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Harold Averkamp, CPA, MBA
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1.
Which accounting method will result in financial statements that report a more complete picture of a corporation’s financial position and a better measure of profitability during a recent accounting year?
Accrual Method
Right!
Cash Method
Wrong.
2.
Which type of journal entries are made at the end of each accounting period so that the financial statements better reflect the accrual method of accounting?
Adjusting
Right!
Closing
Wrong.
Reversing
Wrong.
3.
The generally accepted accounting principles used in the financial statements of U.S. corporations are researched and developed by which organization?
American Accounting Association (AAA)
Wrong.
Financial Accounting Standards Board (FASB)
Right!
Internal Revenue Service (IRS)
Wrong.
4.
Which financial statement will allow you to determine the gross margin for a retailer or manufacturer?
Balance Sheet
Wrong.
Income Statement
Right!
Statement Of Cash Flows
Wrong.
Statement Of Comprehensive Income
Wrong.
Statement Of Stockholders’ Equity
Wrong.
5.
Does the heading of a balance sheet indicate a period of time or a point in time?
Point In Time
Right!
Period Of Time
Wrong.
6.
A corporation's net income will cause a change in which component of stockholders' equity?
Accumulated Other Comprehensive Income
Wrong.
Paid-in Capital
Wrong.
Retained Earnings
Right!
7.
Which financial statement's structure is closest to that of the basic accounting equation?
Balance Sheet
Right!
Income Statement
Wrong.
Statement Of Cash Flows
Wrong.
Statement Of Comprehensive Income
Wrong.
Statement Of Stockholders’ Equity
Wrong.
8.
Is it true or false that a grocery store’s sale of its old delivery van to one of its employees for $2,000 should be recorded in the general ledger account Sales?
True
Wrong.
False
Right!
9.
Is it true or false that the total amount of stockholders’ equity reported on the balance sheet is intended to show the fair market value of the corporation?
True
Wrong.
False
Right!
10.
Comprehensive income is defined as _______________ plus other comprehensive income.
Extraordinary Items
Wrong.
Gains And Losses
Wrong.
Net Income
Right!
11.
Which financial statement reports the adjustments for foreign currency translation?
Statement Of Cash Flows
Wrong.
Statement Of Comprehensive Income
Right!
12.
Ten years ago, a corporation created a new brand name that is now considered to be its most valuable asset. On which financial statement and at what amount will you see the brand name reported?
Balance Sheet At Its Present Value
Wrong.
Statement Of Comprehensive Income With No Value
Wrong.
Not Reported On A Financial Statement
Right!
13.
A corporation's working capital is calculated using which amounts?
Total Assets And Total Liabilities
Wrong.
Total Assets And Current Liabilities
Wrong.
Current Assets And Current Liabilities
Right!
14.
The changes that occurred during a recent year in the accounts Retained Earnings and Treasury Stock will be presented in which financial statement?
Balance Sheet
Wrong.
Income Statement
Wrong.
Statement Of Cash Flows
Wrong.
Statement Of Comprehensive Income
Wrong.
Statement Of Stockholders' Equity
Right!
15.
The amount spent for capital expenditures will be reported in which section of the statement of cash flows?
Cash Provided/Used In Financing Activities
Wrong.
Cash Provided/Used In Investing Activities
Right!
Cash Provided/Used In Operating Activities
Wrong.
Supplemental Information
Wrong.
16.
Which of the following will appear as a negative amount on a statement of cash flows that was prepared using the indirect method?
A Decrease In Inventory
Wrong.
An Increase In Accounts Payable
Wrong.
An Increase In Accounts Receivable
Right!
Depreciation Expense
Wrong.
17.
Which of the following will appear as a positive amount on a statement of cash flows that was prepared using the indirect method?
An Increase In Accounts Receivable
Wrong.
An Increase In Inventory
Wrong.
A Decrease In Accounts Payable
Wrong.
Depreciation Expense
Right!
18.
What is usually presented first in the notes to the financial statements?
Accumulated Other Comprehensive Income
Wrong.
Commitments And Contingencies
Wrong.
Significant Accounting Policies
Right!
19.
Which is the annual report to the SEC that contains the financial statements of a publicly-traded corporation?
Form 1040
Wrong.
Form 10-K
Right!
Form 10-Q
Wrong.
Schedule C
Wrong.
20.
Important disclosures regarding likely losses that could not be estimated are found where?
General Ledger Accounts
Wrong.
Income Statement
Wrong.
Notes To The Financial Statements
Right!
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