Basic Arithmetic Quiz
Can you answer all these simple questions about basic arithmetic? Let's prove yourself now!
- 1.
Which of the following groups would be considered an internal user of financial statements?
- A.
Stockholders
- B.
Factory managers supervising production line workers for Westinghouse
- C.
Assets = Liabilities + Owners' Equity
- D.
FASB (Financial Accounting Standards Board).
Correct Answer
B. Factory managers supervising production line workers for Westinghouse -
- 2.
Which of the following would be classified as external users of financial statements?
- A.
Factory managers supervising production line workers for Westinghouse
- B.
Stockholders
- C.
FASB (Financial Accounting Standards Board).
- D.
Assets = Liabilities + Owners' Equity
Correct Answer
B. Stockholders -
- 3.
The accounting equation can be stated as
- A.
Assets = Liabilities + Owners' Equity
- B.
Stockholders
- C.
FASB (Financial Accounting Standards Board).
- D.
Provide information for decision making
Correct Answer
A. Assets = Liabilities + Owners' Equity -
- 4.
The organization primarily responsible for setting accounting principles (GAAP) today is the:
- A.
Stockholders
- B.
Assets = Liabilities + Owners' Equity
- C.
Provide information for decision making
- D.
FASB (Financial Accounting Standards Board).
Correct Answer
D. FASB (Financial Accounting Standards Board). -
- 5.
Which of the following is the primary objective of financial reporting?
- A.
Provide information for decision making
- B.
Factory managers supervising production line workers for Westinghouse
- C.
Stockholders
- D.
Assets = Liabilities + Owners' Equity
Correct Answer
A. Provide information for decision making -
- 6.
You are a banker and Phillip Morris, Inc., a tobacco company, has given you its most recent annual report in an effort to get a sizeable loan. The company is very profitable and appears to have a sound financial position. Based on a report presented on prime-time television last night, you are aware the company is a defendant in lawsuits from several states and by other parties that have been adversely impacted by cigarettes. The information presented on television is an example of financial information that is
- A.
to those willing to spend the time to understand it.
- B.
Relevant
- C.
Accounts receivable
- D.
Provide information for decision making
Correct Answer
B. Relevant -
- 7.
The preparation of financial statements require that the information be understandable
- A.
to those willing to spend the time to understand it.
- B.
Relevant
- C.
Provide information for decision making
- D.
Factory managers supervising production line workers for Westinghouse
Correct Answer
A. to those willing to spend the time to understand it. -
- 8.
Which of the following items is reported as a current asset on a classified balance sheet?
- A.
Provide information for decision making
- B.
to those willing to spend the time to understand it.
- C.
Accounts receivable
- D.
Relevant
Correct Answer
C. Accounts receivable -
- 9.
Working capital is defined as
- A.
current assets minus current liabilities.
- B.
to those willing to spend the time to understand it.
- C.
Relevant
- D.
Accounts receivable
Correct Answer
A. current assets minus current liabilities. -
- 10.
If Sales equal $357,000, Cost of Goods Sold equals $218,000, and Operating Expenses equal $98,000, what is Gross Profit?
- A.
$139,000.
- B.
current assets minus current liabilities.
- C.
$15,000.
- D.
to those willing to spend the time to understand it.
Correct Answer
A. $139,000. -
- 11.
If total assets were $50,000 and total liabilities were $35,000, then stockholders' equity would be
- A.
$139,000.
- B.
$15,000.
- C.
Accounts receivable
- D.
to those willing to spend the time to understand it.
Correct Answer
B. $15,000. -
- 12.
The financial statement that lists the revenues and expenses is referred to as the
- A.
Income Statement.
- B.
Accounts receivable
- C.
$139,000.
- D.
satisfy the need for full disclosure of all the facts relevant to a company's results and financial position.
Correct Answer
A. Income Statement. -
- 13.
One of the purposes of the notes to financial statements is to
- A.
$15,000.
- B.
$139,000.
- C.
satisfy the need for full disclosure of all the facts relevant to a company's results and financial position.
- D.
Income Statement.
Correct Answer
C. satisfy the need for full disclosure of all the facts relevant to a company's results and financial position. -
- 14.
Although businesses engage in a wide variety of activities, all of these activities can be categorized into three types. These three types of business activities are
- A.
operating, financing, and investing.
- B.
Accounts receivable
- C.
Building a manufacturing plant
- D.
Income Statement.
Correct Answer
A. operating, financing, and investing. -
- 15.
Which of the following is an investing activity of a business?
- A.
Income Statement.
- B.
Selling stock to investors
- C.
satisfy the need for full disclosure of all the facts relevant to a company's results and financial position.
