Chapter 1—Financial accounting
Multiple choice
1. Which of the following statements is true regarding economic events?
a. The signing of a rvice contract is an example of an external event that is
recorded in the accounting records
b. Every event which affects an entity can be identified from a source document
c. All internal and external events must be measured with sufficient reliability
d. External events involve exchanges between an entity and another entity
outside the company而或长烟一空的或
ANS: D PTS: 1 DIF: 2 OBJ: 1-1 NAT: | AACSB Communication | APO-06-Recording Transactions
2. Which of the following underlying assumptions of the conceptual framework is
the reason the dollar is ud in the preparation of financial statements?
a. Economic entity
b. Continuity什么重生成语
c. Time-period
d. Monetary unit
ANS: D PTS: 1 DIF: 1 OBJ: 1-1 NAT: | AACSB Communication | APO-02-GAAP
3. Which of the following is an assumption made in the preparation of financial
statements?
a. Financial statements are prepared for a specific entity that is distinct from the
entity’s owners
b. The current market value is assumed to be less relevant than the original
cost paid
c. The preparation of financial statements for a specific time period assumes
that the balance sheet covers a designated period of time
d. Financial statements are prepared assuming that inflation has a distinct
effect on the monetary unit
ANS: A PTS: 1 DIF: 2 OBJ: 1-1 NAT: | AACSB Communication | APO-02-GAAP
4. The time period assumption is necessary becau:
a. inflation exists and caus confusing swings in financial statement amounts
over time
b. business owners and interested parties want periodic measurements of the
business’ success or failure
c. business owners and interested parties expect full disclosure of all economic
events throughout the entire time period
d. it is required by the federal government
蜡笔怎么读ANS: B PTS: 1 DIF: 1 OBJ: 1-1 NAT: | AACSB Communication | APO-02-GAAP
5. The going concern assumption is concerned with:
a. the company's ability to continue operations long enough to carry out its
existing obligations
b. any information that is capable of influencing the decisions of anyone using
the financial statements
c. measuring ongoing business activities at their exchange price at the time of
the initial external transaction
d. offtting management's natural optimism by providing a prudent approach
to uncertainty in financial statement items
ANS: A PTS: 1 DIF: 2 OBJ: 1-1 NAT: | AACSB Communication | APO-02-GAAP
6. ‘Revenues’ are bes t described as:
a. a decrea in resources resulting from the sale of goods or the provision of
rvices
b. an increa in resources resulting from the sale of goods or the provision of
rvices
c. asts ud or consumed in the sale of products or rvices
d. an increa in the financing activities
ANS: B PTS: 1 DIF: 2 OBJ: 1-2 NAT: | AACSB Analytic |
APO-02-GAAP
7. ‘Expens’ are best described as:
a. an increa in resources resulting from the sale of goods or the provision of
rvices
b. the amount of interest or claim that the owners have in the business
c. the future economic resources of a business entity
d. a decrea in resources resulting from the sale of goods or provision of
rvices
ANS: D PTS: 1 DIF: 1 OBJ: 1-2 NAT: | AACSB Communication | APO-02-GAAP
8. Which statement demonstrates the financial success or failure of the company
over that specific period of time?
a. The statement of cash flows
b. The statement of changes in equity
c. The balance sheet
d. The income statement
ANS: D PTS: 1 DIF: 1 OBJ: 1-2 N NAT: | AACSB Communication | APO-09-Financial statements
9. The resources ud to generate revenues during a period are called:
a. Profit
b. Expens
c. Revenues
d. Dividends
ANS: B PTS: 1 DIF: 1 OBJ: 1-2 NAT: | AACSB Communication | APO-09-Financial statements
10. Which of the following is the correct date format for the financial statement
运动减肥heading?
a. Balance sheet for the Year Ended 30 June 2020
b. Income statement at 30 June 2020
c. Income statement for the Year Ended 30 June 2020
d. Statement of changes in equity at 30 June 2020
ANS: C PTS: 1 DIF: 3 OBJ: 1-2 NAT: | AACSB Communication | APO-09-Financial statements
11. Which of the following terms best describes a distribution of the profit of a
company to its owners?
a. Retained earnings
b. Dividends
c. Liquidation of asts
d. Monetary unit
ANS: B PTS: 1 DIF: 1 OBJ: 1-3 NAT: | AACSB Communication | APO-09-Financial statements
12. IPOD Company’s end of year balance sheet consisted of the following
amounts.
Accounts receivable $500 000 Cash $ 150
000
Property, plant and
700 000 Non-current liabilities 400 000 equipment
Contributed equity 1 000 000 Accounts payable 200 000 Retained earnings ? Inventory 350 000 What amount should IPOD report on its balance sheet for total asts?
a. $1 100 000
b. $1 550 000
c. $1 700 000
d. $1 900 000
ANS: C PTS: 1 DIF: 2 OBJ: 1-3 NAT: | AACSB Analytic | APO-09-Financial statements
13. IPOD Company’s end of year balance sheet consisted of the following
amounts.
Cash $150 000 Accounts receivable $500 000
700 000 Non-current liabilities 400 000 Property, plant and
equipment
Contributed equity 1 000 000 Accounts payable 200 000 Retained earnings ? Inventory 350 000
What is IPOD’s retained earnings balance at the end of the current year?
a. $100 000
b. $1 100 000
c. $1 600 000
d. $1 700 000
ANS: A PTS: 1 DIF: 3 OBJ: 1-4 NAT: | AACSB Analytic | APO-09-Financial statements
14. The Peck Company reported the following items on its financial statements for
the year ending 30 June 2020.
Sales $1 560 000 Cost of sales $1 400 000 Selling, general and Other expen 30 000 administrative
40 000
expen
Dividends 10 000 Income tax expen 25 000
The income statement for Peck will report profit for the current year in the amount of:
a. $ 45 000
b. $ 65 000
c. $ 85 000
d. $465 000
ANS: B PTS: 1 DIF: 2 OBJ: 1-2 NAT: | AACSB Analytic | APO-09-Financial statements
15. The Peck Company reported the following items on its financial statements for
the year ending 30 June 2020.
Sales $1 560 000 Cost of sales $1 400 000 Selling, general and Other expen 30 000十国
40 000
administrative
李国弘
expen
highlightedDividends 10 000 Income tax expen 25 000
How much will be reported as retained earnings on its balance sheet at 30 June 2020, if this is the first year of operations?
a. $45 000
b. $55 000
c. $85 000
d. Not enough information is provided.
ANS: B PTS: 1 DIF: 3 OBJ: 1-4 NAT: | AACSB Analytic | APO-09-Financial statements
16. Ponzi Corporation reported the following information for the year ended 30
June 2020.
Profit $100 000
Dividends 6 000
Retained earnings at 30 June 2020 $120 000
What was the balance of retained earnings at 1 July 2019?
a. $ 21 000
b. $ 26 000
c. $106 000
d. $214 000
ANS: B PTS: 1 DIF: 2 OBJ: 1-4 NAT: | AACSB Analytic | APO-09-Financial statements
17. Ponzi Corporation reported the following information for the year ended 30
June 2020.
Profit $100 000
石壁山风景区
Dividends 6 000
Retained earnings at 30 June 2020 $120 000
What was the economic effect of the payment of Ponzi’s dividends?
a. The dividend reduced profit for 2020
b. The dividend should be added to profit if the company’s accounting equation
is in balance
c. The dividend reduced total retained earnings
d. The dividends must be paid whenever Ponzi Corp. reports profit
