D102 Financial Accounting Quiz
1. Which financial statement provides a detailed explanation of one compo- nent in the year-to-year change in
the retained earnings balance?
Income statement.
Trial balance.
Statement of cash flows. Balance sheet.: Income
statement.
2. Which financial statement provides a detailed explanation of the year-to-year change in the
cash account balance?
Statement of retained earnings. Balance sheet.
Statement of cash flows.
Income statement.: Statement of cash flows.
3. What is articulation?: The relationship among financial statements whereby an item on the income statement or
statement of cash flows helps explain the period-to-period change in an item on the balance sheet
4. What is a balance sheet?
- Report of the operating, investing, and financing cash flows of a company during a period
- Report of the total of the balances of all of a company's bank accounts
- Report of the revenues and expenses of a company during a period
- Report of the assets, liabilities, and equity of a company as of a point in time: Report of the assets, liabilities, and
equity of a company as of a point in time
- The balance sheet reports the resources of a company (assets), the company's obligations (liabilities), and the
difference between what is owned (assets) and what is owed (liabilities), called owners' equity.
5. Which item is a liability?
- Accounts receivable
- Capital stock
- Accounts payable
- Retained earnings: Accounts payable
- AP is the amount owed as a result of the purchase of goods and services on credit.
6. Which item is an owners' equity item?
- Accounts payable
, D102 Financial Accounting Quiz
- Inventory
- Retained earnings
- Accounts receivable: Retained earnings
- Retained earnings is an owners' equity item representing the cumulative amount of profits that the owners have kept in
the business in order to buy assets. So, retained earnings is a source of money to buy assets.
7. Strime Company's assets equal $104,000, and its stockholders' equity totals
$68,500. What is the amount of its liabilities?
$35,500
$104,000
$172,500
$68,500: $35,500
The accounting equation is Assets = Liabilities + Equity. For Strime Company,
$104,000 = Liabilities + $68,500. Rearrangement of this equation gives Liabilities
= $104,000 - $68,500 = $35,500.
8. The Whole Pine Company's liabilities equal $124,000, and its stockholders' equity totals $68,500. What is the
amount of its assets?
$68,500
$192,500
$124,000
$55,500: $192,500
The correct calculation is shown as follows: Assets = Liabilities + Equity; Assets =
$124,000 + $68,500 = $192,500
9. Which is the proper description of the accounting equation?
Owners' Equity = Liabilities
Assets = Liabilities + Owners' Equity Owners' Equity =
Assets
Assets = Liabilities: Assets = Liabilities + Owners' Equity
10.After the effects of every transaction are considered and recorded, what must the accounting equation do?
Equal total owner's equity Equal total
liabilities
, D102 Financial Accounting Quiz
Equal total itself, or balance
Equal total assets: Equal total itself, or balance
After the effects of every transaction are considered and recorded, the accounting equation must balance.
11.Which statement best describes the main features of inventories?
Goods used by company employees on a daily basis
Goods due from customers who have purchased on account Goods purchased and held for
sale
Goods used by a company on a long-term basis, usually more than five years: Goods purchased and held for sale
12.What is a classified balance sheet?
A balance sheet that distinguishes between current and long-term assets A balance sheet that is for a period of
time rather than as of a point in time A balance sheet that separates liabilities from equities
A balance sheet that is not publicly disclosed: A balance sheet that distinguishes between current and long-term assets
13.What does owners' equity represent?
The difference between current assets and long-term assets The difference between total
liabilities and total owners' equity The difference between total assets and total liabilities
The difference between current liabilities and long-term liabilities: The differ- ence between total assets and total
liabilities
14.For most companies, when assets or liabilities are classified as "current" on the balance sheet, it generally
means the related assets or liabilities will be turned into cash or will be required to be paid, respectively, within
what time frame?
The next quarter The next
year
The next six months
The next month: The next year
Assets or liabilities classified as "current" are expected to be converted to cash within a year.
, D102 Financial Accounting Quiz
15.What is owners' equity?
The sum of operating, investing, and financing cash flows
An economic resource that is owned or controlled by a company
An obligation to pay cash, transfer other assets, or provide services to some- one else
A residual amount representing the net assets available after all obligations have been satis e:dA residual
amount representing the net assets available after all obligations have been satis ed
*residual = a quantity remaining after other things have been subtracted or allowed for
16.Which item is an asset?
Retained earnings Capital
stock Accounts receivable
Accounts payable: Accounts receivable
17.According to the accounting equation, what is the correct computation of owners' equity?
Cash - Bank Loan Balance Total
Assets - Liabilities Total Assets +
Liabilities
Cash + Bank Loan Balance: Total Assets - Liabilities
Assets = Liabilities + Owners' Equity Owners' Equity = Assets
- Liabilities
18.What is an accurate description of accounts payable?
Obligation arising from the payment of income taxes on account Obligation arising from the sale
of equipment on account Obligation arising from the purchase of inventory on account
Obligation arising from the sale of office supplies on account: Obligation aris- ing from the purchase of inventory on
account
19.Bullzai Company's financial records include these accounts at the end of the year:
Land
Accounts Receivable
1. Which financial statement provides a detailed explanation of one compo- nent in the year-to-year change in
the retained earnings balance?
