Multiple Choice Questions

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Multiple Choice Questions

• Which of the following is not a transaction to be recorded in the accounting records of an entity?

• Investment of cash by the owners.

• Sale of product to customers.

• Receipt of a plaque recognizing the firm's encouragement of employee participation in the

United Way fund drive.

• Receipt of services from a "quick-print" shop in exchange for the promise to provide

advertising design services of equivalent value.

2. The balance sheet might also be called:

• Statement of Financial Position.

• Statement of Assets.

• Statement of Changes in Financial Position.

• None of the above.

3. Transactions are summarized in:

• The notes for the financial statements.

• The independent auditor's opinion letter.

• The entity's accounts.

• None of the above.

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4. A fiscal year:

• is always the same as the calendar year.

• is frequently selected based on the firm's operating cycle.

• must always end on the same date each year.

• must end on the last day of a month.

• Which of the following is not a principal form of business organization?

• Partnership.

• Sole proprietorship.

• Limited unregistered business.

• Corporation.

• None of the above.

6. The time frame associated with a balance sheet is:

• a point in time in the past.

• a one-year past period of time.

• a single date in the future.

• a function of the information included in it.

• Current U.S. Generally Accepted Accounting Principles and auditing standards require the

financial statements of an entity for the reporting period to include:

• Earnings and gross receipts of cash for the period.

• Projected earnings for the subsequent period.

• Financial position at the end of the period.

• Current fair values of all assets at the end of the period.

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8. The balance sheet equation can be represented by:

• Assets = Liabilities + Stockholders' Equity

• Assets - Liabilities = Stockholders' Equity

• Net Assets = Stockholders' Equity

• All of the above.

• Stockholders' equity refers to which of the following?

• A listing of the organization's assets and liabilities.

• The ownership right of the stockholder(s) of the entity.

• Probable future sacrifices of economic benefits.

• All of the above.

• None of the above.

10. Accumulated depreciation on a balance sheet:

• is part of stockholders' equity.

• represents the portion of the cost of an asset that is assumed to have been "used up" in the

process of operating the business.

• represents cash that will be used to replace worn out equipment.

• recognizes the economic loss in value of an asset because of its age or use.

11. The distinction between a current asset and other assets:

• is based on how long the asset has been owned.

• is based on amounts that will be paid to other entities within a year.

• is based on the ability to determine the current fair value of the asset.

• is based on when the asset is expected to be converted to cash, or used to benefit the entity.

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12. The income statement shows amounts for:

• revenues, expenses, losses, and liabilities.

• revenues, expenses, gains, and fair value per share.

• revenues, assets, gains, and losses.

• revenues, gains, expenses and losses.

13. The time frame associated with an income statement is:

• a point in time in the past.

• a past period of time.

• a future period of time.

• a function of the information included in it.

14. Revenues are:

• cash receipts.

• increases in net assets from selling a product.

• increases in net assets from occasional sales of equipment.

• increases in net assets from selling common stock.

15. Expenses are:

• cash disbursements.

• decreases in net assets from uninsured accidents.

• decreases in net assets from dividends to stockholders.

• decreases in net assets resulting from usual operating activities.