1. Creditors' claims on the assets of a company are called: (Points : 2)
Net losses
Expenses
Revenues
Equity
Liabilities
2. The primary objective of financial accounting is: (Points : 2)
To serve the decision-making needs of internal users
To provide financial statements to help external users analyze and interpret an organization's activities
To monitor and control company activitiesTo provide information on both the costs and benefits of managing products and services
To know what, when and how muchto produce
3. Assets created by selling goods and services on credit are: (Points : 2)
Accounts payable
Accounts receivable
Liabilities
Expenses
4. The debt ratio is used: (Points : 2)
To measure the amount of equity relative to the expenses
To reflect the risk associated with a company's debts
Only by banks when a business applies for a loan
To determine how much debt a firm should pay off
5. Net Income: (Points : 2)
Decreases equity
Represents the amount of assets owners put into a business
Equals assets minus liabilities
Is the excess of revenues over expenses
Represents the owners' claims against assets
6. Internal users of accounting information include: (Points : 2)
Shareholders
Customers
Creditors
Government regulators
Line Supervisor
7. Risk is: (Points : 2)
Net income divided by average total assets
The reward for investment
The uncertainty about the expected return that will be earned from an investment
Unrelated to expected return
8. An example of an operating activity is: (Points : 2)
Paying wages
Purchasing office equipment
Borrowing money from a bank
Selling stock
Paying off a loan
9. Which accounting assumption assumes that all accounting information is reported monthly or yearly? (Points : 2)
Business entity assumption
Monetary unit assumption
Value assumption
Cost assumption
Time period assumption
10. Distributions of assets by a business to its stockholders are called: (Points : 2)
Dividends
Expenses
Assets
Retained earnings
Net Income
