1
ACCT 2000 FINAL EXAM EOC PRACTICE
LOWE-ARDOIN QUESTIONS WITH
SOLUTIONS
What is the basic accounting equation? - correct-answer -Assets = Liabilities +
Stockholders' Equity
Which is an advantage of corporations relative to partnerships and sole
proprietorships? - correct-answer -Reduced legal liability for investors
Which forms of business organization are considered to be separate accounting
entities? - correct-answer -Sole Proprietorship, Corporations, and Partnerships.
Which of the following did NOT result from the Sarbanes-Oxley Act? - correct-
answer -Tax rates on corporations increased.
The payment of dividends is an example of a(n) - correct-answer -financing activity
, 2
What kind of classification is cost of goods sold? - correct-answer -expense
What section of cash flow statement shows the cash spent on new equipment
during the past accounting period? - correct-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? - correct-answer -$10,000 decrease
(Assets = Liabilities + Stockholders' Equity)
Which is NOT one of the three forms of business organizations? - correct-answer -
Creditorship
Ease of transferring ownership is a characteristic of which form of business
organization? - correct-answer -Corporation
In which forms of business organization are the owners personally liable for all the
debts of the business? - correct-answer -Sole proprietorships and Partnerships
, 3
The sole proprietorship form of business organization? - correct-answer -
Generally, receives favorable tax treatment relative to a corporation
To which of the following questions will internal users want answers? - correct-
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? - correct-
answer -Chief Financial Officer
Which statement about users of accounting information is INCORRECT? - correct-
answer -Regulatory authorities are considered internal users.
Which of the following is the most appropriate definition of accounting? - correct-
answer -The information system that identifies, records, and communicates the
economic events of an organization to interested users.
, 4
Paying interest expense and receiving interest revenue are examples of - correct-
answer -Operating activates
Which of the following is NOT one of the three primary business activities? -
correct-answer -Advertising
Which of the following is an example of a financing activity? - correct-answer -
Issuing shares of common stock
Resources owned by a business are referred to as - correct-answer -assets
In terms of the principal types of business activities, paying salaries expense is an
example of an - correct-answer -operating activity
On Jan. 10, Novis Company purchased manufacturing equipment for $80,000
cash. What kind of activity is this? - correct-answer -Investing activity
In what section of the statement of cash flows would the purchase of office
equipment for $10,000 cash appear? - correct-answer -Investing activities
ACCT 2000 FINAL EXAM EOC PRACTICE
LOWE-ARDOIN QUESTIONS WITH
SOLUTIONS
What is the basic accounting equation? - correct-answer -Assets = Liabilities +
Stockholders' Equity
Which is an advantage of corporations relative to partnerships and sole
proprietorships? - correct-answer -Reduced legal liability for investors
Which forms of business organization are considered to be separate accounting
entities? - correct-answer -Sole Proprietorship, Corporations, and Partnerships.
Which of the following did NOT result from the Sarbanes-Oxley Act? - correct-
answer -Tax rates on corporations increased.
The payment of dividends is an example of a(n) - correct-answer -financing activity
, 2
What kind of classification is cost of goods sold? - correct-answer -expense
What section of cash flow statement shows the cash spent on new equipment
during the past accounting period? - correct-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? - correct-answer -$10,000 decrease
(Assets = Liabilities + Stockholders' Equity)
Which is NOT one of the three forms of business organizations? - correct-answer -
Creditorship
Ease of transferring ownership is a characteristic of which form of business
organization? - correct-answer -Corporation
In which forms of business organization are the owners personally liable for all the
debts of the business? - correct-answer -Sole proprietorships and Partnerships
, 3
The sole proprietorship form of business organization? - correct-answer -
Generally, receives favorable tax treatment relative to a corporation
To which of the following questions will internal users want answers? - correct-
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? - correct-
answer -Chief Financial Officer
Which statement about users of accounting information is INCORRECT? - correct-
answer -Regulatory authorities are considered internal users.
Which of the following is the most appropriate definition of accounting? - correct-
answer -The information system that identifies, records, and communicates the
economic events of an organization to interested users.
, 4
Paying interest expense and receiving interest revenue are examples of - correct-
answer -Operating activates
Which of the following is NOT one of the three primary business activities? -
correct-answer -Advertising
Which of the following is an example of a financing activity? - correct-answer -
Issuing shares of common stock
Resources owned by a business are referred to as - correct-answer -assets
In terms of the principal types of business activities, paying salaries expense is an
example of an - correct-answer -operating activity
On Jan. 10, Novis Company purchased manufacturing equipment for $80,000
cash. What kind of activity is this? - correct-answer -Investing activity
In what section of the statement of cash flows would the purchase of office
equipment for $10,000 cash appear? - correct-answer -Investing activities
