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140 QUESTIONS and ANSWERS(1)

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1. The primary purpose(s) of financial accounting is (are) to: A. Measure and record business transactions. B. Prepare federal and state tax returns. C. Communicate financial results to investors a ... nd creditors. D. a and c 2. The accounting equation is defined as: A. Assets = Liabilities + Stockholders' Equity. B. Assets = Liabilities - Stockholders' Equity. C. Net Income = Revenues - Expenses. D. Liabilities + Revenues = Assets. 3. Which statement below best describes the accounting equation? A. The change in retained earnings equals net income less dividends. B. Equality of revenue and expense transactions over time. C. Resources of the company equal creditors' and owners' claims to those resources. D. Financing activities equal investing and operating activities. 4. Emmitt had the following final balances after the first year of operations: assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the amount of Emmitt's liabilities? A. $55,000. B. $30,000. C. $13,000. D. $7,000. 5. One disadvantage of the corporate form of business is: A. Limited liability. B. Access to more capital. C. Smaller in size. D. Double taxation. 6. Use the following appropriate amounts to calculate net income: Revenues, $12,000; Liabilities, $5,000; Expenses, $4,000; Assets, $19,000; Dividends, $4,000. A. $6,000. B. $8,000. C. $4,000. D. $14,000 [Show More]

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