1. 1.

Question
The accounting profession can be divided into three major categories; specifically, the practice of public
accounting, private accounting, and governmental accounting. A somewhat unique and important service
of public accountants is:

o  Financial accounting.

o  Managerial accounting.

o  Auditing.

o  Cost accounting.
2. 2. Question
The primary private sector agency that oversees external financial reporting standards is the:

o  Financial Accounting Standards Board.

o  Federal Bureau of Investigation.

o  General Accounting Office.

o  Internal Revenue Service.

3. 3. Question
Which of the following equations properly represents a derivation of the fundamental accounting
equation?

o  Assets + liabilities = owner's equity.

o  Assets = owner's equity.

o  Cash = assets.

o  Assets – liabilities = owner's equity.

4. 4. Question
Wilson Company owns land that cost $100,000. If a “quick sale” of the land was necessary to generate
cash, the company feels it would receive only $80,000. The company continues to report the asset on the
balance sheet at $100,000. Which of the following concepts justifies this?

o  The historical-cost principle.

o  The value is tied to objective and verifiable past transactions.

o  Neither of the above.

o  Both "a" and "b".

5. 5. Question
 Retained earnings will change over time because of several factors. Which of the following factors would
explain an increase in retained earnings?

o  Net loss.

o  Net income.

o  Dividends.

o  Investments by stockholders.
6. 6. Question
Which of these items would be accounted for as an expense?

o  Repayment of a bank loan.

o  Dividends to stockholders.

o  The purchase of land.

o  Payment of the current period's rent.

7. 7. Question
Which of the following transactions would have no impact on stockholders’ equity?

o  Purchase of land from the proceeds of a bank loan.

o  Dividends to stockholders.

o  Net loss.

o  Investments of cash by stockholders.

8. 8. Question
Which of the following would not be included on a balance sheet?

o  Accounts receivable.

o  Accounts payable.

o  Sales.

o  Cash.