FIN 461 TEST 1 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
Providing info about the performance and financial position of companies so that users can make
economic decisions best describes the role of - Answers financial reporting
A company's current financial position would best be evaluated using the - Answers balance sheet
A company's profitability for a period would best be evaluated using the - Answers income statement
Accounting policies, methods, and estimates used in preparing financial statements are most likely
found in the - Answers notes to the financial statements
Information about management and director compensation would least likely be found in the -
Answers auditor's report
Information about company's objectives, strategies, and significant risks would most likely be found in
the - Answers management commentary
What type of audit opinion is preferred when analyzing financial statements? - Answers unqualified
Ratios are an input into which step in the financial statement analysis framework? - Answers
analyze/interpret the processed data
On 30 April 2006, Pinto Products received a cash payment of $30,000 as a deposit on production of a
custom machine to be delivered in August 2006. This transaction would most likely result in which of
the following on 30 April 2006? - Answers increase of liabilities of 30,000
Which of the following items would most likely be classified as an operating activity? - Answers Sale
of automobiles by an automobile dealer.
Which of the following items would most likely be classified as a financing activity? - Answers
Issuance of debt
Which of the following elements represents an economic resource? - Answers Asset
Which of the following elements represents a residual claim? - Answers Owner's equity
An analyst has projected that a company will have assets of €2,000 at year-end and liabilities of
€1,200. The analyst's projection of total owners' equity should be closest to: - Answers €800
An analyst has collected the following info regarding a company in advance of it's year-end earnings
announcement:
Estimated net income $200
Beg. retained earnings $1400
Estimated distributions to owners $100
The analyst's estimate of ending retained earnings should be closest to: - Answers $1500
An analyst has compiled the following information regarding Rubsam, Inc.
Liabilities at year-end € 1,000
Contributed capital at year-end € 500
Beginning retained earnings € 600
Revenue during the year € 5,000
Expenses during the year € 4,300
There have been no distributions to owners. The analyst's most likely estimate of total assets at year-
end should be closest to: - Answers €2800
A group of individuals formed a new company with an investment of $500,000. The most likely effect
of this transaction on the company's accounting equation at the time of the formation is an increase
in cash and - Answers an increase in contributed capital
HVG, LLC paid $12,000 of cash to a real estate company upon signing a lease on 31 December 2005.
The payment represents a $4,000 security deposit and $4,000 of rent for each of January 2006 and
February 2006. Assuming that the correct accounting is to reflect both January and February rent as
prepaid, the most likely effect on HVG's accounting equation in December 2005 is: - Answers no net
change in assets
TRR Enterprises sold products to customers on 30 June 2006 for a total price of €10,000. The terms of
the sale are that payment is due in 30 days. The cost of the products was €8,000. The most likely net
change in TRR's total assets on 30 June 2006 related to this transaction is: - Answers €2000
Squires & Johnson, Ltd., recorded €250,000 of depreciation expense in December 2005. The most
likely effect on the company's accounting equation is: - Answers a decrease in assets of €250,000
An analyst who is interested in assessing a company's financial position is most likely to focus on
which financial statement? - Answers balance sheet
Providing info about the performance and financial position of companies so that users can make
economic decisions best describes the role of - Answers financial reporting
A company's current financial position would best be evaluated using the - Answers balance sheet
A company's profitability for a period would best be evaluated using the - Answers income statement
Accounting policies, methods, and estimates used in preparing financial statements are most likely
found in the - Answers notes to the financial statements
Information about management and director compensation would least likely be found in the -
Answers auditor's report
Information about company's objectives, strategies, and significant risks would most likely be found in
the - Answers management commentary
What type of audit opinion is preferred when analyzing financial statements? - Answers unqualified
Ratios are an input into which step in the financial statement analysis framework? - Answers
analyze/interpret the processed data
On 30 April 2006, Pinto Products received a cash payment of $30,000 as a deposit on production of a
custom machine to be delivered in August 2006. This transaction would most likely result in which of
the following on 30 April 2006? - Answers increase of liabilities of 30,000
Which of the following items would most likely be classified as an operating activity? - Answers Sale
of automobiles by an automobile dealer.
Which of the following items would most likely be classified as a financing activity? - Answers
Issuance of debt
Which of the following elements represents an economic resource? - Answers Asset
Which of the following elements represents a residual claim? - Answers Owner's equity
An analyst has projected that a company will have assets of €2,000 at year-end and liabilities of
€1,200. The analyst's projection of total owners' equity should be closest to: - Answers €800
An analyst has collected the following info regarding a company in advance of it's year-end earnings
announcement:
Estimated net income $200
Beg. retained earnings $1400
Estimated distributions to owners $100
The analyst's estimate of ending retained earnings should be closest to: - Answers $1500
An analyst has compiled the following information regarding Rubsam, Inc.
Liabilities at year-end € 1,000
Contributed capital at year-end € 500
Beginning retained earnings € 600
Revenue during the year € 5,000
Expenses during the year € 4,300
There have been no distributions to owners. The analyst's most likely estimate of total assets at year-
end should be closest to: - Answers €2800
A group of individuals formed a new company with an investment of $500,000. The most likely effect
of this transaction on the company's accounting equation at the time of the formation is an increase
in cash and - Answers an increase in contributed capital
HVG, LLC paid $12,000 of cash to a real estate company upon signing a lease on 31 December 2005.
The payment represents a $4,000 security deposit and $4,000 of rent for each of January 2006 and
February 2006. Assuming that the correct accounting is to reflect both January and February rent as
prepaid, the most likely effect on HVG's accounting equation in December 2005 is: - Answers no net
change in assets
TRR Enterprises sold products to customers on 30 June 2006 for a total price of €10,000. The terms of
the sale are that payment is due in 30 days. The cost of the products was €8,000. The most likely net
change in TRR's total assets on 30 June 2006 related to this transaction is: - Answers €2000
Squires & Johnson, Ltd., recorded €250,000 of depreciation expense in December 2005. The most
likely effect on the company's accounting equation is: - Answers a decrease in assets of €250,000
An analyst who is interested in assessing a company's financial position is most likely to focus on
which financial statement? - Answers balance sheet
