Question 1

Fontaine Fox Company buys a $12,000 van on credit. The transaction will affect the

Accepted Answer

A)  income statement only. 
B)  balance sheet only. 
C)  income statement and owner's equity statement only. 
D)  income statement, owner's equity statement, and balance sheet. 
A)  income statement only. 
B)  balance sheet only. 
C)  income statement and owner's equity statement only. 
D)  income statement, owner's equity statement, and balance sheet.

Question 2

A small neighborhood barber shop that is operated by its owner would likely be organized as a

Accepted Answer

A)  joint venture. 
B)  partnership. 
C)  corporation. 
D)  proprietorship. 
A)  joint venture. 
B)  partnership. 
C)  corporation. 
D)  proprietorship.

Question 3

Match the items below by entering the appropriate code letter in the space provided.
A. CPA 
B. Budgeting 
C. SEC 
D. Proprietorship
E. Economic Entity Assumption
F. Corporation
G. Assets
H. Equities
 I. Expenses
 J. Transaction
1. Activities of an entity must be kept separate from its owner's activities.
2. Consumed assets or services.
3. Ownership is limited to one person.
4. Offers expert accounting service to the general public.
5. Creditor and ownership claims against the assets of the business.
6. A separate legal entity under state laws.
7. Government agency that can mandate accounting rules.
8. Quantifying goals and objectives.
9. Future economic benefits.
10. Economic events recorded by accountants.
Answers to Matching

Accepted Answer

1. E 6. F
2. I 7. C

Question 4

The cost and fair market value of an asset are the same at the time of acquisition and in all subsequent periods.

Accepted Answer

A) True 
 B)False

Question 5

John and Sam met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a

Accepted Answer

A)  joint venture. 
B)  partnership. 
C)  corporation. 
D)  proprietorship. 
A)  joint venture. 
B)  partnership. 
C)  corporation. 
D)  proprietorship.

Question 6

Accountants rely on a fundamental business concept-ethical behavior-in reporting financial information.

Accepted Answer

A) True 
 B)False

Question 7

An analysis of the transactions made by K. T. Lang & Co., a law firm, for the month of July is shown below. Each increase and decrease in owner's equity is explained.   
Instructions
(a) Determine how much owner's equity increased for the month.
(b) Compute the amount of net income for the month.

Accepted Answer

The answer of An analysis of the transactions made by...

Question 8

Jill's Car Cleaning has the following balance sheet items:   
Identify which items are (1) Assets
(2) Liabilities
(3) Owner's Equity

Accepted Answer

(1) Assets-Van, Cash, Cleaning

Question 9

Ryder Company purchases $600 of equipment from Montez Inc. for cash. The effect on the components of the basic accounting equation of Ryder Company is

Accepted Answer

A)  an increase in assets and liabilities. 
B)  a decrease in assets and liabilities. 
C)  no change in total assets. 
D)  an increase in assets and a decrease in liabilities. 
A)  an increase in assets and liabilities. 
B)  a decrease in assets and liabilities. 
C)  no change in total assets. 
D)  an increase in assets and a decrease in liabilities.

Question 10

Which of the following techniques are not used by accountants to interpret and report financial information?

Accepted Answer

A)  Graphs 
B)  Special memos for each class of external users 
C)  Charts 
D)  Ratios 
A)  Graphs 
B)  Special memos for each class of external users 
C)  Charts 
D)  Ratios

Question 11

Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation.

Accepted Answer

A) True 
 B)False

Question 12

At October 1, Smithson Enterprises reported owner's equity of $35,000. During October, no additional investments were made and the company earned net income of $4,000. If owner's equity at October 31 totals $32,000, what amount of owner drawings were made during the month?

Accepted Answer

A)  $0 
B)  $1,000 
C)  $3,000 
D)  $7,000 
A)  $0 
B)  $1,000 
C)  $3,000 
D)  $7,000

Question 13

Use the following information for questions 138-139.
Saira's Service Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and owner drawings of $20,000.
-Owner's equity at the end of the year was

Accepted Answer

A)  $120,000. 
B)  $100,000. 
C)  $80,000. 
D)  $90,000. 
A)  $120,000. 
B)  $100,000. 
C)  $80,000. 
D)  $90,000.

