1. The major objective of accounting information is that it should be useful.

2. When we talk about faithful representation, we really mean the following:

A) It has predictive value; is complete; and is free from errors.

B) It is complete, neutral, and free from errors.

C) It has predictive value, is confirmatory, and lacks material issues.

D) It is relevant and has predictive characteristics.

3. What are some of the elements of the financial statements?

A) Assets, liabilities, and comprehensive income.

B) Assets, Income from continuing operations, expenses.

C) Representational effectiveness, relevance, consistency.

D) Predictive value, confirmative value, and free from material errors.

4. The Accounting equation can be stated as:

A) A + L OE = 0

B) A-L + OE=0

C) A+L-OE=0

D) A-L-OE=0

5. Hughes Aircraft sold a passenger plane receiving a down payment and a note for the balance, The journal entry for Hughes Aircraft would include:

A) Credit to cash.

B) Debit to cash discount.

C) Debit to notes receivable.

D) Credit to note receivable.

6. Ace Bonding Company purchased merchandise inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase? .

A.	Inventory	2,000
	Accounts payable		2,000
B.	Cost of goods sold	2,000
	Deferred revenue	1,000
	Sales in advance		3,000
C.	Cost of goods sold	2,000
	Inventory payable		2,000
D.	Cost of goods sold	2,000
	Profit	1,000
	Sales payable		3,000

7. Which of the following has a normal debit balance?

A) Accounts payable

B) Accrued taxes.

C) Accumulated depreciation.

D) Advertising expense.

8. An example of a contra account is:

A) Depreciation expense.

B) Accounts receivable.

C) Sales revenue.

D) Accumulated depreciation.

9. Recording revenue that is earned, but not yet collected, is an example of:

A) A prepaid expense transaction.

B) A deferred revenue transaction

C) An accrued liability transaction

D) An accrued receivable transaction

10. Which is a shareholders equity account in the balance sheet?

A) Accumulated depreciation.

B) Paid in capital.

C) Salaries payable.

D) Accounts receivable.

11. Freda's Florist reported the following before-tax income statement items for the year ended December 31, 2016: Operating income of $250,000 and income from discontinued operations of $70,000. All income statement items are subject to a 40% income tax rate. In its 2016 income statement, Freda's separately stated income tax expense and total income tax expense would be:

A) 128,000 and 128,000.

B) 128,000 and 100,000.

C) 100,000 and 128,000.

D) 100,000 and 100,000.