Financial Accounting Midterm 1 Exam
Questions and Answers | Verified Study
Guide | 2026/2027
Which of the following financial statements is for a particular date rather than a
period of time? a. income statement b. cash flow statement c. statement of
stockholder's equity d. balance sheet - correct answer-d. balance sheet
Which of the following items would be shown as part of the Stockholders' Equity
on the balance sheet? a. cash b. notes payable c. retained earnings d. accounts
receivable - correct answer-c. retained earnings
Assets equal $450,000, liabilities equal $120,000, and common stock equals
$200,000. What is the dollar amount of retained earnings? a. $80,000 b. $330,000
c. $320,000 d. $130,000 - correct answer-d. $130,000
A company sold $400,000 of merchandise for cash and $120,000 of merchandise
on credit to customers who will pay for the merchandise in a later time period.
How much revenue should be reported on the income statement of the current
time period? a. $280,000 b. $520,000 c. $400,000 d. $120,000 - correct answer-b.
$520,000
The beginning balance of retained earnings was $7,500. The dividends paid to
stockholders were $1,500. The ending balance of retained earnings is $5,000.
, What was the net income or net loss for the accounting period? a. net loss of
$1,000 b. net income of $1,000 c. net loss of $2,000 d. net income of $2,500 -
correct answer-a. net loss of $1,000
Which cash flow activity is related to borrowing money on a long-term basis? a.
operating activities b. investing activities c. financing activities d. investing and
financing activities - correct answer-c. financing activities
Which of the following transactions would be considered an investing activity on a
Statement of Cash Flows? a. purchased equipment for cash b. sold stock for cash
to stockholders c. borrowed $200,000 on a long-term note d. paid $45,000 for
inventory for resale - correct answer-a. purchased equipment for cash
Which of the following would not appear on an income statement? a. sales
revenue b. accounts payable c. rent expense d. cost of goods sold - correct
answer-b. accounts payable
Which organization has primary responsibility for developing United States'
generally accepted accounting principles? a. American Institute of Certified Public
Accountants b. financial accounting standards board c. securities and exchange
commission d. internal revenue service - correct answer-b. financial accounting
standards board
The primary purpose of an audit (examination) of the financial reports of a
company is to: a. uncover fraud b. determine who is guilty of malpractice c.
determine whether the financial reports conform to GAAP d. examine every
document and transaction to verify it was accurately reported - correct answer-c.
determine whether the financial reports conform to GAAP
Questions and Answers | Verified Study
Guide | 2026/2027
Which of the following financial statements is for a particular date rather than a
period of time? a. income statement b. cash flow statement c. statement of
stockholder's equity d. balance sheet - correct answer-d. balance sheet
Which of the following items would be shown as part of the Stockholders' Equity
on the balance sheet? a. cash b. notes payable c. retained earnings d. accounts
receivable - correct answer-c. retained earnings
Assets equal $450,000, liabilities equal $120,000, and common stock equals
$200,000. What is the dollar amount of retained earnings? a. $80,000 b. $330,000
c. $320,000 d. $130,000 - correct answer-d. $130,000
A company sold $400,000 of merchandise for cash and $120,000 of merchandise
on credit to customers who will pay for the merchandise in a later time period.
How much revenue should be reported on the income statement of the current
time period? a. $280,000 b. $520,000 c. $400,000 d. $120,000 - correct answer-b.
$520,000
The beginning balance of retained earnings was $7,500. The dividends paid to
stockholders were $1,500. The ending balance of retained earnings is $5,000.
, What was the net income or net loss for the accounting period? a. net loss of
$1,000 b. net income of $1,000 c. net loss of $2,000 d. net income of $2,500 -
correct answer-a. net loss of $1,000
Which cash flow activity is related to borrowing money on a long-term basis? a.
operating activities b. investing activities c. financing activities d. investing and
financing activities - correct answer-c. financing activities
Which of the following transactions would be considered an investing activity on a
Statement of Cash Flows? a. purchased equipment for cash b. sold stock for cash
to stockholders c. borrowed $200,000 on a long-term note d. paid $45,000 for
inventory for resale - correct answer-a. purchased equipment for cash
Which of the following would not appear on an income statement? a. sales
revenue b. accounts payable c. rent expense d. cost of goods sold - correct
answer-b. accounts payable
Which organization has primary responsibility for developing United States'
generally accepted accounting principles? a. American Institute of Certified Public
Accountants b. financial accounting standards board c. securities and exchange
commission d. internal revenue service - correct answer-b. financial accounting
standards board
The primary purpose of an audit (examination) of the financial reports of a
company is to: a. uncover fraud b. determine who is guilty of malpractice c.
determine whether the financial reports conform to GAAP d. examine every
document and transaction to verify it was accurately reported - correct answer-c.
determine whether the financial reports conform to GAAP
