Question#1: The accounting standards and concepts used in

#1: The accounting standards and concepts used in the preparation of the financial statements are the:

• Generally Authorized Accounting Procedures.
• Generally Applied Accounting Procedures.
• Generally Authorized Auditing Practices.
• Generally Accepted Accounting Principles

#2: The accounting equation is:

• Revenue – Expense = Liabilities
• Assets = Liabilities + Equity
• Assets = Liabilities – Equity
• Assets + Liabilities = Equity

#3: The Income Statement shows:

• Assets = Liabilities + Equity
• Income minus expense = net income
• Beginning retained earnings plus net income minus dividends = ending retained earnings
• Beginning retained earnings minus net income minus dividends = ending retained earnings

#4: The Statement of Retained earnings shows:

• Assets = Liabilities + Equity
• Income minus expense = net income
• Beginning retained earnings minus net income minus dividends = ending retained earnings
• Beginning retained earnings plus net income minus dividends = ending retained earnings

#5: Retained Earnings represents:

• The total cash retained by the business
• The total assets retained by the business
• The net income retained by the business
• The dividends retained by the business

#6: Which of the following is not one of the four financial statements?

• Income Tax Statement
• Balance Sheet
• Income Statement
• Statement of Retained Earnings
• Statement of Cash Flow

#7: Which of the following is true regarding the income statement?

• The income statement shows revenue minus expense equals net income
• The income statement reports revenues, expenses, and liabilities
• The income statement only reports revenue for which cash was received at the point of sale
• The income statement reports the financial position of a business at a particular point in time

#8: Which of the following is false regarding the balance sheet?

• The accounts shown on a balance sheet represent the basic accounting equation of assets equals liabilities plus equity.
• The retained earnings balance shown on the balance sheet must agree to the ending retained earnings balance shown on the statement of retained earnings.
• The balance sheet summarizes the net changes in specific account balances over a period of time.
• The balance sheet reports the amount of assets, liabilities, and stockholders equity of a business at a point in time.

#9: Which of the following regarding retained earnings is false?

• Retained earnings is increased by net income.
• Retained earnings is a component of stockholders equity on the balance sheet.
• In this course we will be talking about two equity accounts. Common Stock represents the amount of money you invested in the business. Retained earnings is an asset on the balance sheet.
• Retained earnings represents earnings that were not distributed to stockholders in the form of dividends.