A100 FINAL EXAM IU QUESTIONS & 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 - 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. - 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 - Answer -Generally Accepted Accounting
Principles
Which of the following correctly describes the various financial statements?
A) The balance sheet is a financial statement that covers a period of time.
B) The statement of stockholders' equity is a financial statement at a specific point in
time.
C) The cash flow statement is a financial statement at a specific point in time.
D) An income statement covers a period of time. - Answer -An income statement
covers a period of time.
A company purchased supplies for cash, which will be consumed during future months.
Which of the following correctly describes the impact of the supplies purchase on the
financial statements?
A) Operating expenses will increase.
B) Operating income will decrease.
C) Total assets will decrease.
,D) Total assets will remain unchanged. - Answer -Total assets will remain unchanged.
Recognizing an expense may be accompanied by which of the following?
A) An increase in assets
B) A decrease in revenue
C) A decrease in assets
D) A decrease in liabilities - Answer -A decrease in assets
Which of the following transactions will result in an increase in operating income as of
the date of the transaction?
A) The receipt of cash dividends from an investment.
B) Collection of cash from a customer for services to be provided at a later date.
C) Providing a service to a customer on account.
D) The sale of investments at a gain - Answer -Providing a service to a customer on
account.
On January 1, Year 1, Seitz Trucking paid $155,000 to purchase a truck. The truck was
expected to have a four-year useful life and a $20,000 salvage value. If ST uses the
straight-line method, the amount of net book value shown on the Year 1 balance sheet
is:
A) $33,750
B) $121,250
C) $155,000
D) $135,000 - Answer -$121,250
Hoosier Company experienced an accounting event that affected its financial
statements as indicated below.
- Increase in Assets &
- Increase in Equity &
- Increase in Financing Cash Flows
Which of the following accounting events could have caused these effects on the
elements of Hoosier's financial statements?
A) Borrowed money from a bank
B) Earned cash revenue
C) Paid a cash dividend
D) Issued common stock - Answer -Issued common stock
Direct costs:
A) can be easily traced to a particular cost object.
B) are incurred to benefit a particular accounting period.
C) are the variable costs of producing a product.
, D) are incurred due to a specific decision. - Answer -can be easily traced to a particular
cost object.
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. - 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. - 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. - 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. - 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. - 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?
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 - 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. - 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 - Answer -Generally Accepted Accounting
Principles
Which of the following correctly describes the various financial statements?
A) The balance sheet is a financial statement that covers a period of time.
B) The statement of stockholders' equity is a financial statement at a specific point in
time.
C) The cash flow statement is a financial statement at a specific point in time.
D) An income statement covers a period of time. - Answer -An income statement
covers a period of time.
A company purchased supplies for cash, which will be consumed during future months.
Which of the following correctly describes the impact of the supplies purchase on the
financial statements?
A) Operating expenses will increase.
B) Operating income will decrease.
C) Total assets will decrease.
,D) Total assets will remain unchanged. - Answer -Total assets will remain unchanged.
Recognizing an expense may be accompanied by which of the following?
A) An increase in assets
B) A decrease in revenue
C) A decrease in assets
D) A decrease in liabilities - Answer -A decrease in assets
Which of the following transactions will result in an increase in operating income as of
the date of the transaction?
A) The receipt of cash dividends from an investment.
B) Collection of cash from a customer for services to be provided at a later date.
C) Providing a service to a customer on account.
D) The sale of investments at a gain - Answer -Providing a service to a customer on
account.
On January 1, Year 1, Seitz Trucking paid $155,000 to purchase a truck. The truck was
expected to have a four-year useful life and a $20,000 salvage value. If ST uses the
straight-line method, the amount of net book value shown on the Year 1 balance sheet
is:
A) $33,750
B) $121,250
C) $155,000
D) $135,000 - Answer -$121,250
Hoosier Company experienced an accounting event that affected its financial
statements as indicated below.
- Increase in Assets &
- Increase in Equity &
- Increase in Financing Cash Flows
Which of the following accounting events could have caused these effects on the
elements of Hoosier's financial statements?
A) Borrowed money from a bank
B) Earned cash revenue
C) Paid a cash dividend
D) Issued common stock - Answer -Issued common stock
Direct costs:
A) can be easily traced to a particular cost object.
B) are incurred to benefit a particular accounting period.
C) are the variable costs of producing a product.
, D) are incurred due to a specific decision. - Answer -can be easily traced to a particular
cost object.
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. - 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. - 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. - 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. - 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. - 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?
