1. Which of the following is not an objective of financial reporting?

MULTIPLE CHOICE

		A. Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions.
		B. Financial reporting should provide information to help present and potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans.
		C. Financial reporting should provide information about the economic resources of an enterprise, the claims against those resources, and the effects of transactions, events, and circumstances that change the resources and claims against those resources.
		D. Financial accounting is designed to measure directly the value of a business enterprise.

2. According to SFAC No. 6, expenses can be defined by which of the following?

MULTIPLE CHOICE

		A. Inflows or other enhancements of assets of an entity or settlements of its liabilities ( or a combina-tion of both) from delivering or producing goods, rendering services, or other activities that consti-tute the entitys ongoing major or central operations.
		B. Outflows or other consumption or using up of assets or incurrences of liabilities ( or a combination of both) from delivering or producing goods, rendering services, or carrying out other activities that constitute the entitys ongoing major or central operations.
		C. Increases in equity ( net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period, except those that result from revenues or investments.
		D. Decreases in equity ( net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period, except those that result from expenses or distributions to owners.

3. This item need not be provided with a complete set of financial statements:

MULTIPLE CHOICE:

		A. Note disclosure of such items as accounting policies
		B. A 20- year summary of operations
		C. Balance sheet
		D. Statement of cash flows

4. Audit opinions cannot be classified as which of the following?

MULTIPLE CHOICE:

		A. All- purpose
		B. Disclaimer of opinion
		C. Adverse opinion
		D. Qualified opinion

5. If assets are $ 40,000 and stockholders equity is $ 10,000, how much are liabilities?

MULTIPLE CHOICE:

		A. $ 30,000
		B. $ 50,000
		C. $ 20,000
		D. $ 60,000

6. According to SFAC No. 6, assets can be defined by which of the following?

MULTIPLE CHOICE:

		A. Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past trans-actions or events.
		B. Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
		C. Residual interest on the assets of an entity that remains after deducting its liabilities.
		D. Increases in equity of a particular business enterprise resulting from transfers to the enterprise from other entities of something of value to obtain or increase ownership interests ( or equity) in it.

7. Which of the following is a characteristic of information provided by external financial reports?

MULTIPLE CHOICE:

		A. The information is exact and not subject to change.
		B. The information is frequently the result of reasonable estimates
		C. The information pertains to the economy as a whole.
		D. The information is provided at the least possible cost.

8. In addition to the companys principal financial statements, the Form 10- K and shareholder annual reports must include the following:

MULTIPLE CHOICE:

		A. Information on the market for holders of common stock and related securities, including high and low sales price, frequency and amount of dividends, and number of shares
		B. Five- year summary of selected financial data
		C. Two years of audited balance sheets, three years of audited statements of income and statements of cash flows
		D. Disclosure of the domestic and foreign components of pretax income
		E. All of the above.

9. From the point of view of analysis, which classification of an audit opinion indicates that the financial statements carry the highest degree of reliability?

MULTIPLE CHOICE

		A. Unqualified opinion
		B. Disclaimer of opinion
		C. Qualified opinion
		D. Adverse opinion

10. Which party has the primary responsibility for the financial statements?

MULTIPLE CHOICE:

		A. Bookkeeper
		B. Auditor
		C. Management
		D. Cost accountant