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
1) Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?
- A) Securities and Exchange Commission
- B) U.S. Congress
- C) International Accounting Standards Board
- D) Financial Accounting Standards Board
2) The Heritage Company is a manufacturer of office furniture. Which term best describes Heritage’s role in society?
- A) Conversion agent
- B) Regulatory agency
- C) Consumer
- D) Resource owner
3) Which resource providers lend financial resources to a business with the expectation of repayment with interest?
- A) Consumers
- B) Creditors
- C) Investors
- D) Owners
4) Which type of accounting information is intended to satisfy the needs of external users of accounting information?
- A) Cost accounting
- B) Managerial accounting
- C) Tax accounting
- D) Financial accounting
5) Which of the following statements is false regarding managerial accounting information?
- A) It is often used by investors.
- B) It is more detailed than financial accounting information.
- C) It can include nonfinancial information.
- D) It focuses on divisional rather than overall profitability.
6) Financial accounting standards are known collectively as GAAP. What does that acronym stand for?
- A) Generally Accepted Accounting Principles
- B) Generally Applied Accounting Procedures
- C) Governmentally Approved Accounting Practices
- D) Generally Authorized Auditing Principles
7) International accounting standards are formulated by the IASB. What does that acronym stand for?
- A) Internationally Accepted Standards Board
- B) International Accounting Standards Board
- C) International Accountability Standards Bureau
- D) International Accounting and Sustainability Board
8) Which of the following is an example of revenue?
- A) Cash received as a result of a bank loan
- B) Cash received from investors from the sale of common stock
- C) Cash received from customers at the time services were provided
- 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?
- A) Net income
- B) Revenue
- C) Assets
- 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?
- A) $7,000.
- B) $57,000.
- C) $13,000.
- 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?
- A) $17,000
- B) $19,000
- C) $13,000
- D) $21,000