2-1
Chapter 02 Financial Statements and Accounting
Concepts/Principles Answer Key
Multiple Choice Questions
1.
Which of the following is
not
a transaction to be recorded in the accounting records of an
entity?
2.
The balance sheet might also be called:
2-2
3.
Transactions are summarized in:
4.
A fiscal year:
2-3
5.
Which of the following is not a principal form of business organization?
6.
The time frame associated with a balance sheet is:
2-4
7.
Current U.S. Generally Accepted Accounting Principles and auditing standards require the
financial statements of an entity for the reporting period to include:
8.
The balance sheet equation can be represented by:
2-5
9.
Stockholders’ equity refers to which of the following?
10.
Accumulated depreciation on a balance sheet:
2-6
11.
The distinction between a current asset and other assets:
12.
The income statement shows amounts for:
2-7
13.
The time frame associated with an income statement is:
14.
Revenues are:
2-8
15.
Expenses are:
16.
The purpose of the income statement is to show the:
2-9
17.
The Statement of Changes in Stockholders’ Equity shows:
18.
Paid-in Capital represents:
2-10
19.
Retained Earnings represents:
20.
Additional paid-in-capital represents:
2-11
21.
The Statement of Cash Flows:
22.
On January 31, an entity’s balance sheet showed total assets of $2,250 and liabilities of
$750. Stockholders’ equity at January 31 was:
2-12
23.
On January 31, an entity’s balance sheet showed
net
assets
of $3,075 and liabilities of
$675. Stockholders’ equity on January 31 was:
24.
At the end of the year, retained earnings totaled $5,100. During the year, net income was
$750, and dividends of $360 were declared and paid. Retained earnings at the beginning of
the year totaled:
2-13
25.
At the beginning of the fiscal year, the balance sheet showed assets of $2,728 and
stockholders’ equity of $1,672. During the year, assets increased $148 and liabilities
decreased $76.
Stockholders’ equity at the end of the year totaled:
26.
At the beginning of the fiscal year, the balance sheet showed assets of $2,728 and
stockholders’ equity of $1,672. During the year, assets increased $148 and liabilities
decreased $76.
Liabilities at the end of the year totaled:
27.
At the beginning of the year, paid-in capital was $164 and retained earnings was $94.
During the year, the stockholders invested $48 and dividends of $12 were declared and
paid. Retained earnings at the end of the year were $104.
Total stockholders’ equity at the end of the year was:
2-15
28.
At the beginning of the year, paid-in capital was $164 and retained earnings was $94.
During the year, the stockholders invested $48 and dividends of $12 were declared and
paid. Retained earnings at the end of the year were $104.
Net income for the year was:
29.
The going concern concept refers to a presumption that:
2-16
30.
Consolidated financial statements report financial position, results of operations, and cash
flows for:
31.
A concept or principle that relates to transactions is:
2-17
32.
Matching revenues and expenses refers to:
33.
Accrual accounting:
2-18
34.
Which of the following accounting methods accomplishes much of the matching of
revenues and expenses?
35.
The principle of consistency means that:
2-19
36.
The principle of full disclosure pertains to:
37.
The balance sheet of an entity: