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Accounting Questions

Accounting Questions

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Published by: Hurya on Apr 18, 2010
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05/27/2013

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1. Who are the two primary groups of financial resource providers for a corporation?a.Accountants and CPA’s b.Suppliers and vendorsc.Investors and creditorsd.Lenders and Suppliers2. On which of the following financial statements would you expect to find financing,operating, and investing activities?a.Balance sheet b.Income statement
 
c.Statement of cash flowsd.Statement of changes in equity3.Bulldog company purchased land for $50,000 cash. A financial statement impactof this transaction isa.assets decreased b.equity increasedc.cash decreasedd.liabilities increased4.Which of the following statements is false:a.Land that increases in value is reported at its increased value on the balance sheet
 
 b.Information is reliable if it can be independently verifiedc.A reporting entity is a business or entity for which financial statements are preparedd.Financial accounting focuses on the needs of the external users.5. Which of the following statements is false:a.
 
The general ledger is a collection of a company’s financial accounts . b.The term articulation is used to describe the interrelationship among thevarious elements of the financial statements.c.All transactions that affect retained earnings also impact the incomestatement.d.The information in the ledger accounts is used to prepare the financialstatements.
6. An advantage of the corporate form of business is thata. it has limited life.b. its owner’s personal resources are at stake.c.
 
its ownership is easily transferable via the sale of shares of stock. d. it is simple to establish..
 7.
Which of the following is an advantage of corporations relative to partnerships andsole proprietorships?a.
 
Reduced legal liability for investors. b. Harder to transfer ownership.
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c. Lower taxes.d. Most common form of organization.
8.
Which of the following groups uses accounting information to determine whether thecompany’s net income will result in a stock price increase?a.Investors in common stockb.Marketing managersc.Creditorsd.Chief Financial Office
9.
Dividends paida. increase assets.b. increase expenses.c. decrease revenues.d. decrease retained earnings .
10.
In the annual report, where would a financial statement reader find out if thecompany’s financial statements give a fair depiction of its financial position andoperating results?a.Notes to the financial statementsb.Management discussion and analysis sectionc.
 
Balance sheetd.Auditor’s report11. In a classified balance sheet, assets are usually classified as:a.current assets; long-term assets; property, plant, and equipment; and
 
intangible assets.b.current assets; long-term investments; property, plant, and equipment; andcommon stocks.c.current assets; long-term investments; tangible assets; and intangible assets.d.current assets; long-term investments; property, plant, and equipment; andintangible assets.12. An intangible asseta.derives its value from the rights and privileges it provides the owner.b.is worthless because it has no physical substance.c.is converted into a tangible asset during the operating cycle.d.
 
cannot be classified on the balance sheet because it lacks physical
 
substance.13. Long-term creditors are usually most interested in evaluatinga.liquidity and profitability.b.consistency and profitability.c.liquidity and solvency.d.consistency and solvency.14. Accounting information should be neutral in order to enhancea.
 
reliability.b.consistency.c.comparability.d.relevance.15. The time period assumption states that
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a.a transaction can only affect one period of time.b.estimates should
not
be made if a transaction affects more than one timeperiod.c.adjustments to the enterprise's accounts can only be made in the time periodwhen the business terminates its operations.d.the economic life of a business can be divided into artificial time periods.16.One of the accounting concepts upon which adjustments for prepayments andaccruals are based isa. matching.b. cost.c.
 
monetary unit. d. economic entity.17. An accounting time period that is one year in length is calleda.
 
a fiscal year.b.an interim period.c.the time period assumption.d. a reporting period.18. Which of the statements below is
not
true?a.An adjusted trial balance should show ledger account balances.b.
 
An adjusted trial balance can be used to prepare financial statements.c.An adjusted trial balance proves the mathematical equality of debits andcredits in the ledger.d.An adjusted trial balance is prepared before all transactions have been journalized.19. The purpose of the post-closing trial balance is toa.
 
prove that no mistakes were made.b.prove the equality of the permanent account balances that are carriedforward into the next accounting period.c.prove the equality of the temporary account balances that are carried forwardinto the next accounting period.d.list all the balance sheet accounts in alphabetical order for easy reference.20. Ratios are used as tools in financial analysisa.instead of horizontal and vertical analyses.b.
 
because they can provide information that may not be apparent from
 
inspection of the individual components of the financial statements.c.because even single ratios by themselves are quite meaningful.d.because they are prescribed by GAAP.21.In order to be relevant, accounting information musta.be neutral.b.
 
be verifiable.c.help predict future events.d.be a faithful representation.22.If ending inventory is overstated, net income and assets will beNet Income Assetsa.UnderstatedUnderstatedb.OverstatedOverstated
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