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ACCT 2000 Final Exam EOC Practice Lowe-
Ardoin Questions and Correct Answers
What is the basic accounting equation? Ans: Assets = Liabilities +
Stockholders' Equity
Which is an advantage of corporations relative to partnerships and
sole proprietorships? Ans: Reduced legal liability for investors
Which forms of business organization are considered to be
separate accounting entities? Ans: Sole Proprietorship,
Corporations, and Partnerships.
Which of the following did NOT result from the Sarbanes-Oxley
Act? Ans: Tax rates on corporations increased.
The payment of dividends is an example of a(n) Ans: financing
activity
What kind of classification is cost of goods sold? Ans: expense
What section of cash flow statement shows the cash spent on new
equipment during the past accounting period? Ans: The investing
section
If total liabilities decreased by $15,000 and stockholders' equity
increased by $5,000 during a period of time, then total assets must
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change by what amount and direction during that same period?
Ans: $10,000 decrease
(Assets = Liabilities + Stockholders' Equity)
Which is NOT one of the three forms of business organizations?
Ans: Creditorship
Ease of transferring ownership is a characteristic of which form of
business organization? Ans: Corporation
In which forms of business organization are the owners personally
liable for all the debts of the business? Ans: Sole proprietorships
and Partnerships
The sole proprietorship form of business organization? Ans:
Generally, receives favorable tax treatment relative to a
corporation
To which of the following questions will internal users want
answers? Ans: All of the answer choices are correct.
- what selling price for our product will maximize the company's
net income?
- which product line is most profitable?
- is cash sufficient to pay dividend to stockholders?
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Which of the following is NOT an external user of accounting data?
Ans: Chief Financial Officer
Which statement about users of accounting information is
INCORRECT? Ans: Regulatory authorities are considered internal
users.
Which of the following is the most appropriate definition of
accounting? Ans: The information system that identifies, records,
and communicates the economic events of an organization to
interested users.
Paying interest expense and receiving interest revenue are
examples of Ans: Operating activates
Which of the following is NOT one of the three primary business
activities? Ans: Advertising
Which of the following is an example of a financing activity? Ans:
Issuing shares of common stock
Resources owned by a business are referred to as Ans: assets
In terms of the principal types of business activities, paying
salaries expense is an example of an Ans: operating activity
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On Jan. 10, Novis Company purchased manufacturing equipment
for $80,000 cash. What kind of activity is this? Ans: Investing
activity
In what section of the statement of cash flows would the purchase
of office equipment for $10,000 cash appear? Ans: Investing
activities
Which of the following is NOT one of the primary types of the
financing activities in the statement of cash flows? Ans: Buying
equipment
Which of the following would NOT appear on the income
statement? Ans: Dividends paid
Which of the following would NOT appear on the retained earnings
statement? Ans: service revenue
Net income will result during a time period when Ans: revenues
exceed expenses
The financial statements for Harold Corporation contained the
following information:
Accounts receivable: $5,000
Sales Revenue: $75,000
© 2025 All rights reserved
ACCT 2000 Final Exam EOC Practice Lowe-
Ardoin Questions and Correct Answers
What is the basic accounting equation? Ans: Assets = Liabilities +
Stockholders' Equity
Which is an advantage of corporations relative to partnerships and
sole proprietorships? Ans: Reduced legal liability for investors
Which forms of business organization are considered to be
separate accounting entities? Ans: Sole Proprietorship,
Corporations, and Partnerships.
Which of the following did NOT result from the Sarbanes-Oxley
Act? Ans: Tax rates on corporations increased.
The payment of dividends is an example of a(n) Ans: financing
activity
What kind of classification is cost of goods sold? Ans: expense
What section of cash flow statement shows the cash spent on new
equipment during the past accounting period? Ans: The investing
section
If total liabilities decreased by $15,000 and stockholders' equity
increased by $5,000 during a period of time, then total assets must
© 2025 All rights reserved
, 2 | Page
change by what amount and direction during that same period?
Ans: $10,000 decrease
(Assets = Liabilities + Stockholders' Equity)
Which is NOT one of the three forms of business organizations?
Ans: Creditorship
Ease of transferring ownership is a characteristic of which form of
business organization? Ans: Corporation
In which forms of business organization are the owners personally
liable for all the debts of the business? Ans: Sole proprietorships
and Partnerships
The sole proprietorship form of business organization? Ans:
Generally, receives favorable tax treatment relative to a
corporation
To which of the following questions will internal users want
answers? Ans: All of the answer choices are correct.
- what selling price for our product will maximize the company's
net income?
- which product line is most profitable?
- is cash sufficient to pay dividend to stockholders?
© 2025 All rights reserved
, 3 | Page
Which of the following is NOT an external user of accounting data?
Ans: Chief Financial Officer
Which statement about users of accounting information is
INCORRECT? Ans: Regulatory authorities are considered internal
users.
Which of the following is the most appropriate definition of
accounting? Ans: The information system that identifies, records,
and communicates the economic events of an organization to
interested users.
Paying interest expense and receiving interest revenue are
examples of Ans: Operating activates
Which of the following is NOT one of the three primary business
activities? Ans: Advertising
Which of the following is an example of a financing activity? Ans:
Issuing shares of common stock
Resources owned by a business are referred to as Ans: assets
In terms of the principal types of business activities, paying
salaries expense is an example of an Ans: operating activity
© 2025 All rights reserved
, 4 | Page
On Jan. 10, Novis Company purchased manufacturing equipment
for $80,000 cash. What kind of activity is this? Ans: Investing
activity
In what section of the statement of cash flows would the purchase
of office equipment for $10,000 cash appear? Ans: Investing
activities
Which of the following is NOT one of the primary types of the
financing activities in the statement of cash flows? Ans: Buying
equipment
Which of the following would NOT appear on the income
statement? Ans: Dividends paid
Which of the following would NOT appear on the retained earnings
statement? Ans: service revenue
Net income will result during a time period when Ans: revenues
exceed expenses
The financial statements for Harold Corporation contained the
following information:
Accounts receivable: $5,000
Sales Revenue: $75,000
© 2025 All rights reserved