- D.
Building a manufacturing plant
Correct Answer
D. Building a manufacturing plant -
- 16.
Which of the following is a financing activity of a business?
- A.
Selling stock to investors
- B.
Building a manufacturing plant
- C.
Assets increase and owners' equity increases
- D.
Assets increase and owners' equity increases
Correct Answer
A. Selling stock to investors -
- 17.
Which of the following is an operating activity of a business?
- A.
Selling product for cash
- B.
Assets increase and owners' equity increases
- C.
Building a manufacturing plant
- D.
A debit
Correct Answer
A. Selling product for cash -
- 18.
Bart invested $15,000 in his business. How does this affect the accounting equation?
- A.
Factory managers supervising production line workers for Westinghouse
- B.
Provide information for decision making
- C.
to those willing to spend the time to understand it.
- D.
Assets increase and owners' equity increases
Correct Answer
D. Assets increase and owners' equity increases -
- 19.
Services are provided for customers and they are sent bills for the amount they owe. How does this affect the accounting equation?
- A.
to those willing to spend the time to understand it.
- B.
Assets increase and owners' equity increases
- C.
$15,000.
- D.
$139,000.
Correct Answer
B. Assets increase and owners' equity increases -
- 20.
An entry made to the left side of an account is called
- A.
A debit
- B.
operating, financing, and investing.
- C.
Income Statement.
- D.
satisfy the need for full disclosure of all the facts relevant to a company's results and financial position.
Correct Answer
A. A debit -
- 21.
An entry made to the right side of an account is called a
- A.
satisfy the need for full disclosure of all the facts relevant to a company's results and financial position.
- B.
Income Statement.
- C.
operating, financing, and investing.
- D.
Credit
Correct Answer
D. Credit -
- 22.
The process of recording the economic effects of business transactions in a book of original entry is called
- A.
Accounts receivable; accounts payable
- B.
Journalizing
- C.
A double-entry system
- D.
operating, financing, and investing.
Correct Answer
B. Journalizing -
- 23.
The system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance is called
- A.
A double-entry system
- B.
Journalizing
- C.
A list of accounts and their balances (used to prove the equality of debits and credits).
- D.
Accounts receivable; accounts payable
Correct Answer
A. A double-entry system -
- 24.
A trial balance is
- A.
Accounts receivable; accounts payable
- B.
Objective; verifiable.
- C.
A double-entry system
- D.
A list of accounts and their balances (used to prove the equality of debits and credits).
Correct Answer
D. A list of accounts and their balances (used to prove the equality of debits and credits). -
- 25.
If the business has an _________ from a customer, then the customer has an ________ to the business
- A.
Objective; verifiable.
- B.
A list of accounts and their balances (used to prove the equality of debits and credits).
- C.
Accounts receivable; accounts payable
- D.
earned; when the costs are incurred.
Correct Answer
C. Accounts receivable; accounts payable -
- 26.
The original/historical cost is used to record asset purchases because it is __________ and __________.
- A.
Meal is served.
- B.
Objective; verifiable.
- C.
cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting.
- D.
Accounts receivable; accounts payable
Correct Answer
B. Objective; verifiable. -
- 27.
The accrual basis of accounting recognizes revenues when __________, and expenses __________.
- A.
Accounts receivable; accounts payable
- B.
Objective; verifiable.
- C.
cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting.
- D.
Earned; when the costs are incurred
Correct Answer
D. Earned; when the costs are incurred -
- 28.
Lizzie’s Lunches operates a catering service. Conceptually, Lizzie should recognize revenue from its catering service at the date the (HINT: think about your answer to question 27)
- A.
Meal is served.
- B.
$2,100
- C.
Agencies
- D.
Cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting.
Correct Answer
A. Meal is served. -
- 29.
Adjustments are necessary only if
- A.
Subscriptions Received in Advance, $1,200; Magazine Revenue, $3,800.
- B.
Meal is served
- C.
Cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting
- D.
$25,700.
Correct Answer
C. Cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting -
- 30.
CPA Monthly Company received advance payments from customers during 2006 of $5,000. At December 31, 2006, $1,200 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2006, the balances in the Subscriptions Received in Advance and Magazine Revenue accounts will be
- A.
Subscriptions Received in Advance, $1,200; Magazine Revenue, $3,800
- B.
$25,700.
- C.
Cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting.
- D.
meal is served.
Correct Answer
A. Subscriptions Received in Advance, $1,200; Magazine Revenue, $3,800 -
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Current Version
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Mar 20, 2019Quiz Edited by
ProProfs Editorial Team -
Dec 15, 2011Quiz Created by
Nasergreen
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