Which of the Following Is Not One of the Four Basic Financial Statements?

1. Which of the following is not one of the four basic financial statements?
2. The balance sheet
3. The audit report
4. The income statement
5. The statement of cash flows
6. Which of the following regarding retained earnings is false?
7. Retained earnings is increased by net income
8. Retained earnings is a component of stockholders’ equity on the balance sheet
9. Retained earnings is an asset on the balance sheet
10. Retained earnings represents earnings not distributed to stockholders in the form of dividends
11. Which of the following is true regarding the income statement?
12. The income statement is sometimes called the statement of operations
13. The income statement reports revenues, expenses, and liabilities
14. The income statement only reports revenues for which cash was received at the point of sale
15. The income statement reports the financial position of a business at a particular point in time
16. Which of the following is false regarding the balance sheet?
17. The accounts shown on a balance sheet represent the basic accounting equation for a particular business
18. The retained earnings balance shown on the balance sheet must agree with the ending retained earnings balance shown on the statement of retained earnings
19. The balance sheet summarizes the net changes in specific account balances over a period of time
20. The balance sheet reports the amount of assets, liabilities, and stockholders’ equity of a business at a point in time
21. Which of the following is not one of the items required to be shown in the heading of a financial statement?
22. The financial statement preparer’s name
23. The title of the financial statement
24. The financial reporting date or period
25. The name of the business
26. Which of the following statements regarding the statement of cash flows is false?
27. The statement of cash flows separates cash inflows and outflows into three major categories: operating, investing, and financing
28. The ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet at the end of the same period
29. The total increase or decrease in cash shown on the statement of cash flows must agree with the bottom line (net income or net loss) reported on the income statement
30. The statement of cash flows covers a period of time
31. Which of the following is true?
32. FASB creates SEC
33. GAAP creates FASB
34. SEC creates CPA
35. FASB creates GAAP
36. Which of the following is not required by the Sarbanes-Oxley Act?
37. Top managers of public companies must sign a report certifying their responsibilities for the financial statements
38. Public companies must maintain an audited system of internal control to ensure accuracy in accounting reports
39. Public companies must maintain an independent committee to meet with the company’s independent auditors
40. Top managers of public companies must be members of the American Institute of Certified Public Accountants
41. Which of the following regarding GAAP is true?
42. GAAP is an abbreviation for generally applied accounting principles
43. Changes in GAAP always affect the amount of income reported by a company
44. GAAP is the abbreviation for generally accepted accounting principles
45. Changes to GAAP must be approved by the Senate Finance Committee
46. Which of the following would not be a goal of external users reading a company’s financial statements?
47. Understanding the current financial state of the company
48. Assessing the company’s contribution to social and environmental policies
49. Predicting the company’s future financial performance
50. Evaluating the company’s ability to generate cash from sales
51. At period end, Balloon Inc. reported having total assets of $279,451, total liabilities of 152,360, and ending retained earnings of 56,871. What was the balance for contributed capital?
52. 82,650
53. 70,220
54. 127,091
55. 73,640
56. Given that Pledge Inc. had a beginning balance in retained earnings of 63,800, total revenues of 150,000, total expenses of 99,200, and dividends of 32,100. What was their net income for the period, and what was their ending retained earnings?
57. (35,400); 82,500
58. 67,100; 45,100
59. 50,800; 82,500
60. (35,400); 45,100

