UGBA Practice Exam #2
Jose is a recent college graduate who has been hired for an entry-level professional position in the
accounting department of a large corporation. Which of the following terms BEST describes Jose's
capacity as an accountant?
A) public accountant
B) private accountant
C) forensic accountant
D) advisory accountant
E) management accountant - correct answer Answer: B
Reference: Page 222 of custom text. Most private accountants are also management accountants, but
not all.
A company's owners established a company on January 1, investing $10,000 total into the stockholders
equity of the company. The company then made net income of $3,500 in the first year. No dividends
were paid. Its total liabilities stand at $7,000 on December 31 of the first year. What is the value of the
total assets of this company?
A) $500
B) $6,500
C) $13,500
D) $20,500
E) $27,500 - correct answer Answer D
Explanation : SE = 10+3.5 (all profits retained as part of equity as no dividends were paid); A = L+SE = 7
+13.5 =20.5
Reference: Custom text page 225
Who is the President of the European Central Bank? a) Mario Draghi
b) AngelaMerkel
c) Silvio Berlusconi
d) Jacob Lew - correct answer Answer: A
, Which of the following statements is TRUE?
A) As common practice, a union representative for the workers at a firm receives information from the
firm's financial accounting system.
B) As common practice, a union representative for the workers at a firm receives information from the
firm's managerial accounting system.
C) As common practice, a union representative for the workers at a firm receives information from both
the firm's managerial accounting system and its financial accounting system. - correct answer Answer: A
Explanation: A) The financial accounting system is concerned with external users, such as unions.
Reference: Custom text page 219 - "A firm's financial accounting system is concerned with external
information users: consumer groups, unions..."
Which of the following refers to the financial statement detailing a firm's assets, liabilities, and owners'
equity?
A) income statement
B) statement of cash flows
C) balance sheet
D) expense report
E) annual budget - correct answer Answer: C
Explanation: C) A balance sheet uses the accounting equation to show the current value of a company.
Reference: custom text page 226, first line.
Which of the following terms refers to any economic resource that is expected to benefit a firm or
individual who owns it?
A) asset
B) liability
C) equity
D) account
E) deposit - correct answer Answer: A
Reference: custom text page 225, first line.
Jose is a recent college graduate who has been hired for an entry-level professional position in the
accounting department of a large corporation. Which of the following terms BEST describes Jose's
capacity as an accountant?
A) public accountant
B) private accountant
C) forensic accountant
D) advisory accountant
E) management accountant - correct answer Answer: B
Reference: Page 222 of custom text. Most private accountants are also management accountants, but
not all.
A company's owners established a company on January 1, investing $10,000 total into the stockholders
equity of the company. The company then made net income of $3,500 in the first year. No dividends
were paid. Its total liabilities stand at $7,000 on December 31 of the first year. What is the value of the
total assets of this company?
A) $500
B) $6,500
C) $13,500
D) $20,500
E) $27,500 - correct answer Answer D
Explanation : SE = 10+3.5 (all profits retained as part of equity as no dividends were paid); A = L+SE = 7
+13.5 =20.5
Reference: Custom text page 225
Who is the President of the European Central Bank? a) Mario Draghi
b) AngelaMerkel
c) Silvio Berlusconi
d) Jacob Lew - correct answer Answer: A
, Which of the following statements is TRUE?
A) As common practice, a union representative for the workers at a firm receives information from the
firm's financial accounting system.
B) As common practice, a union representative for the workers at a firm receives information from the
firm's managerial accounting system.
C) As common practice, a union representative for the workers at a firm receives information from both
the firm's managerial accounting system and its financial accounting system. - correct answer Answer: A
Explanation: A) The financial accounting system is concerned with external users, such as unions.
Reference: Custom text page 219 - "A firm's financial accounting system is concerned with external
information users: consumer groups, unions..."
Which of the following refers to the financial statement detailing a firm's assets, liabilities, and owners'
equity?
A) income statement
B) statement of cash flows
C) balance sheet
D) expense report
E) annual budget - correct answer Answer: C
Explanation: C) A balance sheet uses the accounting equation to show the current value of a company.
Reference: custom text page 226, first line.
Which of the following terms refers to any economic resource that is expected to benefit a firm or
individual who owns it?
A) asset
B) liability
C) equity
D) account
E) deposit - correct answer Answer: A
Reference: custom text page 225, first line.
