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Internal users of financial data include:


A) investors.
B) creditors.
C) management.
D) regulatory authorities.

E) B) and C)
F) B) and D)

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The three main types of business activities measured by financial statements are:


A) selling goods, selling services, and obtaining financing.
B) operating activities, investing activities, and financing activities.
C) hiring, producing, and advertising.
D) generating revenues, paying expenses, and paying dividends.

E) C) and D)
F) A) and C)

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The Publish or Perish Printing Company paid a dividend to stockholders. This will be reported on the:


A) audit report.
B) income statement.
C) balance sheet.
D) statement of retained earnings.

E) All of the above
F) None of the above

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Which of the following is true about the format of financial statements?


A) A double underline is drawn below the subtotal for total liabilities on the balance sheet.
B) Dollar signs are omitted if the heading states that amounts are reported in U.S. dollars.
C) Dividends are reported in parenthesis on the statement of retained earnings.
D) The heading of each financial statement indicates who, when, and what in that particular order.

E) C) and D)
F) B) and D)

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Financing that individuals or institutions have provided to a company is


A) always classified as liabilities.
B) classified as liabilities when provided by creditors and stockholders' equity when provided by owners.
C) always classified as equity.
D) classified as stockholders' equity when provided by creditors and liabilities when provided by owners.

E) All of the above
F) None of the above

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Calculate the net income for the Green Thumb, Inc. Then, assuming the company had retained earnings of $162,000 as of January 1, 2010, and paid out $46,000 in dividends during the year, prepare its statement of retained earnings.

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blured image Net income is $304,...

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Choose the TRUE statement.


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 $75,000 of contributed capital must have total

E) A) and B)
F) A) and C)

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A legal document called a stock certificate is used to indicate ownership in a


A) Corporation
B) Sole proprietorship
C) Partnership
D) Both sole proprietorship and partnership

E) None of the above
F) A) and B)

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Faithful representation is a characteristic of external financial reporting that means


A) the financial reports of a business are assumed to include the results of only that business's activities.
B) financial information can be compared across businesses because similar accounting methods are applied.
C) the results of business activities are reported using an appropriate monetary unit.
D) financial information depicts the economic substance of business activities.

E) A) and D)
F) None of the above

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What is the amount of the change in stockholders' equity during the year?


A) $3,000 increase
B) $21,000 increase
C) $21,000 decrease
D) $3,000 decrease

E) A) and B)
F) All of the above

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The accounting decisions that were made when preparing a company's financial statements are explained in the auditor's report.

A) True
B) False

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Dividends are reported on the:


A) Income statement.
B) Balance sheet.
C) Statement of retained earnings.
D) Income statement and balance sheet.

E) None of the above
F) All of the above

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The Income Statement


A) reports the amount of Assets of a company.
B) reports results of operations in physical measures.
C) reports the amount of profit distributed to owners during the period.
D) reports the amount of revenues earned and expenses incurred during the period.

E) B) and C)
F) A) and B)

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What is the amount of total assets at the end of 2011?


A) $16,800
B) $16,500
C) $21,600
D) $23,500

E) All of the above
F) A) and D)

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The Don't Bite Me Pest Control Company has 10,000 gallons of insecticide supplies on hand that cost $300,000; a bill from the vendor for $100,000 of these supplies has not yet been paid. The company expects to earn $800,000 for its services when it uses the insecticide supplies. The company would report a supplies asset in the amount of


A) $10,000
B) $200,000.
C) $300,000
D) $800,000

E) C) and D)
F) A) and D)

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The payment of dividends is a financing activity.

A) True
B) False

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


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

E) None of the above
F) B) and D)

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Which of the following statements is false?


A) When choosing between a company that pays steady dividends and one that retains its earnings to support future growth, investors will always choose the company that pays steady dividends.
B) Companies can develop reputations for honest financial reporting even when conveying bad news.
C) Trends in a company's net income from year to year can provide clues about its future earnings, which can help investors to decide whether to buy stock in the company.
D) Information in the notes to the financial statements can influence a user's interpretation of balance sheet and income statement information.

E) A) and D)
F) A) and C)

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A creditor might look at a company's financial statements to determine if the:


A) company is likely to have the resources to repay its debts.
B) company's stock is likely to fall, signaling a good time to sell.
C) company's stock is likely to rise, signaling a good time to buy.
D) company's stock is likely to vary up and down.

E) A) and C)
F) A) and B)

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How many of the following statements regarding the balance sheet for Anonymous Inc. are true? The $207,100 shown on the balance sheet has been distributed to stockholders as dividends. Retained Earnings is misclassified. It should be reported as an Asset. Anonymous, Inc., is owed $310,500 from customers who have purchased goods or services from the company, but have not yet paid for them.


A) None
B) One
C) Two
D) Three

E) All of the above
F) B) and D)

Correct Answer

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Showing 41 - 60 of 135

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