Question 1

The partnership form of business organization

Accepted Answer

A)  is a separate legal entity. 
B)  is a common form of organization for service-type businesses. 
C)  enjoys an unlimited life. 
D)  has limited liability. 
A)  is a separate legal entity. 
B)  is a common form of organization for service-type businesses. 
C)  enjoys an unlimited life. 
D)  has limited liability.

Question 2

Financial accounting provides economic and financial information for all of the following except

Accepted Answer

A)  creditors. 
B)  investors. 
C)  managers. 
D)  other external users. 
A)  creditors. 
B)  investors. 
C)  managers. 
D)  other external users.

Question 3

Interpretation of reported information involves each of the following except

Accepted Answer

A)  limitations of reported data. 
B)  meaning of reported data. 
C)  uses of reported data. 
D)  All of these choices are correct. 
A)  limitations of reported data. 
B)  meaning of reported data. 
C)  uses of reported data. 
D)  All of these choices are correct.

Question 4

The organization(s) primarily responsible for establishing generally accepted accounting principles is(are) the $\begin{array}{lrr} \underline{\text { FASB }} & \underline{\text { SEC }}\\end{array}$ 
A)$\begin{array}{lrr}
  \text { no } && \text { no } &\
\end{array}$

B)$\begin{array}{lrr}
  \text { yes  } && \text { no } &\
\end{array}$

C)$\begin{array}{lrr}
  \text {no } &&& \text { no } &\
\end{array}$

D)$\begin{array}{lrr}
  \text {yes } && \text { yes} &\
\end{array}$

Accepted Answer

The answer of The organization(s) primarily responsible for establishing generally...

Question 5

If an individual asset is increased then

Accepted Answer

A)  there must be an equal decrease in a specific liability. 
B)  there must be an equal decrease in owner's equity. 
C)  there must be an equal decrease in another asset. 
D)  All of these answer choices are possible. 
A)  there must be an equal decrease in a specific liability. 
B)  there must be an equal decrease in owner's equity. 
C)  there must be an equal decrease in another asset. 
D)  All of these answer choices are possible.

Question 6

Liabilities

Accepted Answer

A)  are future economic benefits. 
B)  are existing debts and obligations. 
C)  possess service potential. 
D)  are things of value used by the business in its operation. 
A)  are future economic benefits. 
B)  are existing debts and obligations. 
C)  possess service potential. 
D)  are things of value used by the business in its operation.

Question 7

External transactions involve economic events between the company and some other enterprise or party.

Accepted Answer

A) True 
 B)False

Question 8

Determine the missing items. $\begin{array} { c c c } 
\text { Assets } & = & \text { Liabilities } +& \text { Owner's Equity } \
\$ 85,000 && \$ 52,000 & \text { (a) } \
\text { (b) } && \$ 28,000 & \$ 34,000 \
\$ 84,000 && \text { (c) } & \$ 50,000
\end{array}$

Accepted Answer

a. $33000

Question 9

Net income results when

Accepted Answer

A) Assets > Liabilities. B) Revenues = Expenses. C) Revenues > Expenses. D) Revenues < Expenses. A) Assets > Liabilities. B) Revenues = Expenses. C) Revenues > Expenses. D) Revenues < Expenses.

Question 10

Match between columns
                        Premises:  Activities of an entity must be kept separate from its owner’s activities.
 Consumption of assets or services.
 Ownership is limited to one person.
 Offers expert accounting service to the general public.
 Creditor and ownership claims against the assets of the business.
 A separate legal entity under state laws.
 Government agency that can mandate accounting rules.
 Quantifying goals and objectives.
 Future economic benefits.
 Economic events recorded by accountants.

Accepted Answer

The Answer of CPA and Budgeting and SEC and Proprietorship is...

Question 11

During the year 2016 Dallas Company earned revenues of $90000 had expenses of $62000 purchased assets with a cost of $10000 and had owner drawings of $6000. Net income for the year is

Accepted Answer

A)  $18000. 
B)  $22000. 
C)  $28000. 
D)  $32000. 
A)  $18000. 
B)  $22000. 
C)  $28000. 
D)  $32000.

Question 12

At October 1 Flambo Company reported owner's equity of $70000. During October no additional investments were made and the company earned net income of $18000. If owner's equity at October 31 totals $80000 what amount of owner drawings were made during the month?

