1. As of December 31, 20X7, ABC Co. had total assets of $18,000,000, total owners’ equity of $6,000,000. During 20X7, ABC Co. had total revenues of $4,000,000 and total expenses of $3,400,000. For the year-ended December 31, 20X7, what was ABC Co.’s net income? a. $12,000,000. b. $12,600,000. c. $600,000. d. $11,400,000.
2. The integrity of financial statement presentations and disclosures is enhanced when a. The financial statements are audited by a CPA. b. The financial statements are prepared in an environment that includes a strong system of internal control. c. The financial statement preparers have the appropriate education and experience necessary. d. All of the above.
3. XYZ Co.’s external auditor rendered an opinion on the financial statements which stated that, in the opinion of the auditor, the financial statements and related disclosures do not fairly present financial information in all material respects in terms of U.S. GAAP. This is an example of a (an) a. unqualified (unmodified) opinion. b. adverse opinion. c. qualified opinion. d. disclaimer of opinion.
4. Internal control is a process that has certain objectives including a. the reasonable assurance of reliable financial reporting. b. compliance with laws and regulations. c. effective and efficient operations. d. all of the above.
5. Current assets normally include all of the following except: a. Cash. b. Accounts receivable. c. Equipment. d. Inventory.