Question 1

How many of the following transactions are operating activities? Borrowed $50,000 from the bank
Purchased $12,000 in supplies
Provide services to customers for $27,000
Paid the utility bill of $750
Purchased a delivery truck for $12,000
Received $25,000 from issuing common stock

Accepted Answer

A)  One.
B)  Two.
C)  Three.
D)  Four.

Question 2

Accounting information is used by investors to decide whether to invest in a company's stock.

Accepted Answer

A) True 
 B)False

Question 3

The equation best describing the balance sheet is:

Accepted Answer

A)  Assets = Liabilities + Stockholders' Equity.
B)  RevenuesExpenses = Net Income.
C)  Ending Retained Earnings + Dividends = Net Income.
D)  Revenues + Expenses = Net Income.

Question 4

The conceptual framework's qualitative characteristic of faithful representation includes:

Accepted Answer

A)  Predictive value.
B)  Neutrality.
C)  Confirmatory value.
D)  Comparability.

Question 5

Consider the following account balances of the Shattuck Law Firm at the end of the year:  How many of these accounts would appear in Shattuck's year-end balance sheet?

Accepted Answer

A)  Five.
B)  Four.
C)  Three.
D)  Two.

Question 6

Accounting information that does not provide measurement bias in favor of a particular set of companies has the characteristic of:

Accepted Answer

A)  Relevance.
B)  Consistency.
C)  Materiality.
D)  Neutrality.

Question 7

The balance sheet depicts which of the following equations?

Accepted Answer

A)  Net income = revenue − expenses.
B)  Ending retained earnings = beginning retained earnings + net income − dividends.
C)  Assets = liabilities + stockholders' equity.
D)  Net cash flows = total cash inflows − total cash outflows.

Question 8

Fundamental qualitative characteristics of accounting information are:

Accepted Answer

A)  Relevance and comparability.
B)  Comparability and consistency.
C)  Faithful representation and relevance.
D)  Faithful representation and consistency.

Question 9

The conceptual framework's qualitative characteristic of relevance includes:

Accepted Answer

A)  Predictive value.
B)  Verifiability.
C)  Completeness.
D)  Neutrality.

Question 10

Enhancing qualitative characteristics of accounting information include:

Accepted Answer

A)  Relevance and comparability.
B)  Comparability and consistency.
C)  Faithful representation and relevance.
D)  Cost effectiveness and materiality.

Question 11

Which of the following items would not appear in an income statement?

Accepted Answer

A)  Salaries expense.
B)  Advertising expense.
C)  Service revenue.
D)  Cash.

Question 12

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements regarding financial reports is not correct?

Accepted Answer

A)  A balance sheet contains assets,liabilities,and stockholders' equity information.
B)  An income statement shows revenues and expenses.
C)  A statement of stockholders' equity reports revenues,net income,and dividends information.
D)  A statement of cash flows shows cash inflows and outflows from operating,investing,and financing activities.

Question 14

Constraints on qualitative characteristics of accounting information include:

Accepted Answer

A)  Freedom from material error.
B)  Going concern.
C)  Neutrality.
D)  Cost effectiveness.

Question 15

Transactions related to the primary business activities of the company,such as selling goods and services to customers,are referred to as:

Accepted Answer

A)  Investing activities.
B)  Operating activities.
C)  Management activities.
D)  Financing activities.

Question 16

Below are typical transactions for a company.Indicate whether each transaction is classified as a financing,investing,or operating activity.

Accepted Answer

1.Financing;2.Operating;3.Oper...

Question 17

Which of the following financial statements reports a company's retained earnings?

Accepted Answer

A)  Income statement.
B)  Balance sheet.
C)  Statement of cash flows.
D)  All of the other answers are correct.

Question 18

The accounts that represent resources owed to creditors are called:

Accepted Answer

A)  Assets.
B)  Liabilities.
C)  Dividends.
D)  Stockholders' equity.

Question 19

In general,if a company's net income is increasing,so will its stock price.

Accepted Answer

A) True 
 B)False

Question 20

The financial statement that represents the accounting equation is the:

Accepted Answer

A)  Income statement.
B)  Statement of cash flows.
C)  Balance sheet.
D)  Statement of stockholders' equity.

Exam 1: A Framework for Financial Accounting

Constraints on qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

Below are typical transactions for a company.Indicate whether each transaction is classified as a financing,investing,or operating activity.

Correct Answerverified1.Financing;2.Operating;3.Oper...View AnswerShow Answer

The financial statement that represents the accounting equation is the:

Correct AnswerverifiedShow Answer

Fundamental qualitative characteristics of accounting information are:

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Which of the following financial statements reports a company's retained earnings?

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Which of the following statements regarding financial reports is not correct?

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Consider the following account balances of the Shattuck Law Firm at the end of the year: How many of these accounts would appear in Shattuck's year-end balance sheet?

Correct AnswerverifiedShow Answer

Which of the following items would not appear in an income statement?

Correct AnswerverifiedShow Answer

The equation best describing the balance sheet is:

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The accounts that represent resources owed to creditors are called:

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In general,if a company's net income is increasing,so will its stock price.

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The balance sheet depicts which of the following equations?

Correct AnswerverifiedShow Answer

The conceptual framework's qualitative characteristic of faithful representation includes:

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How many of the following transactions are operating activities? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750 Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock

Correct AnswerverifiedShow Answer

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

Correct AnswerverifiedShow Answer

Accounting information that does not provide measurement bias in favor of a particular set of companies has the characteristic of:

Correct AnswerverifiedShow Answer

Accounting information is used by investors to decide whether to invest in a company's stock.

Correct AnswerverifiedShow Answer

Transactions related to the primary business activities of the company,such as selling goods and services to customers,are referred to as:

Correct AnswerverifiedShow Answer

The conceptual framework's qualitative characteristic of relevance includes:

Correct AnswerverifiedShow Answer

Enhancing qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

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1.Financing;2.Operating;3.Oper...
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