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Chapters are based on last year book but all the questions are still relevant
Accounting Financial Reporting : Question Pool
Chapter 1 :
1. All of the following statements are true except one. Which statement is false?
A. The organization that formulates IFRS is the International Accounting Standard
Board
B. Users of financial information are limited to shareholders of the company
C. Professional accountants are held to a high standard of ethical conduct
D. Bookkeeping is only a part of accounting
Answer: B
Chapter: 1
2. Which of the following items are fundamental qualitative characteristics of financial
information ?
A. Going concern and accrual accounting
B. Relevance and faithful representation
C. Materiality and Cost-benefits
D. Assets and Liabilities
Answer: B
Chapter: 1
3. The accounting equation can be expressed as :
A. Assets = Liabilities – Owners’ Equity
B. Assets + Liabilities = Owners’ Equity
C. Assets – Liabilities = Owners’ Equity
D. Owners’ Equity – Assets = Liabilities
Answer: C
Chapter: 1
4. The nature of an asset is best described as:
A. An economic resource that’s expected to benefit future operations
B. Something with physical form that’s valued at cost in the accounting records
C. Something owned by a business that has a ready market value
D. An economic resource representing cash or right to receive cash in the future
Answer: A
Chapter: 1
5. Which financial statement covers a period of time ?
A. Balance Sheet
B. Income Statement
C. Statement of cash flows
D. Both b and c
Answer: D
Chapter: 1
6. How would net income be most likely to affect the accounting equation ?
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Chapters are based on last year book but all the questions are still relevant
A. Increase assets and increase liabilities
B. Decrease assets and decrease liabilities
C. Increase liabilities and decrease shareholders’ equity
D. Increase assets and increase shareholders’ equity
Answer: D
Chapter: 1
7. During the year, EcoWash has $120,000 in revenues, $50,000 in expenses, and
$4,000 in dividend payments. Shareholders’ equity changed by:
A. +$66,000
B. +$70,000
C. +$74,000
D. -$66,000
Answer: A
Chapter: 1
Explanation: ($120,000 - $50,000 - $4,000 = $66,000)
8. EcoWash in question 7 had a:
A. Net loss of $50,000
B. Net income of $70,000
C. Net income of $66,000
D. Net income of $120,000
Answer: B
Chapter: 1
Explanation: ($120,000 - $50,000 = $70,000)
9. Rochester Corporation holds cash of $11,000 and owes $27,000 in accounts payable.
Rochester has accounts receivable of $40,000, inventory of $34,000, and land that
cost $55,000. How much are Rochester’s total assets and liabilities ?
A. $129,000 Total assets and $27,000 Liabilities
B. $27,000 Total assets and $140,000 Liabilities
C. $140,000 Total assets and $27,000 Liabilities
D. $140,000 Total assets and $93,000 Liabilities
Answer: C
Chapter: 1
Explanation: Total assets = ($11,000 + $40,000 + $34,000 + $55,000) Liabilities =
$27,000
10. Which item(s) is (are) reported on the Balance Sheet?
A. Inventory
B. Accounts Payable
C. Retained earnings
D. All of the above
Answer: D
Chapter: 1
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Chapters are based on last year book but all the questions are still relevant
11. During the year, McKenna Company’s shareholders’ equity increased from $38,000.
To $50,000. McKenna earned net income of $18,000. How much in dividends did
McKenna declare and paid during the year?
A. $0 (no dividends were paid)
B. $6,000
C. $12,000
D. $7,000
Answer: B
Chapter: 1
Explanation: Beginning balance + Net income – Dividends = Ending balance
$38,000 + $18,000 – X = $50,000 X = $6,000
12. Javis Company had total assets of $340,000 and total shareholders’ equity of
$130,000 at the beginning of the year. During the year assets increased by $70,000
and liabilities increased by $25,000. Shareholders’ equity at the end of the year is:
A. $95,000
B. $175,000
C. $200,000
D. $155,000
Answer: B
Chapter: 1
Explanation: Total Assets = Total Liabilities + Total Shareholders’ Equity
$340,000 = X + $130,000 X =$210,000
$410,000 = $235,000 + X X= $175,000
13. Which of the following is a true statement about International Financial Reporting
Standards ?
A. They are newer than US financial reporting standards
B. They require less judgement than other accounting standards
C. They have been adopted (or allowed as an alternative) by many countries and
territories around the world
D. They are worse than local accounting standards as they do not understand local
business conditions and practices
Answer: C
Chapter: 1
14. Which of the following is the most accurate statement regarding ethics as applied to
decision making in accounting?
