Question 1

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the

Accepted Answer

A)  stand alone concept. 
B)  monetary unit assumption. 
C)  corporate form of ownership. 
D)  economic entity assumption. 
A)  stand alone concept. 
B)  monetary unit assumption. 
C)  corporate form of ownership. 
D)  economic entity assumption.

Question 2

The cost principle requires that when assets are acquired, they be recorded at

Accepted Answer

A)  appraisal value. 
B)  historical cost. 
C)  market price. 
D)  exchange price paid. 
A)  appraisal value. 
B)  historical cost. 
C)  market price. 
D)  exchange price paid.

Question 3

Communication of economic events is the part of the accounting process that involves

Accepted Answer

A)  identifying economic events. 
B)  quantifying transactions into dollars and cents. 
C)  preparing accounting reports. 
D)  recording and classifying information. 
A)  identifying economic events. 
B)  quantifying transactions into dollars and cents. 
C)  preparing accounting reports. 
D)  recording and classifying information.

Question 4

Which list below best describes the major services performed by public accountants?

Accepted Answer

A)  Bookkeeping, mergers, budgets 
B)  Employee training, auditing, bookkeeping 
C)  Auditing, taxation, management consulting 
D)  Cost accounting, production scheduling, recruiting 
A)  Bookkeeping, mergers, budgets 
B)  Employee training, auditing, bookkeeping 
C)  Auditing, taxation, management consulting 
D)  Cost accounting, production scheduling, recruiting

Question 5

The common characteristic possessed by all assets is

Accepted Answer

A)  long life. 
B)  great monetary value. 
C)  tangible nature. 
D)  future economic benefit. 
A)  long life. 
B)  great monetary value. 
C)  tangible nature. 
D)  future economic benefit.

Question 6

Match the following external users of financial accounting information with the type of decision that user will make with the information.
a. Creditor
b. Investor
c. Regulatory Agency
d Internal Revenue Service
_______ (1) Is the company operating within prescribed guidelines?
_______ (2) Is the company complying with tax laws?
_______ (3) Is the company able to pay its debts?
_______ (4) Is the company a good investment?
Solution 164

Accepted Answer

The answer of Match the following external users of financial...

Question 7

Accounting information is used only by external users with a financial interest in a business enterprise.

Accepted Answer

A) True 
 B)False

Question 8

Accounting is an information system that identifies, _____________, and _____________ the economic events of an organization.

Accepted Answer

records, c

Question 9

Owner's equity changed by what amount from the beginning of the year to the end of the year?

Accepted Answer

A)  $15,000 
B)  $14,000 
C)  $6,000 
D)  $3,000 
A)  $15,000 
B)  $14,000 
C)  $6,000 
D)  $3,000

Question 10

Expressing an opinion as to the fairness of the information presented in financial statements is a service performed by CPAs.

Accepted Answer

A) True 
 B)False

Question 11

Lim began business on January 1, 2008, with an investment of $100,000.
Instructions
From an analysis of the change in owner's equity during the year, compute the net income (or
loss) for:
(a) 2008, assuming Lim's drawings were $25,000 for the year.
(b) 2009, assuming Lim made an additional investment of $60,000 and had no drawings in
2009.
(c) 2010, assuming Lim made an additional investment of $15,000 and had drawings of
$40,000 in 2010.

Accepted Answer

The answer of Lim began business on January 1, 2008,...

Question 12

Balance sheet amounts as of December 31, 2009 for Lori's Learning Service are listed below. Prepare a balance sheet in good form.

Accepted Answer

The answer of Balance sheet amounts as of December 31,...

Question 13

Cyn Sclose is the bookkeeper for Ayala Company. Cyn has been trying to get the balance
sheet of Ayala Company to balance. Ayala's balance sheet is as follows.   
Instructions
Prepare a correct balance sheet.

Accepted Answer

The answer of Cyn Sclose is the bookkeeper for Ayala...

Question 14

For each of the following, indicate whether the transaction affects revenue (R), expense (E), owner's drawing (D), owner's investment (I), or no effect on owner's equity (NOE).
1. Made an investment to start the business.
2. Billed customers for services performed.
3. Purchased equipment on account.
4. Paid monthly rent.
5. Withdrew cash for personal use.

