Objective Questions relating to basic accounting equation & Concepts.
1. Primary users of accounting information are accountants.
a.True
b.False
2.Short term investment would be classified as an assets and would appear on the income statement
a.True
b.False
3.Which of the following is an objective of financial reporting by business enterprises?
a.Financial reporting should provide assurance that all liabilities of business enterprises will be paid
b.Financial reporting should show the timing and amount of future cash dividends to potential investors
c.The primary focus of financial reporting is information about the assets of the entity.
d.Financial reporting should provide information about the economic resources of an enterprise, the claims to those resources, and changes in those resources and claims to them.
4.Owned resources of a business are referred to as
a.assets
b.liabilities
c.equities
d.revenues
5.The accounting equation may be expressed as
a.Assets=Equities - Liabilities
b.Assets + Liabilities = Owner's Equity
c.Assets = Revenues less Liabilities
d.Assets - Liabilities = Owner's Equity
6.The asset created by a business when it makes a sale on account is termed
a.accounts payable
b.prepaid expense
c.unearned revenue
d.accounts receivable
7.Income from operations would include all of the following except
a.Sales
b.General and administrative expenses
c.Cost of goods sold
d.Gains and losses on the sale of assets