71 Free Test Bank for Using Financial Accounting Information The Alternative to Debits and Credits 8th Edition by Porter 

71 free test bank for Using Financial Accounting Information The Alternative to Debits and Credits 8th Edition by Porter multiple choice questions propose free fundamental accounting questions and answers to explore more the use of financial information accounting in business plans. Especially the illustration of specific examples from the answers helps students “learn by heart” all the concepts in the textbook and apply them directly into the business context. Clearing something you’ve been stuck on when studying this subject with our free online student-tested questions bank for financial accounting. Try it out!

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Which of the following is an organization that lends funds to a business entity and expects repayment of the funds?

•  A partner
•  A stockholder
•  An owner
•  A creditor

Which financial statement would you refer to in order to determine whether a company owed funds to creditors?

•  Balance Sheet
•  Statement of Retained Earnings
•  Income Statement
•  Statement of Public Accounting

Which one of the following financial statements reports an entity’s financial position at a specific date?

•  Balance sheet
•  Statement of retained earnings
•  Income statement
•  Both the income statement and the balance sheet

Which of the following best describes the term “retained earnings”?

•  The amount of total profits earned by a business since it began operations.
•  The amount of interest or claim that the owners have on the assets of the business.
•  The future economic resources of a business entity.
•  The cumulative profits earned by the business less any dividends distributed.

The costs of doing business through the sale of goods and services are called

•  Net income
•  Expenses
•  Revenues
•  Dividends

Which of the following would be internal users of accounting information?

•  Customers and vendors
•  Employees and managers
•  Government and banks
•  Employees and customers

Which one of the following is leastlikely to be a user of financial information of a grocery store?

•  The manager of the grocery store.
•  The supplier of milk to the grocery store.
•  A stockbroker looking for a possible investment.
•  A customer at the grocery store.

You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?

•  Balance sheet
•  Income statement
•  Statement of retained earnings
•  Statement of public accounting

Which of the following statements best describes the term “revenues”?

•  Revenues represent an outflow of assets resulting from the sale of goods or services.
•  Revenues represent assets received from the sale of products or services.
•  Revenues represent assets used or consumed in the sale of products or services.
•  Revenues represent the dollar amount of bonds sold to the public.

Which one of the following is notone of the three activities included in the definition of accounting?

•  Communicating
•  Identifying
•  Measuring
•  Operating

Which one of the following is a correct expression of the accounting equation?

•  Assets + Liabilities = Owners’ Equity
•  Assets = Liabilities - Owners’ Equity
•  Assets + Owners’ Equity = Liabilities
•  Assets = Liabilities + Owners’ Equity

Trailways Busline is an example of a

•  producer
•  supplier
•  retailer
•  service provider

Which of the following best describes the term “expenses”?

•  The amount of total profits earned by a business since it began operations.
•  The amount of interest or claim that the owners have in the business.
•  The future economic resources of a business entity.
•  The outflow of assets resulting from the sale of goods and services.

Which one of the following correctly represents one of the basic financial statement models?

•  Assets - Liabilities = Net Income
•  Assets + Liabilities = Owners’ Equity
•  Revenues + Expenses = Net Income
•  Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Which financial statement would you analyze to determine if a company distributed any of its profits to its shareholders?

•  Balance Sheet
•  Statement of Retained Earnings
•  Income Statement
•  Statement of Public Accounting

What is the name of the branch of accounting concerned with providing managers and administrators with information to facilitate the planning and control of business operations?

•  Management accounting
•  Auditing
•  Financial accounting
•  Bookkeeping

How is the balance sheet linked to the other financial statements?

•  The amount of retained earnings reported on the balance sheet is equal to net income.
•  Retained earnings is added to total assets and reported on the balance sheet.
•  Net income increases retained earnings on the statement of retained earnings, which ultimately increases retained earnings on the balance sheet.
•  There is no link between the balance sheet and other statements, as each contains different accounts and provides different information.

