Question 1

A company incurred $5,000 in wages for employees for the year.$4,500 of these wages were paid by the end of the year.Choose the TRUE statement.

Accepted Answer

A)  Wages payable on the income statement will be $4,500.
B)  Wages expense on the income statement will be $500.
C)  Wages expense on the balance sheet will be $5,000.
D)  Wages payable on the balance sheet will be $500.E) All of the above
F) C) and D) D

Question 2

Dividends are subtracted from revenues on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not an expense?

Accepted Answer

A)  Wages of employees.
B)  Interest incurred on a loan the company had taken out.
C)  Dividends.
D)  Corporate income tax.E) A) and B)
F) None of the above

Question 4

All corporations acquire financing by issuing stock for sale on public stock exchanges.

Accepted Answer

A) True 
 B)False

Question 5

Choose the TRUE statement.

Accepted Answer

A)  A company with Net Income will also have a cash increase from operating activities.
B)  A company with Liabilities of $80,000 and Stockholders' equity of $50,000 will have Assets of $30,000.
C)  If a company has total revenues of $80,000,total expenses of $50,000 and dividends of $10,000,they will have net income of $20,000.
D)  A company with total stockholders' equity of $120,000 and contributed capital of $75,000 must have total retained earnings of $45,000.E) C) and D)
F) A) and B)

Question 6

What is the amount of Cash Flows from Financing Activities?

Accepted Answer

A)  Cash outflow of $40,000
B)  Cash inflow of $5,000
C)  Cash inflow of $49,000
D)  Cash inflow of $10,000E) None of the above
F) B) and C)

Question 7

You paid $10,000 to buy 1% of the stock in a corporation that has now gone bankrupt.The company owes $10 million dollars to creditors.As a result of the bankruptcy,you will lose $100,000.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would not appear as a possible liability on the balance sheet?

Accepted Answer

A)  Accounts payable
B)  Contributed capital
C)  Notes payable
D)  Wages payableE) A) and D)
F) None of the above

Question 9

Which of the following would be reported on the income statement for the current year?

Accepted Answer

A)  In the current year,the company sold goods to customers who agreed to pay next year.
B)  In the current year,the company received payment in cash for goods that were sold to customers last year.
C)  In the current year,the company borrowed money from the bank which is to be used in the business activities this year.
D)  In the current year,the company issued stock to owners and received cash immediately.E) C) and D)
F) B) and D) A

Question 10

The purpose of a statement of retained earnings is to:

Accepted Answer

A)  estimate the current value of a company's assets.
B)  report how the profits of a company have been distributed to stockholders or retained in the business.
C)  show where the cash is flowing into and out of a company.
D)  explain the specific revenues and expenses arising during the period.E) B) and C)
F) A) and D) B

Question 11

Expenses are shown

Accepted Answer

A)  on the income statement in the time period in which they are paid.
B)  on the income statement in the time period in which they are incurred.
C)  on the balance sheet in the time period in which they are paid.
D)  on the balance sheet in the time period in which they are incurred.E) A) and D)
F) C) and D)

Question 12

Which one of the following is not likely to be a consequence of fraudulent financial reporting?

Accepted Answer

A)  The company's stock price drops once the fraud is discovered.
B)  Innocent accountants who work for the company's CPA firm lose their jobs.
C)  Creditors recover 100% of amounts owed to them.
D)  Employees lose their retirement savings.E) None of the above
F) C) and D)

Question 13

A company owes $200,000 on a bank loan.It will be reported as Notes Payable.

Accepted Answer

A) True 
 B)False

Question 14

Generally accepted accounting principles (GAAP) were (are) established by:

Accepted Answer

A)  an Italian monk in 1494.
B)  the U.S.Congress in 1933.
C)  the PCAOB in 2004.
D)  the FASB on an ongoing basis.E) B) and C)
F) A) and C)

Question 15

Every financial statement should have "who,what,and when" in its heading.These are:

Accepted Answer

A)  the name of the person preparing the statement,the type of financial statement,and when the financial statement was reported to the SEC.
B)  the name of the person preparing the statement,the name of the company,and the date the statement was prepared.
C)  the name of the company,the type of financial statement,and the time period or date from which the data were taken.
D)  the name of the company,the purpose of the statement,and when the financial statement was reported to the IRS.E) All of the above
F) B) and C)

Question 16

Which of the following are the three basic elements of the balance sheet?