1. What is the basic accounting equation?
2. Assets+Liabilities=Stockholders’ Equity
3. Assets-Liabilities=Stockholders’ Equity
4. Assets=Liabilties-Stockholders’ Equity
5. Assets=Liabilities+Stockholders’ Equity
6. Which of the following is not an asset?
7. Land
8. Cash
9. Contributed Capital
10. Equipment
11. The T-account is used to summarize which of the following?
12. Increases and decreases to a single account in the accounting system
13. Debits and credits to a single account in the accounting system
14. Changes in specific account balances over a time period
15. All of the above describe how T-accounts are used by accountants
16. Total assets on a balance sheet prepared on any date must agree with which of the following?
17. The sum of total liabilities and net income as shown on the income statement
18. The sum of total liabilities and contributed capital
19. The sum of total liabilities and retained earnings
20. The sum of total liabilities and contributed capital and retained earnings
21. The duality of effects can best be described as follows:
22. When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result
23. When an exchange takes place between two parties, both parties must record the transaction
24. When a transaction is recorded, both the balance sheet and the income statement must be impacted
25. When a transaction is recorded, one account will always increase and one account will always decrease
26. A company was recently formed with $50000 cash contributed to the company by stockholders. The company then borrowed $20000 from a bank and bought $10000 of supplies on account. The company also purchased $50000 of equipment paying $20000 in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet?
27. $110000
28. $100000
29. $90000
30. None of the above
31. Which of the following describes how assets are listed on the balance sheet?
32. In alphabetical order
33. In order of magnitude, lowest value to highest value
34. In the order they will be used up or turned into cash
35. From least current to most current
36. Which of the following statements describe transactions that would be recorded in the accounting system?
37. An exchange of an asset for a promise to pay
38. An exchange of a promise for another promise
39. Both of the above
40. None of the above
41. If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely ot report too small a value for which of the following on its balance sheet
42. Assets
43. Liabilities
44. Retained earnings
45. Contributed capital
46. Which of the following statements are true regarding debits and credits?
47. In any given transaction, the total dollar amount of the debits and the total dollar amount of the credits must be equal
48. Debits decrease certain accounts and credits decrease certain accounts
49. Liabilities and stockholders’ equity accounts usually end in debit balances
50. All of the above
51. Which of the following statements is true regarding the balance sheet?
52. One cannot determine the true current value of a company by reviewing just its balance sheet
53. The balance sheet reports assets only if they have been acquired through identifiable transactions
54. A balance sheet shows only the ending balances, in a summarized format, of balance sheet accounts in the accounting system as of a particular date.
55. All of the above
56. Help.com paid $1500 cash for books purchased on account earlier in the month. Which of the following is the correct journal entry for the event?
57. Cash 1500

Accounts Payable1500

1. Supplies1500

Cash1500

1. Accounts Payable1500

Cash1500

1. Cash1500

Supplies1500

1. If a company incorrectly records a payment as an asset, rather than as an expense how will this error affect net income in the current period?
2. Net income will be too high
3. Net income will be too low
4. Net income will not be affected by this error
5. It’s a mystery; nobody really knows
6. Which of the following accounts normally has a debit balance?
7. Unearned Revenue
8. Rent Expense
9. Retained Earnings
10. Sales Revenue
11. When should companies that sell gift cards to customers report revenue?
12. When the gift card is sold and cash is received
13. When the gift card is used by the customer
14. At the end of the year in which the gift card is sold
15. None of the above
16. Which of the following items is not a specific account in a company’s accounting records?
17. Accounts Receivable
18. Net Income
19. Sales Revenue
20. Unearned Revenue
21. The matching principle controls
22. Where on the income statement expenses should be presented
23. When revenues are recognized on the income statement
24. The ordering of current assets and current liabilities on the balance sheet
25. When costs are recognized as expenses on the income statement
26. When expenses exceed revenues in a given period (and there are no gains or losses),
27. Stockholders’ equity will not be impacted
28. Stockholders’ equity will be increased
29. Stockholders’ equity will be decreased
30. One cannot determine the impact on stockholders’ equity without information about the specific revenues and expenses
31. When should a company report the cost of an insurance policy as an expense?
32. When the company first signs the policy
33. When the company pays for the policy
34. When the company receives the benefits from the policy over its period of coverage
35. When the company receives payments from the insurance company for its insurance claims
36. Which of the following is the entry to be recorded by a law firm when it receives a payment from a new client that will be earned when services are provided in the future?
37. Debit accounts receivable; credit legal services revenue
38. Debit unearned revenue; credit legal services revenue
39. Debit cash; credit unearned revenue
40. Debit unearned revenue; credit cash
41. Which account is least likely to be debited when revenue is recorded?
42. Accounts payable
43. Accounts receivable
44. Cash
45. Unearned revenue
46. Web Corporation reported the following amounts on its income statement: services revenue, $32500; utilities expense, $300; net income, $1600; and income tax expense, $900. If the only other amount reported on the income statement was for selling expenses, what amount would it be?
47. $2200
48. $29700
49. $30000
50. $30900
51. What is the correct way to record the following event: ToysRUs collected $64000 in cash on $132000 of sales of merchandise, the rest were put on accounts.
52. Sales Revenue132000

Cash64000

Accounts Payable68000

1. Cash 64000

Accounts Receivable68000

Sales Revenue132000

1. Cash68000

Accounts Payable64000

Sales Revenue132000

1. Sales Revenue132000

Cash64000

Accounts Receivable68000

1. This period Nike had sales revenue of $68975, selling expenses of $10340, general and administrative expenses of $6785, other revenue of $1538, and other expenses totaling $38562. What was Nike’s net income for the period?
2. $14826
3. $15203
4. $11750
5. $12457

