A100 IU Final Exam Review Questions
Correctly Solved to Score A+
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
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?
A) Net loss was $5,000.
B) Net loss was $45,000.
C) Net income was $45,000.
D) Net income was $5,000. - Answer Net income was $45,000.
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.
Correctly Solved to Score A+
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
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?
A) Net loss was $5,000.
B) Net loss was $45,000.
C) Net income was $45,000.
D) Net income was $5,000. - Answer Net income was $45,000.
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.
