A100Exam1+F104+F204+Sp106+Sp206+Solutions - A100 Exam 1...

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A100 Exam 1 Material from Fall 1 2004, Fall 2 2004, Spring 1 2006, Spring 2 2006 Exams SOLUTIONS – Some of these have been re-formatted from the original multiple-choice format so that they will be more useful for study/review purposes. 1. Which of the following is a Big 4 accounting firm? A) Arthur Andersen. B) Deloitte & Young. C) KPMG. D) Goldman Sachs. E) PricewatermarkKüpers. 2. The equation that best represents the income statement may be shown as: A) assets – liabilities +(gross profit + retained earnings) = net income. B) assets + liabilities - stockholders' equity + retained earnings = net income. C) revenues - gross profit – expenses + gains – losses = net income. D) revenues – cost of goods sold – expenses + gains – losses = net income. E) revenues + gross profit – expenses + gains – losses = net income. 3.The entity that makes the rules (GAAP) that must be followed by companies in the US of America is the: Financial Accounting Standards Board. 4. Which one of the following items appears on the income statement? a. Inventory b. Retained earnings c. Dividend expense d. Interest expense e. None of the above 5. The most common revenue account is a. cash. b. sales. c. stockholders’ equity. d. accounts receivable e. none of the above 6. The single most important financial statement ratio for companies listed on stock exchanges in this country is the: A) current ratio (current assets/current liabilities). B) debt to equity ratio (total liabilities/total stockholders’ equity). C) gross profit ratio (gross profit/total revenues). D) earnings per share (net income/number of common stock shares). E) quick ratio ((cash + receivables + marketable securities)/current liabilities). 7. GAAP is an abbreviation for generally accepted accounting principles . 8. An equity investor is a person who purchases common stock of a corporation. 9 . As used in the business world, SEC is an abbreviation for Securities and Exchange Commission . 10. The equation that represents the balance sheet may be shown as: liabilities = assets - stockholders' equity . 11. Retained earnings at the end of the year is determined by retained earnings at the beginning of the year: plus net income minus dividends .
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12. Cost of goods sold is: A) an asset account. B) a revenue account. C) an expense account. D) an equity account. E) a liability account. 13. Which of the following is not a Big 4 accounting firm? A) P&G B) E&Y C) PWC D) KPMG E) Deloitte 14. Retained earnings is: A) the cash available to pay dividends. B) the cash management withholds to reinvest in the business. C) the part of stockholders' equity that was earned and not yet distributed as dividends. D) an asset account on the balance sheet. E)
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This note was uploaded on 02/24/2011 for the course ECON 302 taught by Professor Prof.ds during the Summer '09 term at Harvard.

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A100Exam1+F104+F204+Sp106+Sp206+Solutions - A100 Exam 1...

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