acct 3001 exam 1 practice
PRACTICE – Ch1 through Ch6
Chapter 1
1. What is the objective of financial reporting?
a. Provide information that is useful to management in making decisions.
b. Provide information that clearly portray nonfinancial transactions.
c. Provide information about the reporting entity that is useful to present and potential equity investors lenders, and other creditors.
d. Provide information that excludes claims to the resources.
2. When making decisions, investors are interested in assessing?
a. the company’s ability to generate net cash inflows.
b. management’s ability to protect and enhance the capital providers’ investments.
c. Both a and b.
d. the company’s ability to generate net income.
Chapter 2
3. What is meant by comparability when discussing financial accounting information?
a. Information has predictive or confirmatory value.
b. Information is reasonably free from error.
c. Information that is measured and reported in a similar fashion across companies.
d. Information is timely.
4. The two fundamental qualities that make accounting information useful for decision making are
a. comparability and timeliness.
b. materiality and neutrality.
c. relevance and faithful representation.
d. faithful representation and comparability.
7. Which of the following elements of financial statements is not a component of comprehensive income?
a. Revenues
b. Distributions to owners
c. Losses
d. Expenses
9. Generally, revenue from sales should be recognized at a point when
a. management decides it is appropriate to do so.
b. the product is available for sale to the ultimate consumer.
c. the entire amount receivable has been collected from the customer and there remains no further warranty liability.
d. none of these.
Chapter 3
10. An accounting record into which the essential facts and figures in connection with all transactions are initially recorded is called the a. ledger. b. account. c. trial balance. d. none of these.
11. When an item of expense
Chapter 1
1. What is the objective of financial reporting?
a. Provide information that is useful to management in making decisions.
b. Provide information that clearly portray nonfinancial transactions.
c. Provide information about the reporting entity that is useful to present and potential equity investors lenders, and other creditors.
d. Provide information that excludes claims to the resources.
2. When making decisions, investors are interested in assessing?
a. the company’s ability to generate net cash inflows.
b. management’s ability to protect and enhance the capital providers’ investments.
c. Both a and b.
d. the company’s ability to generate net income.
Chapter 2
3. What is meant by comparability when discussing financial accounting information?
a. Information has predictive or confirmatory value.
b. Information is reasonably free from error.
c. Information that is measured and reported in a similar fashion across companies.
d. Information is timely.
4. The two fundamental qualities that make accounting information useful for decision making are
a. comparability and timeliness.
b. materiality and neutrality.
c. relevance and faithful representation.
d. faithful representation and comparability.
7. Which of the following elements of financial statements is not a component of comprehensive income?
a. Revenues
b. Distributions to owners
c. Losses
d. Expenses
9. Generally, revenue from sales should be recognized at a point when
a. management decides it is appropriate to do so.
b. the product is available for sale to the ultimate consumer.
c. the entire amount receivable has been collected from the customer and there remains no further warranty liability.
d. none of these.
Chapter 3
10. An accounting record into which the essential facts and figures in connection with all transactions are initially recorded is called the a. ledger. b. account. c. trial balance. d. none of these.
11. When an item of expense