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level: Level 1 of Exam 2

Questions and Answers List

level questions: Level 1 of Exam 2

QuestionAnswer
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 accountingB management accounting
In the accounting equation A = L + E, what does "E" stand for? Select one alternative: A Equilibrium B Entrepreneur C Equity D EqualityC 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 awayD 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 ReportA Balance Sheet
Which of the following is NOT an asset? Select one alternative: A accrued salaries B inventory C investments D cashA 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 equityC 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 revenueC 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 aboveD 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, EquipmentC Cash, Accounts Payable, Buildings
The process of initially recording a business transaction is called _________________. Select one alternative: A balancing B closing C accounting D journalizingD 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 accountA 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 expensesC capital and assets
Expenses can result from _____________________ . Select one alternative: A using up liabilities B purchasing assets C consuming services D increasing owner's equityC 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 basisB 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 statementA 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 handA 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 ExpensingA 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 suedA 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 directorsA 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 sellA 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 performanceC 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 inventoryA 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 expensesA 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 StatementA Cash Flow Statement