1.Liabilities are:

A. debts payable to outsiders called creditors.

B. future economic benefits to which a company is entitled.

C. a decrease in assets as a result of the company's ongoing major or central operations.

D. the outflow of resources that decrease common stock.

2. The assets of a company:

A. include short-term investments and notes payable.

B. must equal the liabilities plus the contributed capital of the company.

C. include property, plant, and equipment and accounts payable.

D. represent economic resources that are expected to produce a future benefit.

3. Lone Peak Company performs services for a client on account. One month later, the company receives cash from the customer as payment. When the customer makes the payment:

A. there is no change in total assets.

B. a liability account is decreased.

C. a revenue account is increased.

D. an expense account is decreased.

4. Revenues are:

A. increases in contributed capital resulting from delivering goods or services to customers.

B. increases in retained earnings resulting from delivering goods or services to customers.

C. decreases in retained earnings resulting from delivering goods or services to customers.

D. increases in liabilities resulting from delivering goods or services to customers.

5. Lomond Company purchased analytics equipment for $200,000 on January 1, 2020. The company determined that the yearly depreciation expense is $19,000. What will be the book value of this equipment on December 31, 2024, after adjusting entries have been made?

A. $105,000

B. $76,000

C. $124,000

D. $95,000

6. With an accrual of revenue:

A. plant assets can create an accrual adjustment.

B. the cash is received before the revenue is recorded.

C. the cash is received after the revenue is recorded.

D. prepaid expenses can create an accrual adjustment.

7.Current assets are assets expected to be converted to cash, sold, or consumed during the next:

A. 12 months or within the business's operating cycle if longer than a year.

B.6 months.

C. 24 months.

D. 8 months.

8. Which of the following statements about financial accounting is true?

A. Financial accounting helps solve agency problems between capital providers and investment advisers.

B. Two of the fundamental qualitative characteristics of financial accounting are mathematical concision and relevance.

C. Financial accounting is catered to all user groups, including managers, tax authorities, and investors.

D. Financial accounting helps reduce information imbalances between company insiders and company outsiders.

9.Verifiability means that the accounting information:

A. must result in repeatable, predictable trends.

B. is timely and understandable.

C. was verified by an auditor.

D. must be capable of being checked for accuracy, completeness and reliability.