Financial Accounting (Practice Quiz)

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If you have difficulty answering the following questions, learn more about this topic by reading our Financial Accounting (Explanation).


  1. 1.

    Financial accounting is focused on the __________ financial statements of a company.

    External
    Right!
    Internal
    Wrong.
  2. 2.

    Financial statements report the fair market value of a company.

    True
    Wrong.
    False
    Right!
  3. 3. Large corporations must follow the
    __________
    accrual
    basis of accounting.
  4. 4. Corporations whose stock is publicly traded must have their financial statements
    __________
    audited
    by independent certified public accountants.
  5. 5.

    The U.S. government agency with authority over the financial reporting requirements of publicly traded corporations is the __________.

    AICPA
    Wrong.
    The AICPA is not a government agency.
    FASB
    Wrong.
    The FASB is not a government agency.
    IRS
    Wrong.
    This government agency is associated with income tax reporting.
    SEC
    Right!
  6. 6.

    The non-government organization that researches and develops new accounting standards is the __________.

    AICPA
    Wrong.
    FASB
    Right!
    IRS
    Wrong.
    This is a government agency.
    SEC
    Wrong.
    This is a government agency.
  7. 7. The acronym for the common rules and standards that companies must follow when preparing its external financial statements is
    __________
    GAAP
    .
  8. 8. SEC is the acronym for
    __________
    Securities and Exchange Commission
    .
  9. 9. FASB is the acronym for
    __________
    Financial Accounting Standards Board
    .
  10. 10. GAAP is the acronym for
    __________
    generally accepted accounting principles
    .
  11. 11.
    __________
    Double
    -entry bookkeeping will result in at least two accounts being involved in every transaction.
  12. 12. Every transaction will have one account being credited and one account being
    __________
    debited
    .
  13. 13. The accounting equation is Assets =
    __________
    Liabilities
    + Stockholders' (or Owner's) Equity.
  14. 14. Matching, cost, and full disclosure are examples of the fundamental or basic accounting
    __________
    principles
    .
  15. 15. The profitability of a company for a specified period of time is reported on the
    __________
    income
    statement.
  16. 16. The main components or elements of the income statement are
    __________
    revenues
    , expenses, gains, and losses.
  17. 17. Prepaid insurance is reported as an
    __________
    asset
    on a company's balance sheet.
  18. 18. The word "
    __________
    payable
    " is often in the title of liability accounts.
  19. 19. The statement of cash flows explains the changes in cash and cash
    __________
    equivalents
    during the specified time interval.
  20. 20. The first section of the statement of cash flows is the
    __________
    operating
    activities.

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