Exam_1_Review - CHAPTERS 1 AND 2 Multiple Choice...

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Unformatted text preview: CHAPTERS 1 AND 2 Multiple Choice Instructions: Designate the best answer for each of the following questions. _c__ 1. Which of the following is a separate legal entity? a. Proprietorship b. Sole proprietorship c. Corporation d. Partnership _b__ 2. Indicate which of the following items would not be reported in the operating section of the Statement of Cash Flows a. Cash received from customers b. Cash paid for dividends. c. Cash paid for salaries. d. Cash received for dividends. _a__ 3. A financial statement that reports accounting data at a specific date is the a. balance sheet. b. retained earnings statement. c. income statement. d. statement of cash flows. _c__ 4. Which of the following is not considered an external user of accounting information? a. Bankers b. Taxing authority c. Manager d. Labor Unions _d__ 5. GAAP refers to a. General Accounting and Auditing Principles. b. Guidelines for American Accounting Procedures. c. General Association of Accounting Practitioners. d. Generally Accepted Accounting Principles. _b__ 6. Which is an indicator of profitability? a. Current ratio. b. Earnings per share. c. Free cash flow. d. Working capita. _c__ 7. Which of the following is false ? a. Intangible assets are noncurrent assets that do not have physical substance. b. Obligations expected to be paid after one year are classified as long-term liabilities. c. Current assets are listed in the order of magnitude (size). d. Property, plant, and equipment are assets with relatively long useful lives that are used in operating the business. _b__ 8. If total liabilities decreased by $30,000 during a period of time and owners equity increased by $35,000 during the same period, the amount and direction (increase or decrease) of the period’s change in total assets is a: a. $65,000 increase. b. $5,000 increase. c. $5,000 decrease. d. $65,000 decrease. _d__ 9. Current assets are listed a. alphabetically. b. by importance. c. by longevity. d. by liquidity. _a__10. To be relevant, accounting information must a. be capable of making a difference in a decision. b. be presented on the balance sheet. c. be recorded at historical cost. d. improve the company’s internal control. . __b_11. In accounting, which of the following is not a description of reliability as it relates to accounting information? a. Verifiable b. Be the least likely to overstate assets or income c. A faithful representation d. Neutral _b__12. Financial statements combining the operations of Kohls and Target would violate the a. monetary unit assumption. b. economic entity assumption. c. cost principle. d. full disclosure principle. _a__13. Limited liability (no liability beyond investment) is not enjoyed by the owner(s) of a a. partnership and proprietorship....
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This note was uploaded on 04/01/2008 for the course ACCT 100 taught by Professor Punke during the Spring '08 term at University of Wisconsin.

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Exam_1_Review - CHAPTERS 1 AND 2 Multiple Choice...

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