ACCT 2000 LOWE ARDOIN 2
CERTIFICATION COMPREHENSIVE TEST
QUESTIONS AND CORRECT ANSWERS
GRADED A+
⩥ What is the basic accounting equation?
Answer: Assets = Liabilities + Stockholders' Equity
⩥ Which is an advantage of corporations relative to partnerships and
sole proprietorships?
Answer: Reduced legal liability for investors
⩥ Which forms of business organization are considered to be separate
accounting entities?
Answer: Sole Proprietorship, Corporations, and Partnerships.
⩥ Which of the following did NOT result from the Sarbanes-Oxley Act?
Answer: Tax rates on corporations increased.
⩥ The payment of dividends is an example of a(n)
Answer: financing activity
,⩥ What kind of classification is cost of goods sold?
Answer: expense
⩥ What section of cash flow statement shows the cash spent on new
equipment during the past accounting period?
Answer: The investing section
⩥ If total liabilities decreased by $15,000 and stockholders' equity
increased by $5,000 during a period of time, then total assets must
change by what amount and direction during that same period?
Answer: $10,000 decrease
(Assets = Liabilities + Stockholders' Equity)
⩥ Which is NOT one of the three forms of business organizations?
Answer: Creditorship
⩥ Ease of transferring ownership is a characteristic of which form of
business organization?
Answer: Corporation
⩥ In which forms of business organization are the owners personally
liable for all the debts of the business?
Answer: Sole proprietorships and Partnerships
,⩥ The sole proprietorship form of business organization?
Answer: Generally, receives favorable tax treatment relative to a
corporation
⩥ To which of the following questions will internal users want answers?
Answer: All of the answer choices are correct.
- what selling price for our product will maximize the company's net
income?
- which product line is most profitable?
- is cash sufficient to pay dividend to stockholders?
⩥ Which of the following is NOT an external user of accounting data?
Answer: Chief Financial Officer
⩥ Which statement about users of accounting information is
INCORRECT?
Answer: Regulatory authorities are considered internal users.
⩥ Which of the following is the most appropriate definition of
accounting?
Answer: The information system that identifies, records, and
communicates the economic events of an organization to interested
users.
, ⩥ Paying interest expense and receiving interest revenue are examples
of
Answer: Operating activates
⩥ Which of the following is NOT one of the three primary business
activities?
Answer: Advertising
⩥ Which of the following is an example of a financing activity?
Answer: Issuing shares of common stock
⩥ Resources owned by a business are referred to as
Answer: assets
⩥ In terms of the principal types of business activities, paying salaries
expense is an example of an
Answer: operating activity
⩥ On Jan. 10, Novis Company purchased manufacturing equipment for
$80,000 cash. What kind of activity is this?
Answer: Investing activity
CERTIFICATION COMPREHENSIVE TEST
QUESTIONS AND CORRECT ANSWERS
GRADED A+
⩥ What is the basic accounting equation?
Answer: Assets = Liabilities + Stockholders' Equity
⩥ Which is an advantage of corporations relative to partnerships and
sole proprietorships?
Answer: Reduced legal liability for investors
⩥ Which forms of business organization are considered to be separate
accounting entities?
Answer: Sole Proprietorship, Corporations, and Partnerships.
⩥ Which of the following did NOT result from the Sarbanes-Oxley Act?
Answer: Tax rates on corporations increased.
⩥ The payment of dividends is an example of a(n)
Answer: financing activity
,⩥ What kind of classification is cost of goods sold?
Answer: expense
⩥ What section of cash flow statement shows the cash spent on new
equipment during the past accounting period?
Answer: The investing section
⩥ If total liabilities decreased by $15,000 and stockholders' equity
increased by $5,000 during a period of time, then total assets must
change by what amount and direction during that same period?
Answer: $10,000 decrease
(Assets = Liabilities + Stockholders' Equity)
⩥ Which is NOT one of the three forms of business organizations?
Answer: Creditorship
⩥ Ease of transferring ownership is a characteristic of which form of
business organization?
Answer: Corporation
⩥ In which forms of business organization are the owners personally
liable for all the debts of the business?
Answer: Sole proprietorships and Partnerships
,⩥ The sole proprietorship form of business organization?
Answer: Generally, receives favorable tax treatment relative to a
corporation
⩥ To which of the following questions will internal users want answers?
Answer: All of the answer choices are correct.
- what selling price for our product will maximize the company's net
income?
- which product line is most profitable?
- is cash sufficient to pay dividend to stockholders?
⩥ Which of the following is NOT an external user of accounting data?
Answer: Chief Financial Officer
⩥ Which statement about users of accounting information is
INCORRECT?
Answer: Regulatory authorities are considered internal users.
⩥ Which of the following is the most appropriate definition of
accounting?
Answer: The information system that identifies, records, and
communicates the economic events of an organization to interested
users.
, ⩥ Paying interest expense and receiving interest revenue are examples
of
Answer: Operating activates
⩥ Which of the following is NOT one of the three primary business
activities?
Answer: Advertising
⩥ Which of the following is an example of a financing activity?
Answer: Issuing shares of common stock
⩥ Resources owned by a business are referred to as
Answer: assets
⩥ In terms of the principal types of business activities, paying salaries
expense is an example of an
Answer: operating activity
⩥ On Jan. 10, Novis Company purchased manufacturing equipment for
$80,000 cash. What kind of activity is this?
Answer: Investing activity