Income statement.
Trial balance.
Statement of cash flows. Balance sheet.: Income
statement.
2. Which financial statement provides a detailed explanation of the year-to-year change in the
cash account balance?
Statement of retained earnings. Balance sheet.
Statement of cash flows.
Income statement.: Statement of cash flows.
3. What is articulation?: The relationship among financial statements whereby an item on the income statement or
statement of cash flows helps explain the period-to-period change in an item on the balance sheet
4. What is a balance sheet?
- Report of the operating, investing, and financing cash flows of a company during a period
- Report of the total of the balances of all of a company's bank accounts
- Report of the revenues and expenses of a company during a period
- Report of the assets, liabilities, and equity of a company as of a point in time: Report of the assets, liabilities, and
equity of a company as of a point in time
- The balance sheet reports the resources of a company (assets), the company's obligations (liabilities), and the
difference between what is owned (assets) and what is owed (liabilities), called owners' equity.
5. Which item is a liability?
- Accounts receivable
- Capital stock
- Accounts payable
- Retained earnings: Accounts payable
- AP is the amount owed as a result of the purchase of goods and services on credit.
6. Which item is an owners' equity item?
- Accounts payable
, D102 Financial Accounting Quiz
- Inventory
- Retained earnings
- Accounts receivable: Retained earnings
- Retained earnings is an owners' equity item representing the cumulative amount of profits that the owners have kept in
the business in order to buy assets. So, retained earnings is a source of money to buy assets.
7. Strime Company's assets equal $104,000, and its stockholders' equity totals
$68,500. What is the amount of its liabilities?
$35,500
$104,000
$172,500
$68,500: $35,500
The accounting equation is Assets = Liabilities + Equity. For Strime Company,
$104,000 = Liabilities + $68,500. Rearrangement of this equation gives Liabilities
= $104,000 - $68,500 = $35,500.
8. The Whole Pine Company's liabilities equal $124,000, and its stockholders' equity totals $68,500. What is the
amount of its assets?
$68,500
$192,500
$124,000
$55,500: $192,500
The correct calculation is shown as follows: Assets = Liabilities + Equity; Assets =
$124,000 + $68,500 = $192,500
9. Which is the proper description of the accounting equation?
Owners' Equity = Liabilities
Assets = Liabilities + Owners' Equity Owners' Equity =
Assets
Assets = Liabilities: Assets = Liabilities + Owners' Equity
10.After the effects of every transaction are considered and recorded, what must the accounting equation do?
Equal total owner's equity Equal total
liabilities
, D102 Financial Accounting Quiz
Equal total itself, or balance
Equal total assets: Equal total itself, or balance
After the effects of every transaction are considered and recorded, the accounting equation must balance.
11.Which statement best describes the main features of inventories?
Goods used by company employees on a daily basis
Goods due from customers who have purchased on account Goods purchased and held for
sale
Goods used by a company on a long-term basis, usually more than five years: Goods purchased and held for sale
12.What is a classified balance sheet?
A balance sheet that distinguishes between current and long-term assets A balance sheet that is for a period of
time rather than as of a point in time A balance sheet that separates liabilities from equities
A balance sheet that is not publicly disclosed: A balance sheet that distinguishes between current and long-term assets
13.What does owners' equity represent?
The difference between current assets and long-term assets The difference between total
liabilities and total owners' equity The difference between total assets and total liabilities
The difference between current liabilities and long-term liabilities: The differ- ence between total assets and total
liabilities
14.For most companies, when assets or liabilities are classified as "current" on the balance sheet, it generally
means the related assets or liabilities will be turned into cash or will be required to be paid, respectively, within
what time frame?
The next quarter The next
year
The next six months
The next month: The next year
Assets or liabilities classified as "current" are expected to be converted to cash within a year.
, D102 Financial Accounting Quiz
15.What is owners' equity?
The sum of operating, investing, and financing cash flows
An economic resource that is owned or controlled by a company
An obligation to pay cash, transfer other assets, or provide services to some- one else
A residual amount representing the net assets available after all obligations have been satis e:dA residual
amount representing the net assets available after all obligations have been satis ed
*residual = a quantity remaining after other things have been subtracted or allowed for
16.Which item is an asset?
Retained earnings Capital
stock Accounts receivable
Accounts payable: Accounts receivable
17.According to the accounting equation, what is the correct computation of owners' equity?
Cash - Bank Loan Balance Total
Assets - Liabilities Total Assets +
Liabilities
Cash + Bank Loan Balance: Total Assets - Liabilities
Assets = Liabilities + Owners' Equity Owners' Equity = Assets
- Liabilities
18.What is an accurate description of accounts payable?
Obligation arising from the payment of income taxes on account Obligation arising from the sale
of equipment on account Obligation arising from the purchase of inventory on account
Obligation arising from the sale of office supplies on account: Obligation aris- ing from the purchase of inventory on
account
19.Bullzai Company's financial records include these accounts at the end of the year:
Land
Accounts Receivable
