AC/113 AC113 AC 113 UNIT 2 EXAM

 1.

Question :

Which concept requires accounting records be base on verifiable and objective evidence?
 

Student Answer:

 Matching

 Objectivity

 Going concern

 Cost
 

Question 2.

Question :

Which accounts are found on the income statement?
 

Student Answer:

 Accounts receivable, notes payable, bonds and expenses

 Revenue and expenses

 Assets, liabilities, stocks

 Expenses, revenues, paid in capital
 

Question 3.

Question :

What type of stakeholders are managers an example of? 
 

Student Answer:

 Government

 Capital Market

 Product

 Internal
 

Question 4.

Question :

What is the order of preparation for financial statements? 
 

Student Answer:

 Income statement, balance sheet, cash flow

 Income statement, retained earnings, balance sheet and statement of cash flow

 Income statement, balance sheet, retained earnings, statement of cash flow

 Balance sheet, cash flow, statement of financial position, owner’s equity
 

Question 5.

Question :

A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.
 

Student Answer:

 transaction

 framework

 control

 set of rules
 

Question 6.

Question :

What are the four forms of a business? 
 

Student Answer:

 Corporation, S corporation, partnership and LLC

 Partnership, sole proprietorship, LLC, Corporation

 LLC, general partnership, bank, limited partnership

 LLP, LLC, construction, corporation
 

Question 7.

Question :

Investments that are made by stockholders into a business are shown on the cash flows in the section of:
 

Student Answer:

 Financing activities 

 Investing activities 

 Operating activities  

 Other activities 
 

Question 8.

Question :

What are the three types of business operations that are for profit?
 

Student Answer:

 Service business, merchandising business, manufacturing business

 Manufacture business, service business, Partnership business

 Merchandise business, sole proprietorship business, service business

 LLC business, merchandising business, service business
 

Question 9.

Question :

These items can be found on what statement: assets, liabilites and owners equity.
 

Student Answer:

 Income statement

 Cash flow    

 Balance sheet

 Retained earnings
 

Question 10.

Question :

Which of the following is a control in accounting?
 

Student Answer:

 The accounting equation must balance.

 The ending cash on the statement of cash flows must equal the cash on the balance sheet.

 The net income on the income statements must equal the net effects of revenue minus expenses.

 All of the above
 

Question 11.

Question :

Which is an example of a capital market stakeholder? 
 

Student Answer:

 Banks

 Employees

 Suppliers

 Government
 

Question 12.

Question :

When a company provides a unique product or service it is considered a(n) ______ strategy?

Student Answer:

 low cost

 capital

 advantage

 premium 
 

Question 13.

Question :

Which of the following expresses the accounting equation accurately? 
 

Student Answer:

 Assets + Liabilities = Stockholders’ equity

 Assets = Liabilities + Stockholders’ equity

 Assets + Liabilities – Stockholders’ equity

 Assets = Liabilities + Retained earnings 
 

Question 14.

Question :

What accounting concept is associated to recording assets at their cost or purchase price? 
 

Student Answer:

 Objectivity

 Cost

 Matching

 Unit of measure
 

Question 15.

Question :

What activity is part of generating revenue for a business?
 

Student Answer:

 Other activities

 Financing activities 

 Operating activities  

 Investing activities
 

Question 16.

Question :

Which statement is the first to be prepared?
 

Student Answer:

 Income statement

 Balance sheet

 Statement of cash flows

 Retained earnings statement 
 

Question 17.

Question :

Which is not a major objective of financial accounting?
 

Student Answer:

 Reporting the financial condition of a business at a point in time

 Reporting changes in the financial condition over a period of time

 Reporting revenue and expenses

 Reporting economic performance over time
 

Question 18.

Question :

What types of accounts are listed in the balance sheet? 
 

Student Answer:

 Asset accounts

 Liability accounts

 Capital stock accounts

 All of the above
 

Question 19.

Question :

Rentz Inc., a corporation, received an additional investment of $4,000 cash in exchange for shares of capital stock. How does this transaction affect Rentz Inc. accounts?
 

Student Answer:

 Increase in stock expense and decrease cash by $4,000 each

 Increase capital stock and increase revenue by $4,000 each

 Increase capital stock and decrease retained earnings by $4,000 each

 Increase capital stock and increase cash by $4,000 each 
 

Question 20.

Question :

A business creates revenue through the process of ________
 

Student Answer:

 selling products or providing a service.

 buying merchandise.

 collecting receivables.

 borrowing.