1. In the expanded accounting equation, what is different from the basic accounting equation
2. There is no difference between the two
3. In the expanded accounting equation, Assets is expanded to show that it includes revenues
4. In the expanded accounting equation, Liabilities is expanded to show that it includes expenses
5. In the expanded accounting equation, Stockholders’ equity is expanded to show that it consists of retained earnings which includes revenues and expenses
6. Which of the following trial balances is used as a source for preparing the income statement?
7. Unadjusted trial balance
8. Pre-adjusted trial balance
9. Adjusted trial balance
10. Post-closing trial balance
11. Which of the following accounts would NOT be involved in a deferral adjustment?
12. Prepaid Rent
13. Unearned Concessions Revenue
14. Interest Receivable
15. None of the above
16. In the term unearned revenue, what does the term “unearned” mean.
17. The service has been performed, but no money has been received
18. Money has been received, but the company has not performed and is therefore liable to do so
19. Money has not been exchanged, nor has a service been performed
20. A service has been performed and cash has been received but it doesn’t count as revenue until the end of the period
21. Which answer best describes the correct way to make the first closing entry?
22. Credit all revenue accounts and debit all expense accounts
23. Debit retained earnings and credit dividends declared
24. Credit retained earnings and debit dividends declared
25. Debit all revenue accounts and credit all expense accounts
26. Which of the following is the correct order of the accounting process
27. Analyze transactions, journal entries, financial statements, unadjusted trial balance, adjusting entries, adjusted trial balance, closing entries, post-closing trial balance
28. Journal entries, analyze transactions, unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements, closing entries, post-closing entries
29. Analyze transactions, journal entries, unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements, closing entries, post-closing trial balance
30. Journal entries, analyze transactions, unadjusted trial balance, financial statements, adjusting entries, adjusted trial balance, closing entries, post-closing trial balance
31. Which of the following accounts would not appear in a closing journal entry?
32. Interest revenue
33. Accumulated depreciation
34. Retained earnings
35. Salary expense
36. On December 31, an adjustment is made to reduce unearned revenue and report (earned) revenue. How many accounts will be included in this adjusting journal entry
37. None
38. One
39. Two
40. Three
41. When a concert promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is recorded?
42. Accrued liability
43. Accounts receivable
44. Prepaid expense
45. Unearned revenue
46. Assume a company receives a bill for $10000 for advertising done during the current year. If this bill is not yet recorded at the end of the year, what will the adjusting journal entry include?
47. Debit to advertising expense of $10000
48. Credit to advertising expense of $10000
49. Debit to accrued liabilities of $10000
50. Need more information to determine
51. Which account is least likely to appear in an adjusting journal entry?
52. Cash
53. Interest receivable
54. Income tax expense
55. Salaries payable
56. Company A has owned a building for several years. Which of the following statements regarding depreciation is false from an accounting perspective?
57. Depreciation expense for the year will equal accumulated depreciation
58. Depreciation is an estimated expense to be recorded each period during the building’s life
59. As depreciation is recorded, stockholders’ equity is reduced
60. As depreciation is recorded, total assets are reduced
61. An adjusted trial balance
62. Shows the ending balances in a debit and credit format before posting the adjusting journal entries
63. Is prepared after closing entries have been posted
64. Is a tool used by financial analysts to review the performance of publically traded companies
65. Shows the ending balances resulting from the adjusting journal entries in a debit and credit format
66. Assume the balance in prepaid insurance is $2500 but it should be $1500. The adjusting journal entry should include which of the following?
67. Debit to prepaid insurance of $1000
68. Credit to insurance expense of $1000
69. Debit to insurance expense of $1000
70. Debit to insurance expense of $1500
71. An adjusting journal entry to recognize accrued salaries payable would cause which of the following?
72. A decrease in assets and stockholders’ equity
73. A decrease in assets and liabilities
74. An increase in expenses, liabilities, and stockholders’ equity
75. An increase in expenses and liabilities and a decrease in stockholders’ equity
76. Which of the following financial statements does dividends declared appear on?
77. Income statement, balance sheet, statement of retained earnings
78. Income statement, statement of retained earnings
79. Just the income statement
80. Just the statement of retained earnings
81. If total assets increase but total liabilities remain the same, what is the impact on the debt-to-assets ratio?
82. Increases
83. Decreases
84. Remains the same
85. Cannot be determined without additional information
86. What type of audit report does a company hope to include with its annual report?
87. Conservative report
88. Qualified report
89. Comparable report
90. Unqualified report
91. The asset turnover ratio is directly affected by which of the following categories of business decisions?
92. Operating and investing decisions
93. Operating and financing decisions
94. Investing and financing decisions
95. Operating, investing, and financing decisions
96. Which of the following describes the order in which the assets are reported under IFRS?
