Week 1 Practice Quiz

TOTAL POINTS 12
1.
Question 1
An investment group is looking to invest some money into a company. Where should
the investment group look for relevant information about the company's performance?

1 / 1 point

The company's Tax Books

The company's Management Books

The company's Budgets

The company's Financial Books

Correct
Correct answer. Companies prepare Financial Books to communicate their economic performance
and financial position to external audiences including investors and creditors.

2.
Question 2
A U.S. company is preparing its financial books to file with the Securities and Exchange
Commission. Which of the following should direct the preparation of the company's
financial books?

1 / 1 point

Investors and creditors

International Financial Reporting Standards (IFRS)

U.S. Generally Accepted Accounting Principles (GAAP)

Independent audit firms

Correct
Correct answer. U.S. GAAP is a set of standards that direct the preparation of financial statements
for U.S.-based companies traded on stock exchanges in the U.S.

3.
Question 3
A European Union-based company is preparing its financial books. Which of the
following should direct the preparation of the company's financial books?

1 / 1 point

International Financial Reporting Standards (IFRS)

International investors and creditors

U.S. Generally Accepted Accounting Principles (GAAP)

International audit firms

Correct
Correct answer. IFRS is a set of standards that direct the preparation of financial statements for
many international companies.

4.
Question 4
Near the end of a fiscal period, a company is working on reporting its financial position,
to share with investors and creditors. Which financial statement should the company
use to report this information?

1 / 1 point

Management Books
Balance Sheet

Statement of Cash Flows

Income Statement

Correct
Correct answer. The Balance Sheet shows a company's financial position at a specific point in time,
such as the end of a fiscal period.

5.
Question 5
A company is working on reporting its net earnings for a fiscal period, to share with
investors and creditors. Which financial statement should the company use to report this
information?

1 / 1 point

Tax Books

Balance Sheet

Income Statement

Statement of Cash Flows

Correct
Correct answer. The Income Statement shows the results of a company's operations over a period
of time, including a company's net income/earnings.

6.
Question 6
A company is working on reporting changes in the company's cash balance during a
fiscal period, to share with investors and creditors. Which financial statement should the
company use to report this information?
1 / 1 point

Income Statement

Statement of Cash Flows

Budget

Balance Sheet

Correct
Correct answer. The Statement of Cash Flows shows a company's sources and uses of cash over a
period of time, such as a fiscal period.

7.
Question 7
A company purchases inventory they hope to resell to customers. In which of the
following Balance Sheet accounts should the company record the inventory purchased?

1 / 1 point

Current Liability account

Owners' Equity account

Asset account

Liability account

Correct
Correct answer. The inventory is now owned/controlled by the company and is expected to provide
future economic benefits, so the inventory purchased should be recorded in an Asset account.

8.
Question 8
A company delivers inventory to a customer who will pay for it next month. In which of
the following Balance Sheet accounts should the company record the amount it is owed
by the customer?

1 / 1 point

Liability account

Asset account

Owners' Equity account

Current Liability account

Correct
Correct answer. The right to collect payment is now owned/controlled by the company and is
expected to provide future economic benefits, so the customer's future payment should be recorded
in an Asset account.

9.
Question 9
A company purchases inventory from its supplier this month and will pay its supplier
next month. In which of the following Balance Sheet accounts should the company
record the obligation to pay its supplier?

1 / 1 point

Liability account

Asset account

Other Equity account

Owners' Equity account

Correct
Correct answer. Since a future payment is probable and the event (purchasing the inventory) has
occurred, the obligation to pay the supplier should be recorded in a Liability account.

10.
Question 10
A company obtains a 5-year loan from a bank. In which of the following Balance Sheet
accounts should the company record the obligation to repay the loan?

0 / 1 point

Asset account

Owners' Equity account

Liability account

Other Equity account

Incorrect
Incorrect answer. The company should record the obligation to repay the loan, but not in an Owners'
Equity account. You may review by returning to "The Balance Sheet" lesson videos.

11.
Question 11
A company issues some capital stock to investors. In which of the following Balance
Sheet accounts should the company record the change in capital stock?

1 / 1 point

Asset account

Liability account

Owners' Equity account

Current Asset account

Correct
Correct answer. The change in capital stock should be recorded in an Owners' Equity account.

12.
Question 12
A company buys back some of its stock from investors. In which of the following
Balance Sheet accounts should the company record the change in treasury stock?

0 / 1 point

Asset account

Liability account

Owners' Equity account

Current Asset account

Incorrect
Incorrect answer. The company should record the change in treasury stock, but not under Current
Assets. You may review by returning to "The Balance Sheet" lesson videos.