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level: Level 1 of Exam 2

Questions and Answers List

level questions: Level 1 of Exam 2

Question	Answer
The area of accounting that provides information to internal users is called ________________________ Select one alternative: A financial accounting B management accounting C forensic accounting D environmental accounting	B management accounting
In the accounting equation A = L + E, what does "E" stand for? Select one alternative: A Equilibrium B Entrepreneur C Equity D Equality	C Equity
What does "long-term liability" (also known as non-current liability) mean? Select one alternative: A Money that customers owe the company and must be paid within 12 months B Investment in the company C Money owed to lenders that is due for payment within 12 months D Money owed to lenders that is due for payment more than 12 months away	D Money owed to lenders that is due for payment more than 12 months away
Which of the following financial statements provide information that is a "snap shot" in time (i.e. a day in a year)? Select one alternative: A Balance Sheet B Income Statement C Statement of Cash Flow D Sustainability Report	A Balance Sheet
Which of the following is NOT an asset? Select one alternative: A accrued salaries B inventory C investments D cash	A accrued salaries
Earning revenue _____________________________ . Select one alternative: A increases one asset, decreases another asset B decreases assets, increases liabilities C increases assets, increases owner's equity D increases assets, decreases owner's equity	C increases assets, increases owner's equity
Which of the following accounts is a liability? Select one alternative: A Wages expenses B Accounts receivable C Accounts payable D Service revenue	C Accounts payable
Which statement below concerning the cash account is true? Select one alternative: A Cash will always have more debits than credits B Cash will never have a credit balance C Cash is increased by debiting D None of the above	D None of the above
Which group of accounts is comprised of only assets? Select one alternative: A Accounts Receivable, Revenue, Cash B Unearned revenue, Prepaid expenses, Cash C Cash, Accounts Payable, Buildings D Prepaid expenses, Buildings, Equipment	C Cash, Accounts Payable, Buildings
The process of initially recording a business transaction is called _________________. Select one alternative: A balancing B closing C accounting D journalizing	D journalizing
Adjusting entries always include ________________________ . Select one alternative: A at least one income statement account and one balance sheet account B only income statement accounts C only balance sheet accounts D the cash account	A at least one income statement account and one balance sheet account
Which of the following groups of accounts have a normal debit balance? Select one alternative: A liabilities and capital B revenues, liabilities and capital C capital and assets D assets and expenses	C capital and assets
Expenses can result from _____________________ . Select one alternative: A using up liabilities B purchasing assets C consuming services D increasing owner's equity	C consuming services
Small businesses can usually prepare their Income Statements and Balance Sheet on a cash basis. On what basis do large businesses prepare their Income Statements and Balance Sheets? Select one alternative: A Cash basis B Accrual basis C Cash flow statement basis D Share price basis	B Accrual basis
What is "Retained earnings"? Select one alternative: A Profit that is made and kept for future use in the business B Profit that is made and shared with shareholders C A type of liability D An account found in the Income statement	A Profit that is made and kept for future use in the business
Shareholder's equity : Select one alternative: A includes retained earnings and paid-in capital B includes paid-in-capital and liabilities C is shown on the income statement D is usually equal to cash on hand	A includes retained earnings and paid-in capital
A business sells its inventory and receives cash for it. In which section of the Statement of Cash Flow will you see this cash amount reported? Select one alternative: A Operating B Investing C Financing D Expensing	A Operating
Which of the following is NOT true of a corporation? Select one alternative: A The acts of its owners bind the corporation B It may buy, own and sell property C It may enter into binding legal contracts in its own name D It may sue and be sued	A The acts of its owners bind the corporation
Which of the following is NOT a right possessed by common shareholders of a corporation? Select one alternative: A the right to receive a minimum amount of dividends B the right to share in assets upon liquidation C the right to sell their shares to anyone they choose D the right to vote in the election of the board of directors	A the right to receive a minimum amount of dividends
What is "Issued share capital"? Select one alternative: A the total par value of shares that has actually been sold to shareholders B the company has issued shares but has only asked for payments in instalments C the total par value of shares that has actually been paid by the shareholders D the number of shares a company is authorised to sell	A the total par value of shares that has actually been sold to shareholders
What is a "dividend"? Select one alternative: A Extra shares that a company gives to its shareholders from dividing its current shares B A sum of cash received by a company from its shareholders returning their shares to the company C A sum of cash paid by a company to its shareholders out of its profits D Extra shares that a company gives to its shareholders due to good performance	C A sum of cash paid by a company to its shareholders out of its profits
Which of the following should be shown on a statement of cash flows under the financing activities section? Select one alternative: A the borrowing of money from the bank B the payment of cash to purchase a motor vehicle C The cash received from the sale of a building D the receipt of cash from the sale of inventory	A the borrowing of money from the bank
Which of the following would NOT be classified as an operating activity (in the Statement of Cash Flows) Select one alternative: A payment of dividends B depreciation expense C sale of inventory D selling expenses	A payment of dividends
What is the Statement of Cash Flows also known as? Select one alternative: A Cash Flow Statement B Balance Sheet C Statement of Equity D Income Statement	A Cash Flow Statement