Acc290 Financial Accounting: Week 1 Quiz (10 MCQs)

Acc290 Financial Accounting
Week 1 Quiz (10 MCQs)

1. All of the following are characteristics of a corporation except:
a. a separate legal entity.
b. ownership evidenced by shares of stock.
c. produce eight times more revenue than sole proprietorships and partnerships in theUnited States.
d. owners have unlimited liability.

2. Acquiring long-term assets necessary to operate the business is called a(n):
a. financing activity.
b. operating activity.
c. revenue activity.
d. investing activity

3. Corporations may issue several classes of stock, but the stock representing the primary ownership interest is:
a. common stock.
b. retained earnings.
c. financing activity.
d. dividends.

4. The time period assumption:
a. indicates that the company will continue in operation long enough to carry out its existing objectives.
b. requires that financial statements be prepared each month.
c. states that the life of a business can be divided into artificial time periods.
d. is an example of a constraint.

5. The term used to describe the total assets that Starbucks receives in exchange for its coffee is:
a. cash.
b. revenue.
c. inventory.
d. accounts receivable.

6. Which of the characteristics is not necessary in order for accounting information to be reliable?
a. conservative.
b. a faithful representation.
c. verifiable.
d. neutral.

7. Consistency of information means that:
a. the information would influence a decision.
b. different companies use the same accounting principles.
c. the amounts involved are material.
d. a company uses the same accounting principles and methods from year to year.

8. Working capital is:
a. current assets less current liabilities.
b. current assets divided by current liabilities.
c. income divided by average assets.
d. net income divided by net sales.

9. The current ratio is a:
a. solvency ratio.
b. profitability ratio.
c. liquidity ratio.
d. none of the above.

10. Free cash flow:
a. describes an unlimited supply of cash.
b. provides additional insight regarding a company’s cash-generating ability.
c. describes the cash remaining from operations after adjusting for capital expenditures and dividends.
d. Both b and c are correct.
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