1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
8) Receivables are classified as:
A) increases in earnings
B) assets
C) decreases in earnings
D) liabilities
Answer: B
Diff: 1 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
9) Shareholders' equity for Raisin Corporation on January 1, 2017 and December 31, 2017 were $60,000 and $75,000, respectively. Assets on January 1, 2017 and December 31, 2017 were $115,000 and $105,000, respectively. Liabilities on January 1, 2017 were $55,000. What is the amount of liabilities on December 31, 2017?
A) $40,000
B) $15,000
C) $30,000
D) $55,000
Answer: C
Diff: 3 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
10) Claims held by the shareholders (owners) of a corporation are referred to as:
A) retained earnings
B) share capital
C) share capital minus retained earnings
D) share capital plus retained earnings
Answer: D
Diff: 3 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
11) Revenues are:
A) increases in liabilities resulting from delivering goods or services to customers
B) increases in retained earnings resulting from delivering goods or services to customers
C) decreases in assets resulting from delivering goods or services to customers
D) decreases in retained earnings resulting from delivering goods or services to customers
Answer: B
Diff: 2 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
12) If assets increase $120,000 during a given period and liabilities decrease $25,000 during the same period, shareholders' equity must:
A) increase $95,000
B) decrease $145,000
C) decrease $95,000
D) increase $145,000
Answer: D
Diff: 3 Type: MC
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
13) Which of the following financial statements would a potential investor most likely use to evaluate a company's financial performance for the current period?
A) balance sheet
B) income statement
C) cash flow statement
D) retained earnings statement
Answer: B