A. Ethics involves making difficult choices under pressure, and should be kept in
mind in making every decision, including those involving accounting
B. Ethics has no place in accounting, since accounting deals purely with numbers
C. It is impossible to learn ethical decision making, since it is just something you
decide to do or not to do
D. Ethics is becoming less and less important as a field of study in business
Answer: A
Chapter: 1
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Chapters are based on last year book but all the questions are still relevant
15. The two types of accounting are
A. Profit and nonprofit
B. Financial and managerial
C. Internal and external
D. Bookkeeping and budgeting
Answer: B
Chapter: 1
16. Financial statements under IFRS are NOT used
A. By investors to make investment decisions
B. By stakeholders to assess accountability of management
C. By tax authorities to decide on the amount of taxes that need to paid
D. By suppliers to decide on the credit granting decisions
Answer: C
Chapter: 1
17. All of the following are characteristics of useful accounting information under the
IASB Conceptual Framework EXCEPT:
A. Comparability
B. Relevance
C. Informativeness
D. Reliability
Answer: C
Chapter: 1
18. International Financial Reporting Standards:
A. Are accounting rules that firms can choose to follow
B. Are used by all US companies
C. Consist of a conceptual framework, individual standards and footnotes
D. Are part of the project to harmonize accounting standards across the world
Answer: D
Chapter: 1
19. When information is important enough to the informed user, so that, if it was
omitted or erroneous, it would make a difference in the user’s decision, it is:
A. Material
B. Comparable
C. Timely
D. Understandable
Answer: A
Chapter: 1
20. Revenues were $170,000, expenses were $90,000, and cash dividends were $30,000.
What was the net income and the change in retained earnings for the period?
A. Net income was $50,000; the change in retained earnings was $50,000
B. Net income was $80,000; the change in retained earnings was $50,000
C. Net income was $50,000; the change in retained earnings was $80,000
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Chapters are based on last year book but all the questions are still relevant
Accounting Financial Reporting : Question Pool
Chapter 1 :
1. All of the following statements are true except one. Which statement is false?
A. The organization that formulates IFRS is the International Accounting Standard
Board
B. Users of financial information are limited to shareholders of the company
C. Professional accountants are held to a high standard of ethical conduct
D. Bookkeeping is only a part of accounting
Answer: B
Chapter: 1
2. Which of the following items are fundamental qualitative characteristics of financial
information ?
A. Going concern and accrual accounting
B. Relevance and faithful representation
C. Materiality and Cost-benefits
D. Assets and Liabilities
Answer: B
Chapter: 1
3. The accounting equation can be expressed as :
A. Assets = Liabilities – Owners’ Equity
B. Assets + Liabilities = Owners’ Equity
C. Assets – Liabilities = Owners’ Equity
D. Owners’ Equity – Assets = Liabilities
Answer: C
Chapter: 1
4. The nature of an asset is best described as:
A. An economic resource that’s expected to benefit future operations
B. Something with physical form that’s valued at cost in the accounting records
C. Something owned by a business that has a ready market value
D. An economic resource representing cash or right to receive cash in the future
Answer: A
Chapter: 1
5. Which financial statement covers a period of time ?
A. Balance Sheet
B. Income Statement
C. Statement of cash flows
D. Both b and c
Answer: D
Chapter: 1
6. How would net income be most likely to affect the accounting equation ?
Find more resources on this topic on
,dmuwodmfdmuwodmfdmuwodmf-2a28c7f5cd865ff89abc11f891d53a7f
Chapters are based on last year book but all the questions are still relevant
A. Increase assets and increase liabilities
B. Decrease assets and decrease liabilities
C. Increase liabilities and decrease shareholders’ equity
D. Increase assets and increase shareholders’ equity
Answer: D
Chapter: 1
7. During the year, EcoWash has $120,000 in revenues, $50,000 in expenses, and
$4,000 in dividend payments. Shareholders’ equity changed by:
A. +$66,000
B. +$70,000
C. +$74,000
D. -$66,000
Answer: A
Chapter: 1
Explanation: ($120,000 - $50,000 - $4,000 = $66,000)
8. EcoWash in question 7 had a:
A. Net loss of $50,000
B. Net income of $70,000
C. Net income of $66,000
D. Net income of $120,000
Answer: B
Chapter: 1
Explanation: ($120,000 - $50,000 = $70,000)
9. Rochester Corporation holds cash of $11,000 and owes $27,000 in accounts payable.
Rochester has accounts receivable of $40,000, inventory of $34,000, and land that
cost $55,000. How much are Rochester’s total assets and liabilities ?
