What does accounting focus on?
A. The impact a business's activities have on its relationships with customers.
B. The impact a business's activities have on the environment.
C. The impact a business's activities have on its public image.
D. The impact a business's activities have on its overall financial performance.
D. The impact a business's activities have on its overall financial performance.
Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time?
A. Cash receipts and disbursements sheet
B. Cash flow schedule
C. Summary of cash receipts
D. Statement of cash flows
D. Statement of cash flows
Which users would have a primary concern with an organization's ability to
provide health benefits?
A. Competitors
B. Employees
C. Vendors
D. Suppliers
B. Employees
Which benefit does a corporation gain by following Generally Accepted
Accounting Principles (GAAP)?
A. A decrease in its income tax obligations
B. A decrease in the amount of net income it reports
C. An increase in its comparability to other companies
D. An increase in the amount of assets it reports
C. An increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when
the firm is auditing a large publicly traded company?
A. The Public Company Accounting Oversight Board (PCAOB)
B. The Financial Accounting Standards Board (FASB)
C. Another certified public accounting (CPA) firm
D. The Internal Revenue Service (IRS)
A. The Public Company Accounting Oversight Board (PCAOB)
What has had the most significant impact on accounting practices?
,A. Certification requirements
B. New product innovations
C. Information technology
D. Mobile computing
C. Information technology
What two items of information are revealed on the balance sheet?
A. Ownership
B. Debt
C. Expenses
D. Revenues
E. Costs
A. Ownership
B. Debt
Which term is defined as the residual interest in the net assets of a company?
A. Operating income
B. Liabilities
C. Revenues
D. Owners' equity
D. Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100
million, and current assets of $50 million.What is the value of the firm's long-term
assets?
A. $250 million
B. $350 million
C. $400 million
D. $550 million
B. $350 million
Which situation should result in revenue recognition on the income statement for
the year ending 12/31/14 if the firm is using accrual-basis accounting?
A. In 2014, a company enters into a contract whereby it agrees to provide
services to a customer next year (2015).
B. In 2014, a company collects cash from a customer for services it will provide
next year (2015).
C. In 2014, a company provides services to a customer for which cash will be
collected in the next year (2015)
D. In 2014, a company collects cash from a customer for services it provided in
the previous year (2013).
C. In 2014, a company provides services to a customer for which cash will be collected
the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company?
, A. Cash flows from investing activities
B. Cash flows from operating activities
C. Cash flows from business activities
D. Cash flows from financing activities
D. Cash flows from financing activities
Where would an investor find a summary of a company's significant accounting
policies?
A. In the balance sheet
B. In the income statement
C. In the statement of cash flows
D. In the notes to financial statements
D. In the notes to financial statements
Which assurance does an external audit report provide for its readers?
A. The company will be a good credit risk
B. The company will generate net income
C. The company's financial statements fairly reflect its financial position
D. The company will generate positive cash flows
C. The company's financial statements fairly reflect its financial position
Match each accounting term with its definition.
Reliable
Relevant
Material
Conservatism
Reliable - Information that can be verified
Relevant - Information having to do with the matter at hand
Material - Information that is important enough to make a difference
Conservatism - Information related to recognizing losses as they occur
Order the steps in the decision cycle from first (1) to last (5).
Implement Decision
Gather Information
Analyze Financial Statements
Make Decision
Prepare Financial Statements
1 - Prepare Financial Statements
2 - Analyze Financial Statements
3 - Gather Information
4 - Make Decision
5 - Implement Decision
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
A. The impact a business's activities have on its relationships with customers.
B. The impact a business's activities have on the environment.
C. The impact a business's activities have on its public image.
D. The impact a business's activities have on its overall financial performance.
D. The impact a business's activities have on its overall financial performance.
Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time?
A. Cash receipts and disbursements sheet
B. Cash flow schedule
C. Summary of cash receipts
D. Statement of cash flows
D. Statement of cash flows
Which users would have a primary concern with an organization's ability to
provide health benefits?
A. Competitors
B. Employees
C. Vendors
D. Suppliers
B. Employees
Which benefit does a corporation gain by following Generally Accepted
Accounting Principles (GAAP)?
A. A decrease in its income tax obligations
B. A decrease in the amount of net income it reports
C. An increase in its comparability to other companies
D. An increase in the amount of assets it reports
C. An increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when
the firm is auditing a large publicly traded company?
A. The Public Company Accounting Oversight Board (PCAOB)
B. The Financial Accounting Standards Board (FASB)
C. Another certified public accounting (CPA) firm
D. The Internal Revenue Service (IRS)
A. The Public Company Accounting Oversight Board (PCAOB)
What has had the most significant impact on accounting practices?
,A. Certification requirements
B. New product innovations
C. Information technology
D. Mobile computing
C. Information technology
What two items of information are revealed on the balance sheet?
A. Ownership
B. Debt
C. Expenses
D. Revenues
E. Costs
A. Ownership
B. Debt
Which term is defined as the residual interest in the net assets of a company?
A. Operating income
B. Liabilities
C. Revenues
D. Owners' equity
D. Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100
million, and current assets of $50 million.What is the value of the firm's long-term
assets?
A. $250 million
B. $350 million
C. $400 million
D. $550 million
B. $350 million
Which situation should result in revenue recognition on the income statement for
the year ending 12/31/14 if the firm is using accrual-basis accounting?
A. In 2014, a company enters into a contract whereby it agrees to provide
services to a customer next year (2015).
B. In 2014, a company collects cash from a customer for services it will provide
next year (2015).
C. In 2014, a company provides services to a customer for which cash will be
collected in the next year (2015)
D. In 2014, a company collects cash from a customer for services it provided in
the previous year (2013).
C. In 2014, a company provides services to a customer for which cash will be collected
the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company?
, A. Cash flows from investing activities
B. Cash flows from operating activities
C. Cash flows from business activities
D. Cash flows from financing activities
D. Cash flows from financing activities
Where would an investor find a summary of a company's significant accounting
policies?
A. In the balance sheet
B. In the income statement
C. In the statement of cash flows
D. In the notes to financial statements
D. In the notes to financial statements
Which assurance does an external audit report provide for its readers?
A. The company will be a good credit risk
B. The company will generate net income
C. The company's financial statements fairly reflect its financial position
D. The company will generate positive cash flows
C. The company's financial statements fairly reflect its financial position
Match each accounting term with its definition.
Reliable
Relevant
Material
Conservatism
Reliable - Information that can be verified
Relevant - Information having to do with the matter at hand
Material - Information that is important enough to make a difference
Conservatism - Information related to recognizing losses as they occur
Order the steps in the decision cycle from first (1) to last (5).
Implement Decision
Gather Information
Analyze Financial Statements
Make Decision
Prepare Financial Statements
1 - Prepare Financial Statements
2 - Analyze Financial Statements
3 - Gather Information
4 - Make Decision
5 - Implement Decision
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
