ACC/561 ACC 561 Week 1 WileyPLUS Practice Quiz

Question 1

The proprietorship form of business organization

combines the records of the business with the personal records of the owner.

generally receives favorable tax treatment relative to a corporation.

is classified as a separate legal entity.

must have at least two owners in most states.

Question 2

Most business enterprises in the United States are

government units.

proprietorships and partnerships.

partnerships.

corporations.

Question 3

A business organized as a separate legal entity is a

corporation.

proprietor.

partnership.

government unit.

Question 4

Which of the following is the best definition of an internal user of accounting information?

Creditors like banks that use accounting information to evaluate the risk of lending money.

Investors who use accounting information to decide whether to buy or sell stock.

Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits.

Managers who use accounting information to plan, organize, and run a business.

Question 5

Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

Taxing authorities

Regulatory agencies

Labor Unions

Management

Question 6

Which of the following groups uses accounting information to determine whether the company can pay its obligations?

Chief Financial Officer

Investors in common stock

Creditors

Marketing managers

Question 7

Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

The balance sheet.

The income statement.

The retained earnings statement.

The statement of cash flows.

Question 8

Ending retained earnings for a period is equal to:

Beginning retained earnings + Net income – Dividends

Beginning retained earnings – Net income – Dividends

Beginning retained earnings – Net income + Dividends

Beginning retained earnings + Net income + Dividends

Question 9

The financial statement that summarizes the changes in retained earnings for a specific period of time is the

income statement.

balance sheet.

statement of cash flows.

retained earnings statement.

Question 10

To show how successfully your business performed during a period of time, you would report its revenues and expense in the

balance sheet.

retained earnings statement.

income statement.

statement of cash flows.

Question 11

Which financial statement is prepared first?

Balance sheet

Statement of cash flows

Income statement

Retained earnings statement

Question 12

An income statement shows

assets, liabilities, and stockholders’ equity.

revenues, liabilities, and stockholders’ equity.

expenses, dividends, and stockholders’ equity.

revenues, expenses, and net income.

Question 13

Dawson Corporation has the following information available for 2011:

		(in millions)
	Issued common stock	$45
	Retired common stock	$65
	Paid dividends	$75
	Net income	$130
	Beginning common stock balance	$575
	Beginning retained earnings balance	$425

Based in this information, what is Dawson's Common Stock balance at the end of the year?

$555

$630

$685

$195

Question 14

Declaring a cash dividend will

increase retained earnings.

decrease retained earnings.

increase common stock.

decrease common stock.

Question 15

At December 31, 2012 Lowery Company had retained earnings of $2,184,000. During 2012 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2012 was $402,000. The retained earnings balance at the beginning of 2012 was:

$2,454,000

$1,914,000

$2,552,000

$1,816,000

Question 16

Which of the following organizations issues accounting standards for countries outside the United States?

IASB

GAAP

FASB

SEC

Question 17

Generally accepted accounting principles

are accounting rules that are recognized as a general guide for financial reporting.

have eliminated all errors in accounting.

are sound in theory but rarely used in real life.

are accounting rules formulated by the Internal Revenue Service.

Question 18

The agency of the United States Government that oversees the U.S. financial markets is the

Security Exchange Commission

Internal Revenue Service

Financial Accounting Standards Board.

International Auditing Standards Committee.

Question 19

What organization issues U.S. accounting standards?

International Auditing Standards Committee.

Financial Accounting Standards Board.

Security Exchange Commission.

International Accounting Standards Committee.

Question 20

Two of the major characteristics that make accounting information useful are

Comparability and flexibility.

Relevance and Faithful representation.

Understandability and consistency.

Verifiability and timeliness.

Question 21

If accounting information has relevance, it is useful in making predictions about

the future events of a company.

new accounting principles.

future IRS audits.

foreign currency exchange rates.

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