Accounting Test with Answers
Introduction to Financial Accounting
1. A _____ year ends on a date that is determined by the firm, perhaps based on its business model (for example, many retailers choose the end of January). physical natural fiscal business cycle
Normal
ANS: C
2. An income statement connects two successive _____ through its effect on retained earnings.
a. balance sheets
b. cash flow statements
c. cash receipts and disbursement statements
d. funds flow statements
e. financing statements
ANS: A
3. A _____ connects two successive balance sheets because it explains the change in cash from operating, financing and investing activities.
a. statement of cash receipts and disbursements
b. income statement
c. funds flow statement
d. statement of cash flows
e. statement of retained earnings ANS: D
4. The _____ is the government agency that enforces the securities laws of U.S., including those that apply to financial reporting.
a. Government Accountability Office (GAO)
b. Public Company Accounting Oversight Board (PCAOB)
c. International Accounting Standards Board (IASB)
d. Financial Accounting Standards Board (FASB)
e. U.S. Securities and Exchange Commission (SEC)
ANS: E
5. The balance sheet of Allhear, a communications firm, for the year ended December 31, 2009, showed current assets of $20 million, current liabilities of $16 million, shareholders’ equity of $17 million, and noncurrent assets of $29 million. Compute the amount of noncurrent liabilities on Allhear’s balance sheet at the end of 2009.
a. $5 million
b. $10 million
c. $12 million
d. $13 million
e. $16 million
ANS: E
Current assets of $20 million + noncurrent assets of $29 million = total assets of $49 million=current liabilities of $16 million + noncurrent liabilities + shareholders’ equity of $17 million = $49 million, therefore noncurrent liabilities = $16 million
6. The income statement of Peoples Motors Corporation, a U.S. automotive
1. A _____ year ends on a date that is determined by the firm, perhaps based on its business model (for example, many retailers choose the end of January). physical natural fiscal business cycle
Normal
ANS: C
2. An income statement connects two successive _____ through its effect on retained earnings.
a. balance sheets
b. cash flow statements
c. cash receipts and disbursement statements
d. funds flow statements
e. financing statements
ANS: A
3. A _____ connects two successive balance sheets because it explains the change in cash from operating, financing and investing activities.
a. statement of cash receipts and disbursements
b. income statement
c. funds flow statement
d. statement of cash flows
e. statement of retained earnings ANS: D
4. The _____ is the government agency that enforces the securities laws of U.S., including those that apply to financial reporting.
a. Government Accountability Office (GAO)
b. Public Company Accounting Oversight Board (PCAOB)
c. International Accounting Standards Board (IASB)
d. Financial Accounting Standards Board (FASB)
e. U.S. Securities and Exchange Commission (SEC)
ANS: E
5. The balance sheet of Allhear, a communications firm, for the year ended December 31, 2009, showed current assets of $20 million, current liabilities of $16 million, shareholders’ equity of $17 million, and noncurrent assets of $29 million. Compute the amount of noncurrent liabilities on Allhear’s balance sheet at the end of 2009.
a. $5 million
b. $10 million
c. $12 million
d. $13 million
e. $16 million
ANS: E
Current assets of $20 million + noncurrent assets of $29 million = total assets of $49 million=current liabilities of $16 million + noncurrent liabilities + shareholders’ equity of $17 million = $49 million, therefore noncurrent liabilities = $16 million
6. The income statement of Peoples Motors Corporation, a U.S. automotive