1. Who is responsible for the preparation of financial statements?

The Board of Directors

External auditors

Shareholders

Company management

2. On December 1st a company pays $1,380 to a catering company for the company Christmas party scheduled for mid December 2015. In recording this transaction the December 31st financial statements would reflect:

a decrease to assets and a decrease to shareholders' equity.

a decrease to liabilities and a decrease to shareholders' equity.

a decrease to assets and an increase to shareholders' equity.

a decrease to liabilities and an increase to shareholders' equity.

3. The two primary sources of funds to finance a company's expansion are:

Customers and creditors.

Investors and shareholders.

Creditors and investors.

Customers and shareholders.

4. Which of the following best describes the statement of income?

All of the other answers are correct - they describe information provided in a statement of income.

It provides information about an entity's financial situation at a point in time.

It measures economic performance over a period of time.

It measures inflows and outflows of an entity's cash resources over a period of time.

5. The net income from the bottom of the statement of income is connected to the statement of financial position (balance sheet) through which of the following accounts?

Retained earnings

None of the other answers is correct. There is no connection between a company's statement of income and statement of financial position.

Total assets

Share capital

6. If a company is at the end of its first year of operations, which of the following is/are true?

All of the other answers are correct.

Assets = Liabilities + Shareholders' Equity

Assets - Liabilities = Shareholders' Equity

Retained earnings = Net income - Dividends declared

7. Which of the following users would rely on internal accounting information?

All of the other answers are correct.

Company management

Lenders

Shareholders

8. Which of the following correctly describes an expense?

An economic resource that provides future benefit.

None of the other answers is correct - none of them describe an expense.

An economic sacrifice made to earn revenue.

An obligation of the entity.

9. What are the owners of a corporation called?

Auditors

Company management

Shareholders

Stakeholders

10. Which of the following is an operating activity for a department store?

All of the other answers are correct - all are operating activities.

Paying for newspaper advertisements to publicise a 'Back to School' sale.

Paying wages to store employees.

Selling goods to customers.