150 test bank for principles of financial accounting 12th edition by needles

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150 Test Bank for Principles of Financial Accounting 12th Edition by Needles

True False Questions - - Multiple Choice Questions

The correct order of the three stages of accounting is

1 measurement, communication, and processing.

2 measurement, processing, and communication

3 processing, measurement, and communication.

4 communication, processing, and measurement.

The net income figure appears in all the following financial

statements except the

1 balance sheet.

2 income statement.

3 statement of owner's equity.

4 statement of cash flows.

An example of a monetary asset is

14,000, Land 14,000 What is the total of liabilities and owner's equity?

1 $32,000

4 Sole proprietorship only

All of the following are broad principles underlying the

accountant's code of professional ethics except

The best definition of assetsis the:

1 cash owned by the company.

2 resources belonging to a company having future benefit to the company.

3 collection of resources belonging to the company and the claims on these resources.

4 owner's investment in the business.

The group of users of accounting information charged with achieving the goals of the business is its

1 a change in ownership will dissolve the partnership.

2 any partner can enter into a binding agreement with a third party.

3 partners must share profits and losses equally.

4 all partners have unlimited liability.

The Sarbanes-Oxley Act of 2002 applies to all except

1 internal management reports

2 annual reports

3 quarterly statements

4 none of these are exceptions

An accounting measurement is concerned with all exceptwhich

of the following?

1 Business transaction

1 Balance sheet, statement of cash flows, statement of owner's equity, income statement

2 Income statement, statement of owner's equity, balance sheet, statement of cash flows

3 Statement of cash flows, balance sheet, income statement, statement of owner's equity

4 Statement of owner's equity, income statement, statement of cash flows, balance sheet

Which of the following is an example of a financing activity?

1 Obtaining a bank loan

2 Selling equipment

3 Purchasing land

4 Paying taxes to the government

The Sarbanes-Oxley Act of 2002 came, in part, as a result of

1 the WorldCom scandal

2 the Enron scandal

3 the Enron and WorldCom scandals

4 the Target scandal

Which of the following is the most appropriate definition of accounting?

1 Ameans of recording transactions and keeping records

2 The interconnected network of subsystems necessary to operate a business

3 The measurement, processing, and communication of financial information about an identifiable economic entity

4 Electronic collection, organization, and communication of vast amounts of information

An audit is an examination of a company’s

1 financial statements.

2 accounting controls.

3 accounting systems.

4 all of these.

Which of the following is the correct accounting equation?

1 Assets + Owner's Equity = Liabilities

2 Assets = Liabilities + Owner's Equity

3 Assets + Liabilities = Owner's Equity

4 Assets = Liabilities – Owner's Equity

All of the following statements about corporations are true except

1 ownership is represented by shares of stock.

2 they are chartered by the state.

3 the sale of stock does not dissolve the business.

4 the stockholders have direct control of the business.

Which of the following is an example of an operating activity?

1 Purchasing equipment

2 Selling goods and services to customers

3 Selling land

4 Obtaining capital from owners

The purpose of an audit is to

1 comply with income tax regulations.

2 determine whether or not a companyis a good investment.

3 ascertain that the financial statements follow GAAP.

4 determine whether or not a company is a good credit risk.

The following users of accounting information have a direct financial interest in a business except

1 an investor.

2 a creditor.

3 management.

4 a financial adviser.

Generally accepted accounting principles

1 have eliminated all weaknesses in accounting practice.

2 are accounting rules formulated by the Internal Revenue Service.

3 are sound in theory but rarely used in practice.

4 are changing continually.

The topic of foreign exchange rates relates most closely to the concept of

1 business transactions.

2 separate entity.

3 money measure.

4 nonexchange transactions.

Which of the following transactions does notinvolve an

exchange of value?

1 Loss from theft

2 Purchase of a building on credit

2 Receipt of cash owed to the business (accounts receivable)

3 Withdrawal by the owner

4 Sale of a service

The communication stage of accounting is accomplished by

1 reportingto decision makers.

4 Wear and tear on machinery

The personal assets and liabilities of an owner are not shown

on the business’s financial statements because of the

1 financial position concept.

2 objectivity concept.

3 separate entity concept.

4 sole proprietorship concept.

Which of the following financial statements is concerned with the enterprise at a point in time?

1 Statement of cash flows

2 Balance sheet

3 Income statement

4 Statement of owner's equity

Which of the following is an agency of the U.S government?

14,000, Land 14,000 If the equipment were sold for $14,000, what would be the total of owner's equity?

14,000, Land 14,000 What is the balance of the Flora Sinoyianis, Capital account?

3 all of these are possible motivations

4 to obtain bonus compensation

Which of the following physically prepare and audit financial reports?

2 Producing goods and services

3 Paying off a loan

4 Employing workers

The statement of cash flows would disclose the purchase of a building for cash

1 in the investing activities section.

2 nowhere on the statement.

3 in the operating activities section.

4 in the financing activities section.

