Financial Accouting Practice

99 Questions | Total Attempts: 52

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Financial Accounting Quizzes & Trivia

Financial Accouting Midterm Practice Chapter 1 questions are 1-41Test 2 questions 42-66Chapter 2 questions 67-


Questions and Answers
  • 1. 
    Assets are
    • A. 

      A probable future benefit arising from a transaction

    • B. 

      A right of claim in property

    • C. 

      A probable future sacrifice arising from an obligation

    • D. 

      The excess of revenue over expenses

  • 2. 
    Ruffen Co. had the following transactions take place during the month of January 2007:a. Received $5,000 cash from a bank loanb. Paid a cash dividend of $2,000 to stockholderdsc. Earned and received revenue of $4,500 cashd. Paid $2,500 worth of expensesRefer to the Ruffen Co. transactions above. At the beginning of January, 2007, stockholders' equity in Ruffen Co. was $60,000. Given the transactions that occured in january, what would stockholders' equity be at the end of the month?
    • A. 

      $69,500

    • B. 

      $62,000

    • C. 

      $60,000

    • D. 

      $64,000

  • 3. 
    The balance sheet of Brock Incorporated includes the following items:CashInventoryAccounts ReceivableCommon StockNotes PayableLandAccrued Expense PayableShort-Term InvestmentsRetained EarningsAccounts PayableThis list includes:
    • A. 

      One equity account and three liabilities

    • B. 

      Two equity accounts and four liabilities

    • C. 

      Three liabilities and two equity accounts

    • D. 

      Three liabilities and one equity account

  • 4. 
    Which financial statement reports the net change in a company's cash resources for a period of time classifying each transaction as an operating, investing or financing activity?
    • A. 

      Balance Sheet

    • B. 

      Statement of Changes in Equity

    • C. 

      Income Statement

    • D. 

      Cash Flow Statement

  • 5. 
    51Profit can be calculated by
    • A. 

      Subtracting revenue from costs

    • B. 

      Subtracting costs from revenue

    • C. 

      Adding revenue to costs

    • D. 

      Adding inventory to costs and subtracting it from revenue

  • 6. 
    Which of the following groups has primary responsibility for developing the GAAP?
    • A. 

      Government Accounting Board

    • B. 

      Securities and Exchange Commission

    • C. 

      International Accounting Standards Board

    • D. 

      Financial Accounting Standards Board

  • 7. 
    Ruffen Co. had the following transactions take place during the month of January 2007:A. Received $5,000 cash from a bank loanB. Paid a cash dividend of $2,000 to stockholdersC. Earned and received revenue of $4,000 cashD. Paid $2,500 worth of expensesRefer to the Ruffen Co. transactions above. For the month of January,2007, net cash flows from operating activities Ruffen were
    • A. 

      $4,500

    • B. 

      $9,500

    • C. 

      $2,000

    • D. 

      $7,000

  • 8. 
    Warren Inc. had the following transactions take place during the month of March 2006, in its first month of operationsA. Received $10,000 cash from the sale of common stockB. Earned and received revenue of $20,000 cashC. Paid one month rent on office space for $3,000 cashD. Purchased office equipment for $12,000 on creditBased on the transaction that ouccured during the month of March, what amount of assets will be reported on the balance sheet as of March 31, 2006?
    • A. 

      $17,500

    • B. 

      $15,500

    • C. 

      $20,500

    • D. 

      $27,500

  • 9. 
    Which of the following transactions would be considered a financing activity on the statement of cash flows?
    • A. 

      Cash received from cashing in a certificate of deposit.

    • B. 

      Cash paid to a bank from purchase of machinery and equipment.

    • C. 

      Cash received for the sale of common stock.

    • D. 

      Cash paid to a CPA for audit work.

  • 10. 
    Which of the following activities can only be performed by a certified public accountant (CPA)?
    • A. 

      Preparing financial statements for a business

    • B. 