Accepted Answer

1. Investment (I)
2.

Question 15

If supplies that have been purchased are used in the course of business, then

Accepted Answer

A)  a liability will increase. 
B)  an asset will increase. 
C)  owner's equity will decrease. 
D)  owner's equity will increase. 
A)  a liability will increase. 
B)  an asset will increase. 
C)  owner's equity will decrease. 
D)  owner's equity will increase.

Question 16

Indicate which of these items is an asset (A), liability (L) or owner's equity (OE) account.
_______ (1) Supplies
_______ (2) Klein, Drawing
_______ (3) Building
_______ (4) Note Payable
_______ (5) Taxes Payable

Accepted Answer

1. Assets (A)
2. Own

Question 17

If the owner's equity account increases from the beginning of the year to the end of the year, then

Accepted Answer

A)  net income is less than owner drawings. 
B)  a net loss is less than owner drawings. 
C)  additional owner investments are less than net losses. 
D)  net income is greater than owner drawings. 
A)  net income is less than owner drawings. 
B)  a net loss is less than owner drawings. 
C)  additional owner investments are less than net losses. 
D)  net income is greater than owner drawings.

Question 18

Your friend, James, made this comment:
My major is biology and I plan to research for cures for major illnesses. Thus, I have no need to study accounting.
What is your response to James?

Accepted Answer

James, you are entering a dynamic profes

Question 19

Which of the following is true regarding the corporate form of business organization?

Accepted Answer

A)  Corporations are the most prevalent form of business organization. 
B)  Corporate businesses are generally smaller in size than partnerships and proprietor-ships. 
C)  The revenues of corporations are greater than the combined revenues of partnerships and proprietorships. 
D)  Corporations are separate legal entities organized exclusively under federal law. 
A)  Corporations are the most prevalent form of business organization. 
B)  Corporate businesses are generally smaller in size than partnerships and proprietor-ships. 
C)  The revenues of corporations are greater than the combined revenues of partnerships and proprietorships. 
D)  Corporations are separate legal entities organized exclusively under federal law.

Question 20

Frank Ito began the Ito Company by investing $20,000 of cash in the business. The company recorded revenues of $185,000, expenses of $160,000, and had owner drawings of $10,000. What was Ito's net income for the year?

Accepted Answer

A)  $15,000 
B)  $35,000 
C)  $25,000 
D)  $45,000 
A)  $15,000 
B)  $35,000 
C)  $25,000 
D)  $45,000

Exam 1: Accounting in Action

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the

The cost principle requires that when assets are acquired, they be recorded at

Communication of economic events is the part of the accounting process that involves

Which list below best describes the major services performed by public accountants?

The common characteristic possessed by all assets is

Accounting information is used only by external users with a financial interest in a business enterprise.

Accounting is an information system that identifies, _____________, and _____________ the economic events of an organization.

Owner's equity changed by what amount from the beginning of the year to the end of the year?

Expressing an opinion as to the fairness of the information presented in financial statements is a service performed by CPAs.

Balance sheet amounts as of December 31, 2009 for Lori's Learning Service are listed below. Prepare a balance sheet in good form.

Cyn Sclose is the bookkeeper for Ayala Company. Cyn has been trying to get the balance sheet of Ayala Company to balance. Ayala's balance sheet is as follows. Instructions Prepare a correct balance sheet.

If supplies that have been purchased are used in the course of business, then

Indicate which of these items is an asset (A), liability (L) or owner's equity (OE) account. _______ (1) Supplies _______ (2) Klein, Drawing _______ (3) Building _______ (4) Note Payable _______ (5) Taxes Payable

If the owner's equity account increases from the beginning of the year to the end of the year, then

Your friend, James, made this comment: My major is biology and I plan to research for cures for major illnesses. Thus, I have no need to study accounting. What is your response to James?

Which of the following is true regarding the corporate form of business organization?

Frank Ito began the Ito Company by investing $20,000 of cash in the business. The company recorded revenues of $185,000, expenses of $160,000, and had owner drawings of $10,000. What was Ito's net income for the year?

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

Accounting is an information system that identifies, _, and _ the economic events of an organization.

Indicate which of these items is an asset (A), liability (L) or owner's equity (OE) account. ___ (1) Supplies _ (2) Klein, Drawing _ (3) Building _ (4) Note Payable _____ (5) Taxes Payable