Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)? A) Securities and Exchange Commission (SEC) B) Public Company Accounting Oversight Board (PCAOB) C) Financial Accounting Standards Board (FASB) D) American Institute of Certified Public Accountants (AICPA) ANSWER A
An examination of a company’s financial statements and records is called an audit. Indicate whether the statement is true or false ANSWER TRUE
The left side of the accounting equation measures the amount that the business owes to creditors and to the stockholders. Indicate whether the statement is true or false ANSWER FALSE
The Public Company Accounting Oversight Board (PCAOB) was created ________. A) by the Sarbanes-Oxley Act (SOX) B) to perform audits of public companies C) to make restitution to investors who were defrauded by the issuance of fraudulent financial reports D) to require auditors to take responsibility for the accuracy and completeness of financial reports ANSWER […]
The total amount of assets a business possesses may or may not be equal to the total of liabilities and equity of the business. Indicate whether the statement is true or false ANSWER FALSE
Which of the following is the correct accounting equation? A) Assets + Liabilities = Equity B) Assets = Liabilities + Equity C) Assets + Revenues = Equity D) Assets + Revenues = Liabilities + Expenses ANSWER B
Genity Corporation records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent? A) economic entity assumption B) going concern assumption C) accounting period assumption D) monetary unit assumption ANSWER D
The equity of Autumn Company is $160,000 and the total liabilities are $50,000. The total assets are ________. A) $320,000 B) $100,000 C) $110,000 D) $210,000 ANSWER D .Assets = Liabilities + Equity Assets = 160,000 + 50,000 = 210,000
Accountants assume that the dollar’s purchasing power is stable. Indicate whether the statement is true or false ANSWER TRUE
Sunlight Company has assets and equity that amount to $200,000 and $90,000, respectively. Liabilities total ________. A) $90,000 B) $110,000 C) $200,000 D) $290,000 ANSWER B .Liabilities = Assets – Equity Liabilities = 200,000 – 90,000 = 110,000
