) - CORRECT ANSWER -c. Financial
Accounting Standards Board (FASB)
2. Which financial statement is primarily concerned with reporting the financial position of a
business at a particular time?
a. The balance sheet.
b. The income statement.
c. The statement of cash flows.
d. All three equally. - CORRECT ANSWER -a. The balance sheet.
3. The nature of an asset is best described as:
a. Something with physical form that is valued at cost in the accounting records.
b. An economic resource owned by a business and expected to benefit future operations.
c. An economic resource representing cash or the right to receive cash in the near future.
d. Something owned by a business that has a ready market value. - CORRECT
ANSWER -b. An economic resource owned by a business and expected to benefit future
operations.
The accounting standards and concepts used in the preparation of financial statements are called:
, a. Certified principles of accounting (CPA).
b. Generally accepted accounting principles (GAAP).
c. Federal accounting standards and bylaws (FASB).
d. Standards enforcing consistency (SEC). - CORRECT ANSWER -b. Generally accepted
accounting principles (GAAP).
5. How is the balance sheet linked to the other financial statements?
a. The beginning retained earnings balance on the statement of retained earnings becomes the
amount of retained earnings reported on the balance sheet.
b. Retained earnings is added to total assets and reported on the balance sheet.
c. Net income increases retained earnings on the statement of retained earnings, which ultimately
increases retained earnings on the balance sheet.
d. There is no link between the balance sheet and the other statements. - CORRECT
ANSWER -c. Net income increases retained earnings on the statement of retained
earnings, which ultimately increases retained earnings on the balance sheet.
6. During the current year, the assets of Chadwick's increased by $382,000, and the liabilities
increased by $240,000. The owners' equity in the business must have:
a. Decreased by $142,000.
b. Decreased by $622,000.
c. Increased by $142,000.
d. Increased by $622,000. - CORRECT ANSWER -c. Increased by $142,000.
7. The balance sheet item that represents the portion of owners' equity resulting from profitable
operation of the business is:
a. Accounts receivable.
b. Cash.
c. Capital stock.
