Question 1
4 / 4 pts
When a company borrows cash from a bank, which of the
following will occur?
An increase to cash
A decrease to
accounts receivable
A decrease to notes
payable
An increase to
owners’ capital
Question 2
4 / 4 pts
Which of the following assets is assumed to have an
unlimited useful life?
Furniture
Land
Machinery
Building
Question 3
4 / 4 pts
The primary responsibility for setting the rules of
accounting rests with the:
Financial Accounting
Standards Board (FASB).
American Institute
of CPAs (AICPA)
Generally Accepted
Accounting Principles (GAAP)
Security and
Exchange Commission (SEC)
Question 4
4 / 4 pts
Which financial statement includes only those activities
that result in cash changing hands during the period?
Statement of cash
flows
Income statement
Balance sheet
Statement of owner’s
equity
Question 5
4 / 4 pts
The income statement reports:
Only sales amounts
paid in cash
The financial
position on a particular date
Net income or loss
for the period
Revenues, assets and
expenses
Question 6
4 / 4 pts
Expenses are:
Incurred only when
cash is paid
Costs incurred to
generate revenues
Increases to owner’s
equity
Recorded as credits
in journal entries.
Question 7
4 / 4 pts
Which of the four basic financial statements provides a
snapshot of the business on a particular day?
Balance sheet
Statement of owner’s
equity
Income statement
Statement of cash
Flows
Question 8
4 / 4 pts
For external financial reporting GAAP requires use of:
Either cash basis or
accrual basis accounting
Accrual basis
accounting
Cash basis
accounting
Credit basis
accounting
Question 9
4 / 4 pts
The statements of financial accounting standards and other
authoritative pronouncements that define what constitutes acceptable accounting
practice for financial reporting are collectively referred to as:
SEC
GAAP
FASB
SFAS
Question 10
4 / 4 pts
Which depreciation method produces an equal amount of
depreciation each period?
Declining-balance
Straight-line
Units-of-production
Weighted Average
Question 11
4 / 4 pts
Financial information that is __________ ensures that it is
unbiased and verifiable.
relevant
comparable
consistent
reliable
Question 12
4 / 4 pts
Amortization:
Is another term for
depreciation of fixed assets
Can be used to
expense the cost of intangible assets with unlimited lives.
Is an accelerated
depreciation method
Is a method used to
allocate the cost of an intangible asset over its limited useful life
Question 13
4 / 4 pts
Terms for the left and right side of an account are known
as:
Positive/Negative
Up/Down
Debit/Credit
Increase/Decrease
Question 14
4 / 4 pts
Activities involving the purchase and sale of long-term
assets as well as other major items used in a business’s operation are referred
to as:
Financing activities
Planning activities
Operating activities
Investing activities
Question 15
4 / 4 pts
A debit is:
A decrease in an
account.
The left side of a
T-account
An increase in an
account
The right side of a
T-account
Question 16
4 / 4 pts
Which inventory costing method assigns the earliest units
received to cost of goods sold?
Weighted average
Specific
identification
LIFO
FIFO
Question 17
4 / 4 pts
Which of the following statements is true?
Double-entry
accounting systems have existed for at least 2,000 years
Before the advent of
a money economy, the double-entry accounting system was not feasible
The double-entry
accounting system came about as a result of the Great Depression
Accounting systems
developed in the 18thcentury because, by then, most people were literate
Question 18
4 / 4 pts
The organization responsible for setting U.S. external
financial reporting practice is the:
Financial Accounting
Standards Board
American Institute
of Certified Public Accountants
Federal Government
Securities and
Exchange Commission
Question 19
4 / 4 pts
When sales are made on account, which of the following will
occur?
Accounts receivable
will increase
Cash will increase
Accounts payable
will decrease
Revenues will
decrease
Question 20
4 / 4 pts
Which of the following is not one of the four basic
financial statements?
Balance sheet
Accounting equation
Statement of cash
flows
Income statement
Question 21
4 / 4 pts
When expenses are incurred, what is the effect on the
accounting equation?
Assets will increase
Owner’s equity will
increase
Liabilities will
decrease
Owner’s equity will
decrease
Question 22
4 / 4 pts
When faced with uncertainty about the amount at which assets
and liabilities should be recorded, accountants should follow which principle,
in order to avoid misleading users of financial statements?
Consistency
Conservatism
Comparability
Continuity
Question 23
4 / 4 pts
Resources a business owns are called:
Liabilities
Assets
Revenues
Owner’s equity
Question 24
4 / 4 pts
An account with the word “prepaid” in the title is
a(n):
Expense
Liability
Liability
Asset
Question 25
4 / 4 pts
Which of the following is an example of a liability account?
Prepaid Rent
Unearned Revenue
Equipment
Inventory
