A100 FINAL EXAM IU QUESTIONS AND
ANSWERS GRADED A+ 2025/2026
Which of the following is primarily responsible for the information provided in the financial
statements?
A) Board of Directors
B) Internal Accounting Staff
C) Company Top Management
D) External Auditors - ANS Company Top Management
Which of the following describes the primary objective of financial accounting?
A) To provide information about a business' future business strategies.
B) To provide useful financial information only to stockholders.
C) To provide useful financial information about a business to help external parties make
informed decisions.
D) To provide useful financial information about a business to help internal parties make
informed decisions. - ANS To provide useful financial information about a business to help
external parties make informed decisions.
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,Financial accounting standards are known collectively as GAAP. What does that acronym stand
for?
A) Generally Authorized Auditing Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Accepted Accounting Principles - ANS Generally Accepted Accounting Principles
For accounting information to be useful, it must be which of the following?
A) It must be comparable and reliable.
B) It must be consistent and comparable.
C) It must be a faithful representation and relevant.
D) It must be relevant and consistent. - ANS It must be a faithful representation and relevant.
Which of the following best describes the purpose of an audit?
A) To audit every transaction that an entity entered into.
B) To establish that a corporation's stock is a sound investment.
C) To prove the accuracy of an entity's financial statements.
D) To lend credibility to an entity's financial statements. - ANS To lend credibility to an entity's
financial statements.
Which of the following is considered to be an expense on the income statement?
A)Prepaid Expenses.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, B)Wages payable.
C)Notes payable.
D)Cost of goods sold. - ANS Cost of goods sold.
At the beginning of 2020, a corporation had assets of $270,000 and liabilities of $160,000.
During 2020, assets increased $25,000 and liabilities increased $5,000. What was stockholders'
equity at December 31, 2020?
A) $130,000.
B) $190,000.
C) $140,000.
D) $80,000. - ANS $130,000.
Which of the following would not be reported in the operating activities section of a cash flow
statement?
A) Cash paid for interest expense.
B) Cash paid for dividends to stockholders.
C) Cash paid for employee wages.
D) Cash received from customers. - ANS Cash paid for dividends to stockholders.
Seitz Trucking's retained earnings increased $20,000 during the current year. What was Seitz
Trucking's current year net income or loss given that Seitz Trucking declared $25,000 of
dividends during this year?
A) Net loss was $5,000.
B) Net loss was $45,000.
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
ANSWERS GRADED A+ 2025/2026
Which of the following is primarily responsible for the information provided in the financial
statements?
A) Board of Directors
B) Internal Accounting Staff
C) Company Top Management
D) External Auditors - ANS Company Top Management
Which of the following describes the primary objective of financial accounting?
A) To provide information about a business' future business strategies.
B) To provide useful financial information only to stockholders.
C) To provide useful financial information about a business to help external parties make
informed decisions.
D) To provide useful financial information about a business to help internal parties make
informed decisions. - ANS To provide useful financial information about a business to help
external parties make informed decisions.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Financial accounting standards are known collectively as GAAP. What does that acronym stand
for?
A) Generally Authorized Auditing Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Accepted Accounting Principles - ANS Generally Accepted Accounting Principles
For accounting information to be useful, it must be which of the following?
A) It must be comparable and reliable.
B) It must be consistent and comparable.
C) It must be a faithful representation and relevant.
D) It must be relevant and consistent. - ANS It must be a faithful representation and relevant.
Which of the following best describes the purpose of an audit?
A) To audit every transaction that an entity entered into.
B) To establish that a corporation's stock is a sound investment.
C) To prove the accuracy of an entity's financial statements.
D) To lend credibility to an entity's financial statements. - ANS To lend credibility to an entity's
financial statements.
Which of the following is considered to be an expense on the income statement?
A)Prepaid Expenses.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, B)Wages payable.
C)Notes payable.
D)Cost of goods sold. - ANS Cost of goods sold.
At the beginning of 2020, a corporation had assets of $270,000 and liabilities of $160,000.
During 2020, assets increased $25,000 and liabilities increased $5,000. What was stockholders'
equity at December 31, 2020?
A) $130,000.
B) $190,000.
C) $140,000.
D) $80,000. - ANS $130,000.
Which of the following would not be reported in the operating activities section of a cash flow
statement?
A) Cash paid for interest expense.
B) Cash paid for dividends to stockholders.
C) Cash paid for employee wages.
D) Cash received from customers. - ANS Cash paid for dividends to stockholders.
Seitz Trucking's retained earnings increased $20,000 during the current year. What was Seitz
Trucking's current year net income or loss given that Seitz Trucking declared $25,000 of
dividends during this year?
A) Net loss was $5,000.
B) Net loss was $45,000.
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