A. $129,000 Total assets and $27,000 Liabilities
B. $27,000 Total assets and $140,000 Liabilities
C. $140,000 Total assets and $27,000 Liabilities
D. $140,000 Total assets and $93,000 Liabilities
Answer: C
Chapter: 1
Explanation: Total assets = ($11,000 + $40,000 + $34,000 + $55,000) Liabilities =
$27,000
10. Which item(s) is (are) reported on the Balance Sheet?
A. Inventory
B. Accounts Payable
C. Retained earnings
D. All of the above
Answer: D
Chapter: 1
Save time with the right summary on
,dmuwodmfdmuwodmfdmuwodmf-2a28c7f5cd865ff89abc11f891d53a7f
Chapters are based on last year book but all the questions are still relevant
11. During the year, McKenna Company’s shareholders’ equity increased from $38,000.
To $50,000. McKenna earned net income of $18,000. How much in dividends did
McKenna declare and paid during the year?
A. $0 (no dividends were paid)
B. $6,000
C. $12,000
D. $7,000
Answer: B
Chapter: 1
Explanation: Beginning balance + Net income – Dividends = Ending balance
$38,000 + $18,000 – X = $50,000 X = $6,000
12. Javis Company had total assets of $340,000 and total shareholders’ equity of
$130,000 at the beginning of the year. During the year assets increased by $70,000
and liabilities increased by $25,000. Shareholders’ equity at the end of the year is:
A. $95,000
B. $175,000
C. $200,000
D. $155,000
Answer: B
Chapter: 1
Explanation: Total Assets = Total Liabilities + Total Shareholders’ Equity
$340,000 = X + $130,000 X =$210,000
$410,000 = $235,000 + X X= $175,000
13. Which of the following is a true statement about International Financial Reporting
Standards ?
A. They are newer than US financial reporting standards
B. They require less judgement than other accounting standards
C. They have been adopted (or allowed as an alternative) by many countries and
territories around the world
D. They are worse than local accounting standards as they do not understand local
business conditions and practices
Answer: C
Chapter: 1
14. Which of the following is the most accurate statement regarding ethics as applied to
decision making in accounting?
A. Ethics involves making difficult choices under pressure, and should be kept in
mind in making every decision, including those involving accounting
B. Ethics has no place in accounting, since accounting deals purely with numbers
C. It is impossible to learn ethical decision making, since it is just something you
decide to do or not to do
D. Ethics is becoming less and less important as a field of study in business
Answer: A
Chapter: 1
Discuss this document with others on
, dmuwodmfdmuwodmfdmuwodmf-2a28c7f5cd865ff89abc11f891d53a7f
Chapters are based on last year book but all the questions are still relevant
15. The two types of accounting are
A. Profit and nonprofit
B. Financial and managerial
C. Internal and external
D. Bookkeeping and budgeting
Answer: B
Chapter: 1
16. Financial statements under IFRS are NOT used
A. By investors to make investment decisions
B. By stakeholders to assess accountability of management
C. By tax authorities to decide on the amount of taxes that need to paid
D. By suppliers to decide on the credit granting decisions
Answer: C
Chapter: 1
17. All of the following are characteristics of useful accounting information under the
IASB Conceptual Framework EXCEPT:
A. Comparability
B. Relevance
C. Informativeness
D. Reliability
Answer: C
Chapter: 1
18. International Financial Reporting Standards:
A. Are accounting rules that firms can choose to follow
B. Are used by all US companies
C. Consist of a conceptual framework, individual standards and footnotes
D. Are part of the project to harmonize accounting standards across the world
Answer: D
Chapter: 1
19. When information is important enough to the informed user, so that, if it was
omitted or erroneous, it would make a difference in the user’s decision, it is:
A. Material
B. Comparable
C. Timely
D. Understandable
Answer: A
Chapter: 1
20. Revenues were $170,000, expenses were $90,000, and cash dividends were $30,000.
What was the net income and the change in retained earnings for the period?
A. Net income was $50,000; the change in retained earnings was $50,000
B. Net income was $80,000; the change in retained earnings was $50,000
C. Net income was $50,000; the change in retained earnings was $80,000
Quiz yourself with flashcards on
