Accounting 1 Midterm 1 Exam Questions & Answers!!

The financial statement which summarized the operating, investing, and financing activities of an entity for a period of time is the A. statement of cash flows B. retained earnings statement C. statement of financial position D. income statement {Ans: A}Usual and infrequent gains and losses A. include restructuring charges B. include restructuring charges and are reported net of tax C. include the elimination of a component of the business D. are reported net of tax {Ans: A}All of the following are ways in which accounting information is used by financial accounting except to A. buy, sell, hold equity and debit instruments. B. decide whether to invest in the company. C. evaluate borrowing capacity to determine the extent of a loan to grant. D. plan and control company's operations. {Ans: D}Which of the following describes an expense? A. Increases in equity (net assets) from peripheral or incidental transactions of any entity except those that result from revenues or investments by owners. B. Outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. C. Decreases