1. Businesses use accounting systems to a. Analyze transactions. b. Handle routine bookkeeping tasks. c. Evaluate the performance and financial health of the business 1. Which of the following is NOT a function of accounting? a. Executing sales transactions for organizations. 1. Which of the following is NOT typically true of accounting information? a. The information relates to future time periods. 1. Which of the following is NOT one of the three primary financial statements? a. Statement of retained earnings. 1. Which of the following financial statements reports a company's resources, obligations, and ownership? Balance sheet 1. Which of the following financial statements reports the excess of a company's revenues over its expenses? a. Income statement. 1. Which of the following financial statements reports the amount of cash collected and paid out by a company? a. Statement of cash flows. 1. Which of the following is NOT an external user of accounting information? a. Management. 1. The emphasis in financial accounting is to provide financial information to which of the following user groups? a. Investors and creditors. 1. The current standard setting organization for financial accounting in the United States is the a. Financial Accounting Standards Board (FASB). 1. Which of the following is NOT true about the Financial Accounting Standards Board (FASB)? a. It is a government agency. 1. Which of the following organizations has specific legal authority to establish financial accounting standards for publicly held U.S. companies? a. Security and Exchange Commission (SEC). 1. Increased federal oversight of the audit process resulted from the passage of the following act of Congress: a. Sarbanes-Oxley Act. 1. Which of the following types of accounts are NOT found on the balance sheet? a. Revenues. 1. The basic accounting equation is a. Assets = Liabilities + Owners' Equity 1. Which of the following accounts is the most liquid? a. Cash Which of the following distinguishes between current and long-term assets? a. Classified balance sheet 1. Cooper Company purchased land for $90,000 in 2010. In 2013, the land is valued at $155,000. The land would appear on the company's December 31, 2013 balance sheet at a. $90,000. 1. The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a year, is called a(n) Income Statement. 1. Which of the following statements is TRUE regarding the Statement of Cash Flows prepared using the Direct Method? a. A Statement of Cash Flows prepared under the Direct Method is typically easier for users to understand than a Statement of Cash Flows prepared under the Indirect Method. 1. Which of the following is an overall measure of the economic performance of a business entity's activities? a. Net income (or net loss) 1. Which of the following would be included on an income statement? a. Cost of goods sold 1. Expense and revenue accounts appear on the a. Income statement. In completing an audit of a company's financial statements, external auditors Provide some assurance that the financial statements are not misleading 1. The accuracy of the information contained in the financial statements is the responsibility of the a. Management. 1. Which of the following is an asset? a. Accounts receivable 1. Which of the following would be classified as a long-term asset? Land 1. Which of the following would be classified as a current asset? a. Accounts receivable Which of the following is considered a liability? a. Interest payable 1. Which of the following would be classified as a current liability? a. Accounts payable 1. Which of the following would be classified as a noncurrent liability? a. Portion of mortgage payable not due within the next 12 months 1. Which of the following is NOT considered to be an owners' equity account? a. Gain 1. Given the following information, compute operating income. Cost of goods sold $2,000 Income taxes 350 Interest expense 200 Operating expenses 1,500 Sales 5,500 a. $2,000 1. Given the following information, compute net income. Cost of goods sold $2,000 Income taxes 350