Question 14

Indicate whether the following items would appear on the balance sheet (BS), income statement (IS), or owner's equity statement (OE).
1. Advertising expense
2. Accounts receivable
3. Jones, drawing
4. Rent revenue
5. Salaries payable
6. Supplies

Accepted Answer

1. Income statement (IS) 4. In

Question 15

A partnership must have more than one owner.

Accepted Answer

A) True 
 B)False

Question 16

Owner's equity is increased by

Accepted Answer

A)  drawings. 
B)  revenues. 
C)  expenses. 
D)  liabilities. 
A)  drawings. 
B)  revenues. 
C)  expenses. 
D)  liabilities.

Question 17

Accountants refer to an economic event as a

Accepted Answer

A)  purchase. 
B)  sale. 
C)  transaction. 
D)  change in ownership. 
A)  purchase. 
B)  sale. 
C)  transaction. 
D)  change in ownership.

Question 18

During the year 2009, Diego Company earned revenues of $45,000, had expenses of $25,000, purchased assets with a cost of $5,000 and had owner drawings of $3,000. Net income for the year is

Accepted Answer

A)  $45,000. 
B)  $20,000. 
C)  $17,000. 
D)  $15,000. 
A)  $45,000. 
B)  $20,000. 
C)  $17,000. 
D)  $15,000.

Question 19

The process of recording transactions has become more efficient because

Accepted Answer

A)  fewer events can be quantified in financial terms. 
B)  computers are used in processing business events. 
C)  more people have been hired to record business transactions. 
D)  business events are recorded only at the end of the year. 
A)  fewer events can be quantified in financial terms. 
B)  computers are used in processing business events. 
C)  more people have been hired to record business transactions. 
D)  business events are recorded only at the end of the year.

Question 20

The basic accounting equation cannot be restated as

Accepted Answer

A)  Assets - Liabilities = Owner's Equity. 
B)  Assets - Owner's Equity = Liabilities. 
C)  Owner's Equity + Liabilities = Assets. 
D)  Assets + Liabilities = Owner's Equity. 
A)  Assets - Liabilities = Owner's Equity. 
B)  Assets - Owner's Equity = Liabilities. 
C)  Owner's Equity + Liabilities = Assets. 
D)  Assets + Liabilities = Owner's Equity.

Exam 1: Accounting in Action

Fontaine Fox Company buys a $12,000 van on credit. The transaction will affect the

A small neighborhood barber shop that is operated by its owner would likely be organized as a

The cost and fair market value of an asset are the same at the time of acquisition and in all subsequent periods.

John and Sam met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a

Accountants rely on a fundamental business concept-ethical behavior-in reporting financial information.

An analysis of the transactions made by K. T. Lang & Co., a law firm, for the month of July is shown below. Each increase and decrease in owner's equity is explained. Instructions (a) Determine how much owner's equity increased for the month. (b) Compute the amount of net income for the month.

Jill's Car Cleaning has the following balance sheet items: Identify which items are (1) Assets (2) Liabilities (3) Owner's Equity

Ryder Company purchases $600 of equipment from Montez Inc. for cash. The effect on the components of the basic accounting equation of Ryder Company is

Which of the following techniques are not used by accountants to interpret and report financial information?

Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation.

At October 1, Smithson Enterprises reported owner's equity of $35,000. During October, no additional investments were made and the company earned net income of $4,000. If owner's equity at October 31 totals $32,000, what amount of owner drawings were made during the month?

Indicate whether the following items would appear on the balance sheet (BS), income statement (IS), or owner's equity statement (OE). 1. Advertising expense 2. Accounts receivable 3. Jones, drawing 4. Rent revenue 5. Salaries payable 6. Supplies

A partnership must have more than one owner.

Owner's equity is increased by

Accountants refer to an economic event as a

During the year 2009, Diego Company earned revenues of $45,000, had expenses of $25,000, purchased assets with a cost of $5,000 and had owner drawings of $3,000. Net income for the year is

The process of recording transactions has become more efficient because

The basic accounting equation cannot be restated as

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

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