Financial Accounting Practice Quiz 1

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Acct 2610 Spring 2003 Practice Quiz 1 1. The financial statements of all companies, both private and public, must follow generally accepted accounting principles as well as the Securities and Exchange Commission's accounting rules. TRUE FALSE

2. The payment of a cash dividend to stockholders reduces stockholders' equity. TRUE FALSE

3. The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings. TRUE FALSE

4. When the auditors give an unqualified opinion, it means the company's financial statements do not conform to generally accepted accounting principles. TRUE FALSE

5. The income statement is an "earnings statement," while the balance sheet is a "position statement." TRUE FALSE

6. Which of the following is used by financial analysts in forming a recommendation about whether a company's stock should be sold, held or bought? A) Knowledge of alternative accounting methods used by companies in their financial statement preparation B) Information about the general economy C) Information about competitors within the industry D) Only B and C are used E) All of the above are used

7. On January 1, 20A, Virginia Company had $22,000 of Retained Earnings. During 20A Virginia earned net income of $40,000 and declared and paid dividends of $20,000. In addition, the company received cash of $15,000 as an additional investment by its owners. Therefore, the ending balance in Retained Earnings at December 31, 20A would be A) $67,000. B) $42,000. C) $57,000. D) $32,000.

8. On a balance sheet, assets are listed in the order of A) dollar amount (largest first). B) date of acquisition (earliest first). C) ease of conversion to cash. D) importance to the operation of the business.

9. During 20A, Burton Company delivered products to customers for which customers paid or promised to pay $3,820,000. The company collected $3,670,000 in cash from customers during the year. Indicate which of these...
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