Accepted Answer

A)  $0 
B)  $8000 
C)  $10000 
D)  $26000 
A)  $0 
B)  $8000 
C)  $10000 
D)  $26000

Question 13

Rachel Bells Havens is a friend of yours from high school. She decided to become a beautician after leaving high school rather than to attend college. She recently opened her own shop and has contracted her services to a local hospital. She is paid a monthly fee for her services and receives a small gratuity from each of the patients.
She has just received her first set of financial statements from her accountant. She is quite upset. The statements show a cash balance of $3600 at the end of the month but a net income of only $500. She has written you a letter asking you whether such a situation is possible or whether she should find another accountant.
Required:
Write a short letter to your friend. Use proper form. Answer her question completely but briefly.

Accepted Answer

Answers will vary. The instructor's requ

Question 14

At September 1 the balance sheet accounts for Stanley's Restaurant were as follows: $$\begin{array} { l r l r } 
\text { Accounts Payable } & \$ 3,800 & \text { Land } & \$ 33,000 \
\text { Accounts Receivable } & 9,600 & \text { Owner's Capital } & ? \
\text { Buildings } & 68,000 & \text { Notes Payable } & 48,000 \
\text { Cash } & 10,000 & \text { Supplies } & 6,600 \
\text { Equipment } & 18,700 & &
\end{array}$$ The following transactions occurred during the next two days:
Stanley invested an additional $22000 cash in the business. The accounts payable were paid in full. (No payment was made on the notes payable.)
Instructions
Prepare a balance sheet at September 3 2016.

Accepted Answer

The answer of At September 1 the balance sheet accounts...

Question 15

Luis Consulting started the year with total assets of $60000 and total liabilities of $17000. During the year the business recorded $48000 in consulting revenues and $36000 in expenses. Luis made an additional investment of $8000 and withdrew cash of $9000 during the year. Owner's equity changed by what amount from the beginning of the year to the end of the year?

Accepted Answer

A)  $3000. 
B)  $11000. 
C)  $12000. 
D)  $45000. 
A)  $3000. 
B)  $11000. 
C)  $12000. 
D)  $45000.

Question 16

The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets.

Accepted Answer

A) True 
 B)False

Question 17

For each of the following describe a transaction that will have the stated effect on the elements of the accounting equation.
(a) Increase one asset and decrease another asset.
(b) Increase an asset and increase a liability.
(c) Decrease an asset and decrease a liability.
(d) Increase an asset and increase owner's equity.
(e) Increase one asset decrease one asset and increase a liability.

Accepted Answer

(a) Receive cash from customers on accou

Question 18

The assumption that the unit of measure remains sufficiently constant over time is part of the

Accepted Answer

A)  economic entity assumption. 
B)  cost principle. 
C)  historical cost principle. 
D)  monetary unit assumption. 
A)  economic entity assumption. 
B)  cost principle. 
C)  historical cost principle. 
D)  monetary unit assumption.

Question 19

A service proprietorship shows five transactions summarized below. The effect of each transaction on the accounting equation is shown and also the new balance of each item in the equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.

Accepted Answer

(a) Withdrew cash from business.
(b) Rec

Question 20

A proprietorship is a business

Accepted Answer

A)  owned by one person. 
B)  owned by two or more persons. 
C)  organized as a separate legal entity under state corporation law. 
D)  owned by a governmental agency. 
A)  owned by one person. 
B)  owned by two or more persons. 
C)  organized as a separate legal entity under state corporation law. 
D)  owned by a governmental agency.

Exam 1: Accounting in Action

The partnership form of business organization

Financial accounting provides economic and financial information for all of the following except

Interpretation of reported information involves each of the following except

The organization(s) primarily responsible for establishing generally accepted accounting principles is(are) the A) no no B) yes no C) no no D) yes yes

If an individual asset is increased then

Liabilities

External transactions involve economic events between the company and some other enterprise or party.

Determine the missing items. Assets = Liabilities + Owner's Equity \ 85,000 \ 52,000 (a) (b) \ 28,000 \ 34,000 \ 84,000 (c) \ 50,000

Net income results when

During the year 2016 Dallas Company earned revenues of $90000 had expenses of $62000 purchased assets with a cost of $10000 and had owner drawings of $6000. Net income for the year is

At October 1 Flambo Company reported owner's equity of $70000. During October no additional investments were made and the company earned net income of $18000. If owner's equity at October 31 totals $80000 what amount of owner drawings were made during the month?

The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets.

The assumption that the unit of measure remains sufficiently constant over time is part of the

A service proprietorship shows five transactions summarized below. The effect of each transaction on the accounting equation is shown and also the new balance of each item in the equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.

A proprietorship is a business

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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