Multiple ChoiceIdentify the choice that best completes the statement or answers the question.

1. Which of the following equations represents the balance sheet?a. Assets + Liabilities = Shareholders’ Equityb. Assets = Liabilities = Shareholders’ Equityc. Assets = Liabilities ­ Shareholders’ Equityd. Assets = Liabilities + Shareholders’ Equity

ANSWER: DEasy

POINTS: 0 / 1REF: Pages 42, 43

2. Earnings are the result of the difference between:a. Revenue and assets.b. Revenue and liabilities.c. Liabilities and expenses.d. Revenue and expenses.

ANSWER: DEasy

POINTS: 0 / 1REF: page 45

3. What is the result of recording the initial investment by shareholders?a. An equal increase in both assets and shareholders’ equity.b. An increase in assets and a decrease in shareholders’ equity.c. An equal increase in both assets and liabilities.d. A decrease in assets and an increase in liabilities.

ANSWER: AEasy

POINTS: 0 / 1REF: page 46

4. A service is sold for 250 CU on 10 March. The service is carried out in March; it isinvoiced on 10 April and paid for on 31 May. When is the transaction recognized?a. On 10 Marchb. On 10 Aprilc. On 31 Marchd. On 31 May

ANSWER: BModerate

POINTS: 0 / 1REF: page 48

Name: Score: 0 / 10 points (0%)

Chapter 2 ­ Introduction to financial statements

5. What is the result of recording debt reimbursement?a. An increase in both cash and liabilitiesb. An increase in both cash and shareholders’ equityc. A decrease in both cash and shareholders’ equityd. A decrease in both cash and liabilities

ANSWER: DEasy

POINTS: 0 / 1REF: page 53

6. The accrual principle means that revenue is recorded in the income statement at the timeof the transaction and not at the time the cash is received.a. Trueb. False

ANSWER: AModerate

POINTS: 0 / 1REF: page 57

7. A revenue:a. Is a decrease in shareholders’ equity.b. Is a decrease or an increase in shareholders’ equity.c. Has no impact on shareholders’ equity.d. Is an increase in shareholders’ equity.

ANSWER: DEasy

POINTS: 0 / 1REF: page 58

8. How do we describe the process of adjusting the value of an asset by recognizing that itis consumed in a way that does not completely eliminate the resource?a. Adjustmentb. Valuationc. Depreciationd. Waning

ANSWER: CEasy

POINTS: 0 / 1REF: page 63

9. Retained earnings are equivalent to available cash.a. Trueb. False

ANSWER: BEasy

POINTS: 0 / 1REF: page 66

10. What is the ratio between current assets and current liabilities called?a. Return on assetsb. Return on investment

c. Current ratiod. Cash ratio

ANSWER: CModerate

POINTS: 0 / 1REF: page 75