The following users of accounting information have an indirect financial interest in the business except

14,000, Land 14,000 If, $6,000 of Accounts Payable were paid in cash, what would be the balance of the Flora Sinoyianis, Capital account?

1 $36,000

2 $28,000

3 $40,000

4 $8,000

Fraudulent financial reporting at Enron resulted in

1 thousands of people losing their pensions and investment incomes.

2 thousands of people losing their jobs.

3 prison sentences and fines for corporate executives.

4 all of these choices.

Companies listed on the stock exchanges must file financial statements with the

1 Internal Revenue Service.

2 Securities and Exchange Commission.

3 Financial Accounting Standards Board.

4 American Institute of Certified Public Accountants.

All of the following are considered nonexchange transactions except

1 the wear and tear on machinery.

2 the day-by-day accumulation of interest.

3 losses from fire, flood, and theft.

4 the sale of goods and services.

An auditor maintains no direct financial interest in the company

he or she is auditing The principle being followed is:

1 Federal Reserve Board.

2 Internal Revenue Service.

3 American Institute of Certified Public Accountants.

4 Financial Accounting Standards Board.

Sinoyianis Realty Company had the following balance sheet accounts and balances: Accounts Payable $12,000, Accounts Receivable 2,000, Building 16,000, Cash 6,000, Equipment

14,000, Land 14,000 If, $6,000 of Accounts Payable were paid in cash, what would be the total of liabilities and owner's equity?

1 $28,000

2 $52,000

3 $46,000

4 $34,000

A company's ability to attract and hold investment capital

ultimately depends on its

Which of the following are required to swear that financial

reports are accurate and complete?

1 managers

2 board of directors

3 chief executives

4 accountants

The statement of cash flows would disclose the withdrawal of cash by the owner

1 in the financing activities section.

2 in the investing activities section.

3 in the operating activities section.

4 nowhere on the statement.

Which of the following forms of organization are considered to

be separate entities by accountants?

1 Corporations only

2 Sole proprietorships only

3 Partnerships only

4 Sole proprietorships, partnerships, and corporations

Which of the following groups uses accounting information primarily to help protect the public?

A liability would notinclude an obligation to

1 recording a revenue that has been earned but not yet received.

2 the misapplication of accounting principles.

3 the manipulation of inventory records.

4 fictitious sales or orders.

All of the followingstatements are true about the OxleyAct except

Sarbanes-1 its primary goal is to regulate financial reporting and the accounting profession.

2 it orders the SEC to draw up certain rules.

3 it shields chief executives from criminal penalties.

4 it applies to publicly traded companies.

Most business enterprises in the United States are

1 partnerships.

2 corporations.

3 government units.

4 sole proprietorships.

Carrying out professional responsibilities with competence and diligence is called

1 objectivity.

2 due care.

3 integrity.

4 independence.

In general, one partner acting alone cannot obligate the

partnership to another party.

1 True

2 False

The Sarbanes-Oxley Act orders the SEC to hold chief

executives and CFOs responsible for the accuracy of their

company's financial statements

Liquidity means nothaving enough funds on hand to pay debts when they fall due

The economic resources invested in a business by the owner are represented by owner's equity

The statement of owner's equity discloses the owner's

withdrawals made during the period

1 False

2 True

The statement of owner's equity relates the income statement to the balance sheet by showing how the owner's capital account changed during the accounting period

1 True

2 False

The liability of corporate stockholders is limited to their

percentage share of ownership

1 False

2 True

The statement of cash flows discloses significant events related

to the operating, investing, and financing activities of a

business

1 False

2 True

Knowledge of the exchange rate is necessary to apply the

money measure concept in case of international transactions

A proper heading for the income statement could include “For the Year Ended December 31, 20 .”

A major function of financial accounting is to provide the

investor with relevant and useful information

1 False

2 True

Less than 20 percent of the U.S economy is generated by

governmental and not-for-profit organizations

Exchange rates for currency change daily according to the

supply and demand for each currency

Sole proprietorships in the United States generate more

business (in terms of receipts) than partnerships and

corporations put together

1 True

2 False

The account ‘Wages Payable’ would appear on the income statement

Financing a business means obtaining funds so the business can begin and continue operating

For accounting purposes, a business and its owner are

considered the same entity

Accounts Receivable is an asset that is considered

Both public accountants and managerial accountants are

required to adhere to a code of professional conduct

The purchase of land with cash would be disclosed on the

statement of cash flows

Objectivity is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant

Criminal penalties can be imposed on those who prepare

fraudulent financial statements

1 True

2 False

One way of stating the accounting equation is: Assets +

Liabilities = Owner's Equity

2 False

The Internal Revenue Service is responsible for issuing

accounting standards for state and local governments

Taxing authorities are considered accounting information users with a direct financial interest

1 False

2 True

The primary external users of accounting information are

investors and management

The intentional preparation of misleading financial statements

is referred to as fraudulent financial reporting

1 False

2 True