Question 1

What is a dividend?

	A.	Amounts paid to shareholders out of a firm's retained earnings.
	B.	Amounts paid to lenders as compensation for lending money.
	C.	Amounts paid to shareholders to buy back their stock.
	D.	Amounts paid to suppliers.

4 points

Question 2

What does a firms statement of cash flows tell us about the firm?

	A.	A statement of cash flows shows the assets, liabilities, and equity of the firm at a given period of time.
	B.	A statement of cash flows summarizes a firms revenues, expenses, gains, and losses for a period of time.
	C.	A statement of cash flows shows the sources and uses of cash for a period of time.
	D.	None of these are correct.

4 points

Question 3

Stockholders' equity in a corporation consists of:

	A.	Long-term assets.
	B.	Current assets plus long-term assets.
	C.	Contributed capital plus retained earnings.
	D.	All assets plus all liabilities.

4 points

Question 4

A long-term liability is one that the company:

	A.	retained earnings
	B.	will not pay off for over one year.
	C.	will not pay off for over five years.
	D.	paid-in capital.

4 points

Question 5

What does a firms balance sheet tell us about the firm?

	A.	A balance sheet summarizes a firms revenues, expenses, gains, and losses for a period of time.
	B.	A balance sheet shows the assets, liabilities, and equity of the firm at a given period of time.
	C.	None of these are correct.
	D.	A balance sheet shows the sources and uses of cash for a period of time.

4 points

Question 6

Which of the following is a true statement?

	A.	Revenue accounts are a subset of cash, and expense accounts are a subset of accounts payable.
	B.	Revenue accounts are a subset of assets, and expense accounts are a subset of liabilities.
	C.	Both revenue accounts and expense accounts are subsets of contributed capital.
	D.	Both revenue accounts and expense accounts are subsets of retained earnings.

4 points

Question 7

What does it mean when a firm capitalizes something?

	A.	Capitalizing means classifying something as an asset.
	B.	Capitalizing means we sell something to a customer.
	C.	Capitalizing means recording an expense.
	D.	Capitalizing means we pay for something over time.

4 points

Question 8

Why is it necessary to record depreciation expense?

	A.	None of these are correct.
	B.	To show that benefits acquired have been used up.
	C.	To show that the value of something has decreased.
	D.	To show that something has been sold.

4 points

Question 9

Which of the following would not be reported on the Income Statement?

	A.	Utilities expense in the amount of a bill received for utilities used during the current period but unpaid as of the end of the period.
	B.	Revenue in the amount of services provided to customers who promise to pay in the next period.
	C.	Cost of land, paid in cash, and purchased for future use.
	D.	Rent expense in the amount of rent paid during the period for use of a storage facility in the current period.

4 points

Question 10

The common characteristic NOT possessed by all assets is

	A.	usually has greater financial value.
	B.	a future economic benefit.
	C.	economic life greater than one year.
	D.	physical substance.

4 points

Question 11

Revenues

	A.	decrease assets.
	B.	increase liabilities.
	C.	increase stockholders' equity.
	D.	decrease expenses.

4 points

Question 12

Which of the following statements is true?

	A.	Operating income is listed before net income on the income statement.
	B.	Expenses are listed before revenues on the income statement.
	C.	The income statement is prepared after the balance sheet.
	D.	Dividends declared are listed on the income statement

4 points

Question 13

Which of the following would not be classified as a current asset?

	A.	Inventory
	B.	Accounts Payable
	C.	Cash
	D.	Supplies

4 points

Question 14

Which of the following would not appear as a possible liability on the balance sheet?

	A.	Accounts payable
	B.	Notes payable
	C.	Wages payable
	D.	Retained earnings

4 points

Question 15

Assets reported on the balance sheet would include which of the following?

	A.	Accounts receivable, sales revenue and cash
	B.	Accounts payable, retained earnings and cash
	C.	Accounts receivable, equipment and cash
	D.	Equipment, supplies expense and cash

4 points

Question 16

Which of the following is NOT true about liabilities?

	A.	Examples of liabilities include notes payable, deferred revenue and income tax payable.
	B.	Examples of liabilities include retained earnings, revenues and expenses.
	C.	Liabilities are amounts owed by a business.
	D.	Liabilities + equity = assets.

4 points

Question 17

Assets are always listed on a classified balance sheet in which of the following ways?

	A.	From the smallest dollar amount to the largest dollar amount.
	B.	Beginning with non-current assets and ending with current assets.
	C.	Starting with cash.
	D.	In alphabetical order.

4 points

Question 18

Which of the following accounts does not have a normal debit balance?

	A.	Cash
	B.	Accounts Receivable
	C.	Sales Revenue
	D.	Wages Expense

4 points

Question 19

Which of the following is NOT an asset?

	A.	Contributed capital
	B.	Land
	C.	Cash
	D.	Notes receivable

4 points

Question 20

Which of the following accounts does not have a normal credit balance?

	A.	Accounts payable
	B.	Revenue
	C.	Expense
	D.	Contributed capital

4 points

Question 21

What is the difference between sales revenue and income?

	A.	Income is what is received from customers in the regular course of business and sales revenue is how much income is left after expenses are deducted.
	B.	Sales revenue is what is received from customers in the regular course of business and income is how much revenue is left after expenses are deducted.
	C.	There is no difference.
	D.	Sales revenue is what is received from customers in the regular course of business and income measures the resources used to generate revenue.

4 points

Question 22

Which of the following would be listed as a current liability?

	A.	Accounts payable.
	B.	Cash in the bank.
	C.	Supplies held in the storeroom.
	D.	Retained Earnings

4 points

Question 23

Which of the following would be reported on the income statement for the current year?

	A.	In the current year, the company sold goods to customers who agreed to pay next year.
	B.	In the current year, the company borrowed money from the bank which is to be used in the business activities this year.
	C.	In the current year, the company received payment in cash for goods that were sold to customers last year.
	D.	In the current year, the company issued stock to owners and received cash immediately.

4 points

Question 24

What does a firms income statement tell us about the firm?

	A.	None of these choices are correct.
	B.	An income statement summarizes a firms revenues, expenses, gains, and losses for a period of time.
	C.	An income statement shows the sources and uses of cash for a period of time.
	D.	An income statement shows the assets, liabilities, and equity of the firm at a given period of time.

4 points

Question 25

Which of the following statements is FALSE?

	A.	Revenues would appear on the Income Statement.
	B.	Assets would appear on the Income Statement.
	C.	Dividends would appear on the Statement of Retained Earnings.
	D.	Cash flows from financing activities would appear on the Statement of Cash Flows.

4 points

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