      Providing an opinion on the fairness of financial statements

    • C. 

      Preparing tax returns for the public and corporations

    • D. 

      Providing a recommendation on an accounting software package

  • 11. 
    Corporations communicate their financial information to shareholders primarily through
    • A. 

      Financial statements

    • B. 

      Publications in trade magazines

    • C. 

      Information published by NYSE's financial analysts

    • D. 

      Information broadcasted nationally on CNN

  • 12. 
    An examination of a business's financial statements to ensure that they conform to generally accepted accounting procedures is called a(an)
    • A. 

      Certification

    • B. 

      Verification

    • C. 

      Audit

    • D. 

      Validation

  • 13. 
    Assets = Liabilities + Owners' Equity is known as
    • A. 

      A transaction

    • B. 

      The owner's equity equation

    • C. 

      The accounting equation

    • D. 

      The income statement equation

  • 14. 
    The organization that is primarily responsible for setting accounting standards is the
    • A. 

      SEC (Securities and Exchange Commission)

    • B. 

      FASB (Financial Accounting Standards Board)

    • C. 

      PCAOB (Public Companies Accounting Oversight Board)

    • D. 

      United States Congress

  • 15. 
    All of the following are balance sheet accounts except
    • A. 

      Cash

    • B. 

      Inventories

    • C. 

      Retained earnings

    • D. 

      Expenses

  • 16. 
    Cash investments by owners appear on which of the following financial statements?
    • A. 

      Balance sheet

    • B. 

      Both B and C

    • C. 

      Statement of cash flows

    • D. 

      Statement of changes in owners' equity

  • 17. 
    Which of the following is not a financial statement?
    • A. 

      Balance sheet

    • B. 

      Liability statement

    • C. 

      Income Statement

    • D. 

      Statement of changes in owner's equity

  • 18. 
    A Statement of Financial Position is another name for
    • A. 

      The statement of cash flows

    • B. 

      The balance sheet

    • C. 

      The statement of changes in equity

    • D. 

      The income statement

  • 19. 
    Which of the following equations represents the claims on a company's net assets?
    • A. 

      Common Stock + Retained Earnings

    • B. 

      Liabilities + Owner's Equity

    • C. 

      Assets - Liabilities

    • D. 

      Assets - Owner's Equity

  • 20. 
    During the year, the assets of Weber Consulting increased by $145,000 and the liabilites decreased by $35,000. If stockholders' equity is $395,000 at the end of the year, the stockholders' equity at the beginning of the year must have been
    • A. 

      $505,000

    • B. 

      $575,000

    • C. 

      $285,000

    • D. 

      $215,000

  • 21. 
    Which of the following transactions would not be recorded in a business's accounting records?
    • A. 

      The purchase of merchandise on account

    • B. 

      The purchase of merchandise for cash

    • C. 

      The sale of the business's common stock to an investor

    • D. 

      The bank reconciliation performed by the bookkeeper

  • 22. 
    Which accounts will normally appear on the income statement?
    • A. 

      Revenues

    • B. 

      Both A and B

    • C. 

      Expenses

    • D. 

      Dividends

  • 23. 
    The basic purpose of an accounting system is to
    • A. 

      Provide maximum useful information to decision makers regardless of cost

    • B. 

      Develop financial statements in accordance with GAAP

    • C. 

      Record, organize and transform business transactions into useful information as efficiently as possible

    • D. 

      Computerize information

  • 24. 
    Equity is
    • A. 

      A person who owns debt

    • B. 

      The residual interest in the assets after liabilities are deducted

    • C. 

      A business that is owned by two or more people

    • D. 

      Calculated by taking revenue minus expenses

  • 25. 
    An operating cycle for a business
    • A. 

      Is the same for all businesses

    • B. 

      Can only be for a period of twelve months

    • C. 

      Is represented by the time it takes to produce and sell a product and collect the cash from the customer

    • D. 

      Is represented by the time it takes to produce and sell a product