A100 Final Exam IU Questions with Correct Answers Latest Update 2025-2026
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 - Answers 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. - Answers 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 - Answers 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. - Answers 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. - Answers 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. - Answers 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. - Answers $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. - Answers 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. - Answers 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. - Answers 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. - Answers Total assets will remain unchanged.
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 - Answers 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. - Answers 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 - Answers 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. - Answers 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. - Answers 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. - Answers 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. - Answers $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. - Answers 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. - Answers 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. - Answers 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. - Answers Total assets will remain unchanged.
