Question 1

During the year, a company purchased goods on a credit basis for its supplies of $750.What would be the impact on the accounting equation and financial statement?

Options :

A : Increase in assets by $750 and decrease in liability by $750

B : Decrease in assets by $750 and increase in liability by $750

C : Increase in assets by $750 and increase in liability by $750

D : Decrease in assets by $750 and decrease in liability by $750

Answer: C

Question 2

Given the following information:Pairs of shoes expected to be produced = 1,950,000Pairs of shoes produced = 2,500,000Overhead rate = $0.75What is the amount of applied overhead?

Options :

A : $412,500

B : $550,000

C : $1,462,500

D : $1,875,000

Answer: D

Question 3

What purpose do the notes within financial statements serve to the Financial Accounting Standards Board?

Options :

A : Providing supplementary information as needed

B : Summarizing totals of financial statements

C : Providing a summary of accounting policies

D : Disclosing financial statistics

Answer: A

Question 4

What can be determined when a firm performs an external audit of a company's financial statements?

Options :

A : Whether a company’s financial statements indicate it made a profit

B : Whether a company’s financial statements fairly reflect its financial position

C : Whether a company’s financial statements indicate that the company has to pay income taxes

D : Whether a company’s financial statements were prepared by a trained bookkeeper

Answer: B

Question 5

What does the overall economic performance of a company for a given time period represent?

Options :

A : The net income of the company

B : Whether or not cash received from sales exceeds cash paid for business expenses for a given time period

C : Whether or not a company’s sales exceed the costs of the products sold for a given time period

D : The overall market value of the company

Answer: A

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