Question 1
The rent paid for future months is a(n):
liability.
asset.
expense.
revenue.
Question 2
Revenue by definition is:
Multiple Choice
amounts earned from the sale of goods or services.
the payment of amounts owed to creditors.
the collection of amounts owed by customers.
an amount a business must pay in the future.
Question 3
The Financial Accounting Standards Board is responsible for
Multiple Choice
developing generally accepted accounting principles.
auditing financial statements.
making recommendations to the Securities and Exchange Commission.
establishing accounting systems for businesses.
Question 4
The financial activities of a business and the financial activities of the owners should be
Multiple Choice
reported in different parts of the firm's accounting records.
combined only if the owner wants them to be.
kept totally and completely separate.
combined in the firm's accounting records.
Question 5
Which financial statement is a representation of the accounting equation?
Multiple Choice
Statement of Owner's Equity
Profit and Loss Statement
Balance Sheet
Income Statement
Question 6
Tax accounting involves tax compliance and
Multiple Choice
tax evaluation.
tax obfuscation.
tax configuration.
tax planning.
Question 7
he Statement of Owner's Equity is calculated as follows:
Multiple Choice
beginning capital + net income + withdrawals + additional investments = ending capital
beginning capital + net loss + withdrawals + additional investments = ending capital
beginning capital + net loss − withdrawals + additional investments = ending capital
beginning capital + net income − withdrawals + additional investments = ending capital
Question 8
The Balance Sheet heading includes each of the following except:
Multiple Choice
date of the report.
firm's address.
title of the report.
firm's name.
Question 9
Amounts that a business must pay in the future are known as:
Multiple Choice
expenses.
liabilities.
capital.
assets.
Question 10
Choose the option below that reflects the correct order in which to prepare the three financial statements
Multiple Choice
Statement of Owner's Equity; Balance Sheet; Income Statement.
Balance Sheet; Income Statement; Statement of Owner's Equity.
Income Statement; Statement of Owner's Equity; Balance Sheet.
Income Statement; Balance Sheet; Statement of Owner's Equity.
Question 11
Managerial accountants usually do which of the following?
Multiple Choice
audit financial statements
prepare internal reports for management
investigate companies for possible violations of law
prepare and audit tax returns
Question 12
Which of the following equations is the Fundamental Accounting Equation?
Multiple Choice
Assets + Liabilities = Owner's Equity
Assets – Owner's Equity = Liabilities
Assets – Liabilities = Owner's Equity
Assets = Liabilities + Owner's Equity
Question 13
All financial statements submitted to the SEC by publicly owned corporations must include an auditor's report prepared by
Multiple Choice
an internal auditor.
the firm's managerial accountant.
anyone in the accounting department.
an independent certified public accountant.
Question 14
Which financial statement is reported as of a specific date?
Multiple Choice
Balance Sheet
Income Statement
Statement of Owner's Equity
Statement of Changes in Financial Position
Question 15
Managerial accounting is
Multiple Choice
private accounting.
government accounting.
tax accounting.
public accounting.
Question 16
Tax planning includes
Multiple Choice
correcting tax returns.
preparing tax returns.
suggesting actions to reduce tax liability.
auditing tax returns.
Question 17
When the owner invests equipment in a business,
Multiple Choice
liabilities decrease and owner's equity increases.
assets and revenue increase.
assets and owner's equity increase.
assets increase and owner's equity decreases.
Question 18
Which of the following is NOT an area in which accountants usually practice?
Multiple Choice
Managerial (Private) Accounting
Industrial Accounting
Governmental Accounting
Public Accounting
Question 19
Which of the following is an example of an expense:
Multiple Choice
an owner withdrawal for personal use.
the payment of the monthly utility bill.
the receipt of cash from a credit customer.
the payment of a creditor on account.
Question 20
Identify the form of business that is considered a separate legal entity.
Multiple Choice
a partnership
a limited liability partnership
a sole proprietorship
a corporation
Question 21
When the owner writes a company check to pay the company's electric bill,
Multiple Choice
expenses increase and owner's equity increases.
assets and liabilities decrease.
assets and owner's equity increase.
assets and owner's equity decrease.
Question 22
Which of the following is NOT a type of information communicated by the financial statements?
Multiple Choice
how long the business has been in operation
how much the business owes others
whether or not the business is profitable
what types of assets business owns
Question 23
The form of a business organization that is not affected by the withdrawal or death of an owner and can continue indefinitely is the
Multiple Choice
corporation.
nonprofit organization.
partnership.
sole proprietorship.
Question 24
If the income statement covered a six-month period ending on November 30, 2019, the third line of the income statement heading would read:
Multiple Choice
Six-month Period Ended November 30, 2019.
Month Ended November 30, 2019.
Month of November, 2019.
November 30, 2019.
Question 25
Identify the type of accounts that would appear on a firm's income statement
Multiple Choice
assets and liabilities.
liabilities and expenses.
assets and revenues.
revenues and expenses.
Question 26
The group of accounting educators who offer their opinions about proposed FASB statements, after research has been done to determine the possible effects on financial reporting and the economy, is
Multiple Choice
the AICPA.
the AAA.
the FCC.
the SEC.
Question 27
A company issues periodic reports called
Multiple Choice
financial statements.
summaries.
tax returns.
audits.
Question 28
Which of the following is NOT a service of public accounting firms?
Multiple Choice
tax accounting
management advisory services
auditing
investment services
Question 29
When the owner withdraws cash for personal use,
Multiple Choice
owner's equity decreases and revenue decreases.
assets decrease and owner's equity increases.
assets decrease and expenses increase.
assets decrease and owner's equity decreases.
Question 30
Owners are not personally responsible for the debts of the business if the form of business organization is a
Multiple Choice
partnership.
sole proprietorship.
corporation.
nonprofit organization.