Accepted Answer

A)  assets,liabilities,and retained earnings.
B)  assets,liabilities,and contributed capital.
C)  assets,liabilities,and revenues.
D)  assets,liabilities,and stockholders' equity.E) B) and D)
F) B) and C)

Question 17

Which of the following would be reported on the income statement for the year?

Accepted Answer

A)  The amount of cash at the end of the year.
B)  The amount of supplies used up during the current year.
C)  The amount of dividends distributed to owners during the current year.
D)  The amount of unpaid employee wages at the end of the year.E) All of the above
F) A) and C)

Question 18

The WC Company borrowed $26,500 from a bank during 2013.

Accepted Answer

A)  This would be listed as ($26,500) under investing activities on the statement of cash flows.
B)  This would be listed as ($26,500) under operating activities on the statement of cash flows.
C)  This would be listed as $26,500 under investing activities on the statement of cash flows.
D)  This would be listed as $26,500 under financing activities on the statement of cash flows.E) C) and D)
F) A) and B)

Question 19

Which of the following statements about financial accounting is true?

Accepted Answer

A)  Produces reports for external users.
B)  Produces reports for internal users.
C)  Produces reports that are used by employees.
D)  Produces reports that are used to determine how the company finances its growth.E) A) and B)
F) A) and C)

Question 20

Cash flow from investing activities includes

Accepted Answer

A)  amounts received from a company's stockholders for the sale of stock.
B)  amounts received from the sale of the company's office building.
C)  amounts paid for dividends to the company's stockholders.
D)  amounts paid for salaries of employees.E) A) and D)
F) A) and C)

Exam 1: Business Decisions and Financial Accounting

A company incurred $5,000 in wages for employees for the year.$4,500 of these wages were paid by the end of the year.Choose the TRUE statement.

Correct AnswerverifiedD

Dividends are subtracted from revenues on the income statement.

Correct AnswerverifiedShow Answer

Which of the following is not an expense?

Correct AnswerverifiedShow Answer

All corporations acquire financing by issuing stock for sale on public stock exchanges.

Correct AnswerverifiedShow Answer

Choose the TRUE statement.

Correct AnswerverifiedShow Answer

What is the amount of Cash Flows from Financing Activities?

Correct AnswerverifiedShow Answer

You paid $10,000 to buy 1% of the stock in a corporation that has now gone bankrupt.The company owes $10 million dollars to creditors.As a result of the bankruptcy,you will lose $100,000.

Correct AnswerverifiedShow Answer

Which of the following would not appear as a possible liability on the balance sheet?

Correct AnswerverifiedShow Answer

Which of the following would be reported on the income statement for the current year?

Correct AnswerverifiedA

The purpose of a statement of retained earnings is to:

Correct AnswerverifiedB

Expenses are shown

Correct AnswerverifiedShow Answer

Which one of the following is not likely to be a consequence of fraudulent financial reporting?

Correct AnswerverifiedShow Answer

A company owes $200,000 on a bank loan.It will be reported as Notes Payable.

Correct AnswerverifiedShow Answer

Generally accepted accounting principles (GAAP) were (are) established by:

Correct AnswerverifiedShow Answer

Every financial statement should have "who,what,and when" in its heading.These are:

Correct AnswerverifiedShow Answer

Which of the following are the three basic elements of the balance sheet?

Correct AnswerverifiedShow Answer

Which of the following would be reported on the income statement for the year?

Correct AnswerverifiedShow Answer

The WC Company borrowed $26,500 from a bank during 2013.

Correct AnswerverifiedShow Answer

Which of the following statements about financial accounting is true?

Correct AnswerverifiedShow Answer

Cash flow from investing activities includes

Correct AnswerverifiedShow Answer

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