Multiple Choice Questions
1. The primary objective of financial reporting is to provide information
a. Useful for making investment and credit decisions.
b. About the profitability of the enterprise.
c. To the federal government.
d. On the cash flows of the company.
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. Historical cost.
b. Current market value.
c. Appraised value.
d. None of the above (fill in the blank).
4. During March, assets increased by $19,000 and liabilities increased by $6,000. Stockholders equity must have
a. Increased by $13,000.
b. Decreased by $13,000.
c. Increased by $25,000.
d. Decreased by $25,000.
5. The amount a company expects to collect from customers appears on the
a. Statement of cash flows.
b. Balance sheet in the current assets section.
c. Income statement in the expenses section.
d. Balance sheet in the stockholders equity section.
6. All of the following are current assets except
a. Inventory.
b. Sales Revenue.
c. Cash.
d. Accounts Receivable.
7. Revenues are
a. Decreases in liabilities resulting from paying off loans.
b. Increases in paid-in capital resulting from the owners investing in the business.
c. Increases in retained earnings resulting from selling products or performing services.
d. All of the above.
8. The financial statement that reports revenues and expenses is called the
a. Statement of cash flows.
b. Income statement.
c. Statement of retained earnings.
d. Balance sheet.