97. Increasing order of liquidity
98. Increasing time to maturity
99. Decreasing order of liquidity
100. Decreasing time to maturity
101. Costco and Sam’s Club are two companies that offer low prices for items packages in bulk. This strategy increases total sales volume but generates less profit for each dollar of sales. Which of the following ratios is improved by this strategy?
102. Net profit margin
103. Asset turnover
104. Debt-to-assets
105. All of the above
106. Which of the following transactions will increase the debt-to-assets ratio?
107. The company issues stock to investors
108. The company uses cash to buy land
109. The company issues a note payable to buy machinery
110. None of the above
111. Which of the following would increase the net profit margin ratio in the current year?
112. Increase the amount of research and development in the last month of the year
113. Decrease the amount of sales in the last month of the year
114. Postpone routine maintenance work that was to be done this year
115. All of the above
116. Which of the following is always included in an annual report but never in a quarterly report?
117. Balance sheet
118. Income statement
119. Management’s discussion and analysis
120. Auditor’s report
121. Which of the following reports is filed annually with the SEC?
122. Form 10-Q
123. Form 10-K
124. Form 8-K
125. Press release
126. Which of the following describes a time-series analysis of your academic performance?
127. Counting the number of A’s on your transcript
128. Comparing the number of A’s you received this year to the number you received last year
129. Comparing the number of A’s you received this year to the number your friend received
130. Counting the total number of A’s given out to your class as a whole
131. Which of the following is not a possible incentive for committing accounting fraud?
132. Enhance job security
133. Increase personal wealth
134. Attract business partners
135. Following personal ethics
136. The financial statements portion of the annual report presents what kind of information?
137. Key figures covering a period of 5 or 10 years
138. Further information about the financial statements; crucial to understanding the financial statement data
139. Brief summary of highs and lows during the year
140. The auditor’s conclusion about whether GAAP was followed
141. What is a difference between GAAP and IFRS?
142. GAAP reports using account titles such as statement of financial position and statement of comprehensive income, while IFRS uses titles such as balance sheet and income statement
143. Under IFRS public companies categorize expenses by business function, while under IFRS companies can categorize by either function or nature
144. GAAP presents accounts in decreasing order of liquidity and time to maturity, and IFRS presents accounts in increasing order of liquidity and time to maturity.
145. All of the above are differences
146. Which of the following internal control principles underlies the requirement that all customers be given a sales receipt?
147. Segregate duties
148. Establish responsibility
149. Restrict access
150. Document procedures
151. Which of the following is false regarding a perpetual inventory system
152. Physical counts are never needed because records are maintained on a transaction-by-transaction basis
153. The inventory records are updated with each inventory purchase, sale, or return
154. Cost of goods sold is increased as sales are recorded
155. A perpetual inventory system can be used to detect shrinkage
156. Which of the following does not enhance internal control?
157. Assigning different duties to different employees
158. Ensuring adequate documentation is maintained
159. Allowing access only when required to complete assigned duties
160. None of the above- all enhance internal control
161. This year your company has purchased less expensive merchandise inventory but has not changed its selling prices. What effect will this change have on the company’s gross profit percentage this year, in comparison to last year?
162. The ratio will not change
163. The ratio will increase
164. The ratio will decrease
165. Cannot determine
166. Sales discounts with terms 2/10, n/30 mean
167. 10 percent discounts for payment received within 30 days of the date of sale
168. 2 percent discount for payment received within 10 days or the full amount (less returns) is due within 30 days
169. Two-tenths of a percent discount for payment received within 30 days
170. None of the above
171. Mountain Gear, Inc., buys bikes, tents, and climbing supplies from Rugged Rock Corporation for sale to consumers. What type of company is Mountain Gear, Inc?
172. Service
173. Retail merchandiser
174. Wholesale merchandiser
175. Manufacturer
176. Upon review of the most recent bank statement, you discover that a check was made out to your supplier for $76 but was recorded in your cash and accounts payable as $67. Which of the following describes the actions to be taken when preparing your bank reconciliation?
177. Bank-decrease; book-no change
178. Bank-increase; book-decrease
179. Bank- no change; book-decrease
180. Bank- decrease; book- increase
181. Which of the following is not a component of Net Sales?
182. Sales Returns and Allowances
183. Sales Discounts
184. Cost Goods Sold
185. Sales Revenue
186. A $1000 sale is made on May 1 with terms 2/10, n/30. Items with a $100 selling price are returned on May 3. What amount, if received on May 9, will be considered payment in full.
187. $700
188. $800
189. $882
190. $900
191. Upon review of your company’s bank statement, you discover that you recently deposited a check form a customer that was rejected by your bank as NSF. Which of the following describes the actions to be taken when preparing your company’s bank reconciliation?

Bank Book