(Multiple choice)

1. The primary objective of financial reporting is to provide information

a. on the cash flows of the company.

b. to the federal government.

c. useful for making investment and credit decisions.

d. about the profitability of the enterprise.

2. Which type of business organization provides the least amount of protection for bankers and other creditors of the company?

a. Partnership

b. Proprietorship

c. Corporation

d. Both a and b

3. Assets are usually reported at their

a. current market value.

b. appraised value.

c. historical cost.

d. none of the above

4. During May, assets increased by $28,000, and liabilities increased by $9,000. Stockholders’ equity must have

a. decreased by $19,000.

b. increased by $19,000.

c. increased by $37,000.

d. decreased by $37,000.

5. The amount a company expects to collect from customers appears on the

a. statement of cash flows.

b. balance sheet in the stockholders’ equity section.

c. income statement in the expenses section.

d. balance sheet in the current assets section.

6. All of the following are current assets except

a. Accounts Receivable.

b. Cash.

c. Inventory.

d. Sales Revenue.

7. Revenues are

a. increases in retained earnings resulting from selling products or performing services.

b. decreases in liabilities resulting from paying off loans.

c. increases in paid-in capital resulting from the owners investing in the business.

d. all of the above.