1. Which one of the following is a correct expression of the accounting equation?

a. Assets + Liabilities = Owners Equity

b. Assets = Liabilities Owners Equity

c. Assets + Owners Equity = Liabilities

d. Assets = Liabilities + Owners Equity

2. (1 point) In order for accounting information to be useful in making informed decisions, it must be:

a. relevant.

b. reliable.

c. both relevant and reliable.

d. neither relevant nor reliable.

3. (1 point) What is the primary objective of financial reporting?

a. To help investors make credit decisions.

b. To help management assess cash flows.

c. To protect users from fraudulent financial information.

d. To provide useful information for decision making

4. (1 point) Although businesses engage in a wide variety of activities, all of these activities can be categorized into three types. Which of the following choices best reflects these three types of business activities?

a. Operating, financing, reporting

b. Investing, reporting, financing

c. Operating, financing, investing

d. Investing, reporting, operating

5. (1 point) Which of the following include only current assets?

a. Accounts receivable, cash, inventory, office supplies

b. Cash, accounts payable, inventory, office supplies

c. Cash, land, accounts receivable, inventory

d. Accounts receivable, cash, furniture, office supplies

6. (1 point) For the following list of accounts place the correct letter in the blank space to identify them as (A) Assets; (L) Liabilities; (R) Revenues or (E) Expenses by

___L_ Accounts payable
__A__ Accounts receivable
_A___ Building
_A___ Cash
_E___ Gas, utilities, and other expenses
__A__ Land
__L__ Lawn-care revenue
__L__ Notes payable
___E_ Salaries and wages expense
__A__ Tools
___A_ Tree-trimming revenue
___A_ Truck

1. (1 point) Seashell Company is considered "very liquid" for the year ended December 31, 2016. This means that Seashell

a. has a small quick ratio.

b. must decrease its liquidity in order to appear favorable to stockholders.

c. should sell plant assets in order to remain in business.

d. is able to pay its current debts using its current assets.

2. (1 point) Which of the following statements is true regarding vertical analysis?

a. Common-size financial statements can be used to compare businesses of different sizes.

b. Vertical analysis can only be used with balance sheet accounts.

c. Vertical analysis can only be used with income statement accounts.

d. Vertical analysis can only be used with retained earnings accounts.