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Accounting 100 Practice Exam Questions with Correct Answers
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Accounting 100 Practice Exam Questions with Correct Answers
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Accounting 100 Practice ExamQuestions with Correct Answers
Which of the following financial statements would be included in an annual report? -
Answer-All of the financial statements
An owner who wants to have limited liability should form which type of business
enterprise? - Answer-A corporation
Which of the following is true of a partnership? - Answer-A partnership must have more
than one owner
Accounting activities - Answer-require identifying and reporting economic events
Analysis of an ethical case is done by - Answer-identifying all of the stakeholders and
how alternatives impact each
Ginni founded Waggstooth Manor Doggie Day Care and after a year in business,
formed a partnership with her husband, Warren. Their friend, Phebe, is a shareholder
with Networth Bank. In terms of personal liability, who is at greater risk? Why? -
Answer-Ginni and Warren, because both partners have unlimited personal liability,
regardless of who owns a larger percentage of the company.
Which of the following statements about accounting information is true? - Answer-
Accounting communicates financial information about a business enterprise to both
internal and external users.
Ethics are the principles of conduct that are used to judge whether decisions are -
Answer-right/wrong, honest/dishonest, moral/immoral
The main purpose of operating activities is to - Answer-generate revenue to increase
profits.
When a company borrows money from a bank to purchase equipment, this action is
called - Answer-a financing activity
Companies can borrow money if they need a source of outside funds. Borrowing money
is called - Answer-debt financing
Purchasing resources that a company needs in order to operate is called a(n) ________
activity. - Answer-investing
,If a company purchases plastic that they will melt and form into milk jugs that they will
then sell to milk plants, the cost of the plastic will be categorized as what type of
expense? - Answer-cost of goods sold
What is the primary purpose of the statement of cash flows? - Answer-to provide
information about cash receipts and cash payments
To keep the accounting equation in balance, an increase in an asset may be matched
with a(n) - Answer-decrease in another asset.
At the beginning of the year, Tektron Company had total assets of $600,000 and total
liabilities of $300,000. If the total assets increased $100,000 and the total liabilities
decreased $70,000, what is the amount of stockholders' equity at the end of the year? -
Answer-$470,000
Sheldon has the following year-end account balances: Accounts Receivable, $5,000;
Supplies, $12,000; Equipment, $18,000; Accounts Payable, $17,000; Stockholders'
Equity, $43,000. The Cash account balance was not available at year-end. Given the
account balances listed, the balance in the Cash account should be - Answer-$25,000
Which financial statement summarizes the financial position of a company? - Answer-
balance sheet
Torres Travel's stockholders' equity at the beginning of March 2014 was $200,000.
During the month, the company earned net income of $50,000 and paid dividends of
$10,000. At the end of March 2014, what is the amount of stockholders' equity? -
Answer-$240,000
Tonelli Trucking buys a $65,000 truck on credit. Which financial statement will be
affected by this transaction? - Answer-balance sheet only
Which is not one of the three forms of business organization?
a. sole proprietorship
b. creditorship
c. partnership
d. corporation - Answer-b
Which is an advantage of corporations relative to partnerships and sole proprietorships?
a. lower taxes
b. harder to transfer ownership
c. reduced legal liability for investors
d. most common form of organization - Answer-c
Which statement about users of accounting information is incorrect?
, a. management is considered an internal user
b. taxing authorities are considered external users
c. present creditors are considered external users
d. regulatory authorities are considered internal users - Answer-d
Which of the following did not result from the Sarbanes-Oxley Act?
a. top management must now certify the accuracy of financial information
b. penalties for fraudulent activity increased
c. independence of auditors increased
d. tax rates on corporations increased - Answer-d
Which is not one of the three primary business activities?
a. financing
b. operating
c. advertising
d. investing - Answer-c
Which of the following is an example of a financing activity?
a. issuing shares of common stock
b. selling goods on account
c. buying delivery equipment
d. buying inventory - Answer-a
Net income will result during a time period when:
a. assets exceed liabilities
b. assets exceed revenues
c. expenses exceed revenues
d. revenues exceed expenses - Answer-d
What section of a statement of cash flows indicates the cash spent on new equipment
during the past accounting period?
a. the investing activities section
b. the operating activities section
c. the financing activities section
d. the statement of cash flows does not give this information - Answer-a
Which statement presents information as of a specific point in time?
a. income statement
b. balance sheet
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