Business Degree Accounting Principles 3

Question 1

Which financial statement reports a company's revenues and expenses over a specific period of time?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Statement of Cash Flows

Answer

Statement of Stockholders' Equity

Question 2

A trial balance is prepared primarily to:

Accepted Answer

Verify that total debits equal total credits

Answer

Calculate net income for the period

Answer

Prepare the company's tax return

Answer

Determine available cash flow

Question 3

Which of the following is NOT one of the three sections of the Statement of Cash Flows?

Accepted Answer

Manufacturing Activities

Answer

Operating Activities

Answer

Investing Activities

Answer

Financing Activities

Question 4

Goodwill recorded on a company's balance sheet is an example of a(n):

Accepted Answer

Intangible Asset

Answer

Current Asset

Answer

Tangible Asset

Answer

Current Liability

Question 5

The allowance for doubtful accounts is used to:

Accepted Answer

Estimate uncollectible accounts receivable in advance

Answer

Record actual bad debts as they occur

Answer

Calculate straight-line depreciation

Answer

Record prepaid expenses at period end

Question 6

Which of the following transactions would increase owner's equity?

Accepted Answer

Earning net income for the period

Answer

Payment of cash dividends to shareholders

Answer

Purchase of equipment with cash

Answer

Borrowing money from a bank

Question 7

The accounting principle that requires companies to use the same accounting methods and procedures from one period to the next is the:

Accepted Answer

Consistency Principle

Answer

Matching Principle

Answer

Full Disclosure Principle

Answer

Materiality Principle