Multiple Choice Questions
34.An annual report
A. Must be audited by the IRS.
B. Is delivered to stockholders and the public on the last day of the fiscal year.
C. Includes comparative financial statements for several years.
D. Must be filed with the SEC by all companies in the United States.
35.Which of the following financial statements is usually prepared last?
A. Income statement.
B. Statement of retained earnings.
C. Income tax return.
D. Balance sheet.
36.Publicly owned companies are:
A. Managed and owned by the government.
B. Must be not-for-profit companies.
C. Usually listed on a stock exchange.
D. Not permitted to be owned by individuals.
37.The normal order in which the financial statements are prepared is:
A. Balance sheet, income statement, statement of retained earnings.
B. Income statement, statement of retained earnings, balance sheet.
C. Income tax return, income statement, balance sheet.
D. Income statement, statement of cash flows, balance sheet.
38.Publicly traded companies must file audited financial statements with the:
A. AICPA.
B. IRS.
C. SEC.
D. AAA.
39.Of the following, which is not an alternative title for the income statement?
A. Earnings statement.
B. Statement of Operations.
C. Profit and Loss Statement.
D. Statement of Financial Position.
40.The Retained Earnings statement is based upon which of the following relationships?
A. Retained Earnings - Net Income - Dividends.
B. Retained Earnings - Net Income + Dividends.
C. Retained Earnings + Net Income + Dividends.
D. Retained Earnings + Net Income - Dividends.
41.Dividends declared:
A. Reduce retained earnings.
B. Increase retained earnings.
C. Reduce net income.
D. Increase net income.
42.The dividends account should be:
A. Closed to income summary.
B. Closed to retained earnings.
C. Closed only if there is a profit.
D. Not closed at all.
43.Retained Earnings at the end of a period:
A. Is equal to the balance in the Retained Earnings account in the adjusted trial balance at the end of a period.
B. Is determined in the Statement of Retained Earnings.
C. Is equal to Retained Earnings at the beginning of the period, minus net income (or plus net loss) for the period.
D. Appears in the Income Statement for the period.