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Financial Statements in Accounting Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Which method of accounting is preferred under GAAP?

Question 2 2. An auditor makes a note that there is a patent lawsuit. After the audit is complete, the company losses the lawsuit. If the auditor noted this as a recognized event, what would need to be done?

Question 3 3. If a sister sold a house to her brother, this would be suspicious to an investor because of which of the following reasons?

Question 4 4. Your company has $800,000 in sales revenue with a cost of goods sold being $450,000. If you have a 5% return rate, what is you income?

Question 5 5. Your plumbing company fixed the shower for Jane Smith. You have invoiced Jane for $1,000 but she has not paid yet. Using the accrual method of accounting, how much should you show as income?

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Question 6 6. Which of the following would be a cash outflow operating activity for a small healthcare manufacturer?

Question 7 7. How is a cash flow statement different from an income statement?

Question 8 8. Last year your company made a total profit of $100,000. You decide to reinvest all of that money into the company. Where will this information be shown?

Question 9 9. From a balance sheet, the assets less the owner's equity will equal which of the following?

Question 10 10. Why would an investor require a third party audit of a potential portfolio company?

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Question 11 11. Which of the following would need an external audit?

Question 12 12. Which of the following is a job of an auditor?

Question 13 13. Where would an investor find information about the total revenue and expenses of a company.

Question 14 14. The net income is derived from which pieces of information?

Question 15 15. A balance sheet compares liabilities and equity to which of the following?

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Question 16 16. Your plumbing company fixed the shower for Jane Smith. You have invoiced Jane for $1,000 but she has not paid yet. Using the cash method of accounting, how much should you show as income?

Question 17 17. How can money be brought into a company?

Question 18 18. When a criminal case is tried, the stenographer writes down every word of the proceeding. How does the principle of monetary management differ?

Question 19 19. What is the balance sheet equation?

Question 20 20. If an investor wanted to see how much money was maintained and reinvested in the company, which financial statement would give that information?

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Question 21 21. The people that have invested money into a company, as well as those who are considering making an investment into the company, are called _____.

Question 22 22. A company had total revenue of $20,000 for the month ending March 31. In the same time period, the company had $12,000 in expenses. What was the company's net income or net loss?

Question 23 23. What is the balance sheet equation?

Question 24 24. Which of the sections of the statement of cash flows includes activities that involve cash receipts or cash payments from changes on long-term liabilities?

Question 25 25. The Widget Company is changing the way it does its accounting. They used to report revenue only when the money was received, but now they will report it once an order is made. How will this show in the notes?

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Question 26 26. Explain the purpose of an income statement.

Question 27 27. What are the rules and regulations that must be followed when reporting all financial data?

Question 28 28. Which of the financial statements reports all accounts that a company has and the account balances?

Question 29 29. Why might potential investors and creditors look at a company's financial statements?

Question 30 30. What is the term for an examination of a company's financial records by someone that is not an employee of the company?

Financial Statements in Accounting Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next question. You can skip questions if you would like and come back to them later with the "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. You will lose your work if you close or refresh this page. Good luck!

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