1.Which of the following is a TRUE statement?
a.Financial statements are the primary means organizations use to report general-purpose accounting information to external decision makers.
b.Financial statements are the primary means of supporting the information on tax returns.
c.Financial statements are specific-purpose reports used primarily by internal decision makers.
d.Financial statements are prepared according to the internal revenue code of the IRS.
2.Which of the following is NOT one of the three primary financial statements organizations use to report to external decision makers?
a.statement of cash flows
c.gross profit statement
3.The financial statement that reports an organization's assets, liabilities, and owners' equity
accounts is the
b.gross profit statement
d.statement of cash flows
4.The difference between the selling price of goods sold to customers during a period and the cost of the goods sold is
5.Consolidated financial statements
a.report the combined economic activities of two or more corporations owned by the same stockholders
b.report a shortened version, to the SEC, of financial statements reported to the public
c.report the combined financial statements of subsidiaries that are only partially owned
d.are the same thing as classified financial statements
6.Costs directly associated with specific goods are
c.past period costs
7.The primary difference between a product cost and a period cost is that
a.product costs are associated with specific goods and period costs are not
b.product costs are incurred by manufacturers and period costs by service providers
c.only product costs are recorded as expenses
d.period costs become part of cost of goods sold but product costs do not
8.The income statement reports
a.the costs of resources consumed in producing, selling, and distributing goods and services and the prices of goods and services sold during a period
b.the cash consequences of financing, investing, and operating activities during a period
c.the resources available for use in the transformation process and claims to those resources at a point in time
d.summaries of accounts by general categories
a.the sales price of goods and services sold during a period
b.how much cash was received from the sales during a period
c.the cost of resources consumed in producing and selling goods and services sold during a period
d.the net income earned during a period
10.A loss from operations would occur from which of the following circumstances?
a.if gross profit is greater than operating income
b.if operating income is greater than operating expense
c.if operating expenses are greater than gross profit
d.if gross profit is greater than income taxes