Which one of the following items appears on a balance sheet?

•  Accounts payable
•  Sales revenue
•  Utilities expense
•  Cost of goods sold

Which of the following statements would be true if you own stock in a company?

•  You are an owner of the retained earnings and capital stock of the company.
•  You have a claim to the assets of the business
•  You have the right to receive interest on an annual basis.
•  You have the right to a portion of the company’s revenues each accounting period.

Which of the following terms best describes a distribution of the net income of a business to its owners?

•  Revenue
•  Dividends
•  Earnings
•  Monetary unit

Which of the following would be classified as external users of financial statements?

•  Stockholders and management of the company
•  The controller of the company and a company's stockholders
•  The company's marketing managers
•  The creditors and stockholders of the company

Which one of the following groups is considered an internal user of financial statements?

•  A bank reviewing a loan application from a corporation.
•  The labor union representing employees of a company that is involved in labor negotiations
•  The financial analysts for a brokerage firm who are preparing recommendations for the firm’s brokers on companies in a certain industry,
•  Factory managers that supervise production line workers.

Which one of the following is an economic obligation for a business entity?

•  Salaries paid to employees for services rendered
•  Amounts owed to creditors
•  Materials used in manufacturing products
•  Payment of rent for the next year

Which of the following is the correct date format for the financial statement heading?

•  Balance sheet for the year ended June 30, 2014
•  Income statement at December 31, 2014
•  Balance sheet at December 31, 2014
•  Statement of retained earnings at December 31, 2014

The inflow of assets resulting from the sale of products and services is called a(n)

•  asset
•  liability
•  revenue
•  expense

Which of the following best describes the term “assets”?

•  The amount of total profits earned by a business since it began operations.
•  The amount of interest or claim that the owners have in the business.
•  The economic resources of a business entity.
•  The cumulative profits earned by a business less any dividends distributed.

Clip Joint Company is ready to sell its bonds. Which one of the following financial questions is most relevant to the issue of the bonds and that investors will most likely want answered before they purchase the bonds?

•  How many product lines did Clip Joint Company have last year?
•  What will be Clip Joint Company’s cost to start operations in another city?
•  How much debt does Clip Joint Company already have?
•  Will Clip Joint Company pay dividends?

The three forms of business entities are:

•  Government, cooperatives, and philanthropic organizations
•  Financing, investing, and operating
•  Sole proprietorships, partnerships, and corporations
•  Wholesaler, manufacturer, and retailer

Which one of the following business decisions will least likely require financial information?

•  The National Bank is reviewing the loan application from Petra’s Restaurant.
•  Petra’s Restaurant is attempting to sell its stock to the public.
•  The labor union representing Winn’s Fitness Spa employees is negotiating a pay raise as part of a new labor agreement.
•  Petra’s Restaurant management is deciding whether to wash its catering vans today or tomorrow.

Which one of the following is not an external user of financial statements?

•  Suppliers
•  Creditors
•  Investors
•  The company’s controller

Which one of the following items is correct concerning the time element of financial statements?

•  The balance sheet covers a period of time.
•  The statement of retained earnings explains changes during a particular period.
•  An income statement lists amounts at a specific point in time.
•  Both the income statement and the balance sheet cover a period of time.

Which of the following invests funds into a business and is considered an owner?

•  Stockholders
•  Creditors
•  Bankers
•  Lenders

Which one of the following events involves a liability for a business?

•  Loans to be repaid to banks
•  Inventories purchased for cash
•  Amounts invested by the owners
•  Stock sold to the general public

Which one of the following is notan external user of financial information?

•  Company management
•  Internal Revenue Service
•  Creditors
•  Stockholders

Which of the following statements is true?

•  Profits distributed to the creditors are called dividends.
•  The balance sheet shows the assets, liabilities, and profits of a company.
•  Dividends are an expense, and are reported on the income statement as a deduction from net income.
•  The income statement reports the revenues and expenses of a company.