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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. 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?

Question 2 2. 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 3 3. From a balance sheet, the assets less the owner's equity will equal which of the following?

Question 4 4. 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 5 5. Which method of accounting is preferred under GAAP?

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Question 6 6. 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 7 7. Which of the following would be a cash outflow operating activity for a small healthcare manufacturer?

Question 8 8. How is a cash flow statement different from an income statement?

Question 9 9. If a sister sold a house to her brother, this would be suspicious to an investor because of which of the following reasons?

Question 10 10. A balance sheet compares liabilities and equity to which of the following?

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Question 11 11. 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 12 12. The net income is derived from which pieces of information?

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

Question 14 14. Which of the following would need an external audit?

Question 15 15. Why would an investor require a third party audit of a potential portfolio company?

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Question 16 16. Which of the following is a job of an auditor?

Question 17 17. Identify the person that performs the financial statement audit?

Question 18 18. What accounting principle states that people involved in a transaction should not be personally related?

Question 19 19. Which financial statement shows how much money that a company made was retained and reinvested in the company?

Question 20 20. What is the balance sheet equation?

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Question 21 21. What are financial statements?

Question 22 22. The _____ of a company denotes the amount of money that was paid out.

Question 23 23. What do the notes to the financial statements do?

Question 24 24. ABC Ropes is interested in buying a retail store front to sell their ropes as they have previously only been selling online. ABC takes a loan from the bank in order to purchase a retail space outright. ABC receives a $250,000 loan from the bank to purchase their retail space. What is this $250,000 categorized as and what type of activity is it?

Question 25 25. A financial statement which shows how cash flows in and out of a company during a given time period is known as a(n)

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Question 26 26. Bob is an accountant with ABC Gas. Over the last 6 months, Bob has made intentional errors in his financial reporting in order to earn more money for himself. Who evaluates and will punish Bob's indiscretion?

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

Question 28 28. Which financial statement tells whether a company made or lost money in a given time period?

Question 29 29. The balance sheet is a part of which of the following?

Question 30 30. Why might potential investors and creditors look at a company's financial statements?

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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