Test Bank for Introductory Financial Accounting for Business 1st Edition By Edmonds

Test Bank for Introductory Financial Accounting for Business 1st Edition By Edmonds

Introductory Financial Accounting for Business, 1e (Edmonds)

Chapter 1   An Introduction to Accounting

ISBN10: 1260299449.
ISBN13: 9781260299441.

1) Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

1. A) Securities and Exchange Commission
2. B) U.S. Congress
3. C) International Accounting Standards Board
4. D) Financial Accounting Standards Board

2) The Heritage Company is a manufacturer of office furniture. Which term best describes Heritage’s role in society?

1. A) Conversion agent
2. B) Regulatory agency
3. C) Consumer
4. D) Resource owner

3) Which resource providers lend financial resources to a business with the expectation of repayment with interest?

1. A) Consumers
2. B) Creditors
3. C) Investors
4. D) Owners

4) Which type of accounting information is intended to satisfy the needs of external users of accounting information?

1. A) Cost accounting
2. B) Managerial accounting
3. C) Tax accounting
4. D) Financial accounting

5) Which of the following statements is false regarding managerial accounting information?

1. A) It is often used by investors.
2. B) It is more detailed than financial accounting information.
3. C) It can include nonfinancial information.
4. D) It focuses on divisional rather than overall profitability.

6) Financial accounting standards are known collectively as GAAP. What does that acronym stand for?

1. A) Generally Accepted Accounting Principles
2. B) Generally Applied Accounting Procedures
3. C) Governmentally Approved Accounting Practices
4. D) Generally Authorized Auditing Principles

7) International accounting standards are formulated by the IASB. What does that acronym stand for?

1. A) Internationally Accepted Standards Board
2. B) International Accounting Standards Board
3. C) International Accountability Standards Bureau
4. D) International Accounting and Sustainability Board

8) Which of the following is an example of revenue?

1. A) Cash received as a result of a bank loan
2. B) Cash received from investors from the sale of common stock
3. C) Cash received from customers at the time services were provided
4. D) Cash received from the sale of land for its original selling price

9) Which of the following is not an element of the financial statements?

1. A) Net income
2. B) Revenue
3. C) Assets
4. D) Cash

10) Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, what is the amount of the company’s retained earnings?

1. A) $7,000.
2. B) $57,000.
3. C) $13,000.
4. D) $87,000.

11) Stosch Company’s balance sheet reported assets of $40,000, liabilities of $15,000 and common stock of $12,000 as of December 31, Year 1. Retained earnings on the December 31, Year 2 balance sheet is $18,000 and Stosch paid a $14,000 dividend during Year 2. What is the amount of net income for Year 2?

1. A) $17,000
2. B) $19,000
3. C) $13,000
4. D) $21,000