Question 1

Financial statements are historical reports of what has taken place financially in a business.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following do NOT pay taxes on the business income through their individual owners?

Accepted Answer

A) S-corporation 
B) Sole proprietorship 
C) Partnership 
D) Corporation 
A) S-corporation 
B) Sole proprietorship 
C) Partnership 
D) Corporation

Question 3

Beginning Retained Earnings for the period would be shown on the:

Accepted Answer

A) Statement of Retained Earnings. 
B) Income Statement. 
C) Balance Sheets. 
D) Statement of Cash Flows. 
A) Statement of Retained Earnings. 
B) Income Statement. 
C) Balance Sheets. 
D) Statement of Cash Flows.

Question 4

Accounting is important because the process "keeps score" of the financial aspects of a business.

Accepted Answer

A) True 
 B)False

Question 5

Information for the Alaska Alehouse's first month of operations is presented below:  
How much did Alaska Alehouse pay out in dividends?

Accepted Answer

A) $0 
B) $11,000 
C) $5,000 
D) Cannot be determined from given information 
A) $0 
B) $11,000 
C) $5,000 
D) Cannot be determined from given information

Question 6

Assets are defined as:

Accepted Answer

A) earnings retained in the business. 
B) amounts owed to others. 
C) stockholders' claims to assets. 
D) economic resources of a company. 
A) earnings retained in the business. 
B) amounts owed to others. 
C) stockholders' claims to assets. 
D) economic resources of a company.

Question 7

What is an example of objective evidence?

Accepted Answer

A) Bank statements 
B) Cancelled checks 
C) Purchase receipts 
D) All of the above 
E) None of the above 
A) Bank statements 
B) Cancelled checks 
C) Purchase receipts 
D) All of the above 
E) None of the above

Question 8

Illusions, Inc. produces high-end mirrors, which are sold in specialty boutiques throughout the country. What type and legal form of business is Illusions, Inc. ?

Accepted Answer

A) Manufacturing & Corporation 
B) Merchandising & Corporation 
C) Retail & Sole proprietorship 
D) Service & Sole proprietorship 
A) Manufacturing & Corporation 
B) Merchandising & Corporation 
C) Retail & Sole proprietorship 
D) Service & Sole proprietorship

Question 9

Payment of cash dividends will decrease an asset and increase stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 10

Purchasing supplies on account will increase both assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 11

The owner of Sassycat Designs wrote a company check to pay her personal credit card bill. What accounting principle did she violate?

Accepted Answer

A) Cost 
B) Reliability 
C) Business entity 
D) No principle is violated-the bank account belongs to her, so it's okay to write checks. 
A) Cost 
B) Reliability 
C) Business entity 
D) No principle is violated-the bank account belongs to her, so it's okay to write checks.

Question 12

The value of an item is determined by taking the revenue from a sale and deducting the cost of the sale.

Accepted Answer

A) True 
 B)False

Question 13

The Balance Sheet presents changes to assets and liabilities over a period of time.

Accepted Answer

A) True 
 B)False

Question 14

FASB is made up of how many members?

Accepted Answer

A) 3 
B) 5 
C) 7 
D) 9 
A) 3 
B) 5 
C) 7 
D) 9

Question 15

A tax preparation business is primarily a:

Accepted Answer

A) merchandising operation. 
B) service operation. 
C) not-for-profit operation. 
D) manufacturing operation. 
A) merchandising operation. 
B) service operation. 
C) not-for-profit operation. 
D) manufacturing operation.

Question 16

Fiona's Flowers buys a new van for the business using cash. The effect on the accounting equation is to:

Accepted Answer

A) Increase assets and decrease liabilities 
B) Shift liabilities to stockholders' equity. 
C) Decrease assets. 
D) No effect. 
A) Increase assets and decrease liabilities 
B) Shift liabilities to stockholders' equity. 
C) Decrease assets. 
D) No effect.

Question 17

The method of accounting that recognizes a transaction when it occurs is:

Accepted Answer

A) financial accounting. 
B) cash accounting. 
C) cost accounting. 
D) accrual accounting. 
A) financial accounting. 
B) cash accounting. 
C) cost accounting. 
D) accrual accounting.

Question 18

Tumbler, Inc. purchased office supplies on account for $50,000. How would this transaction affect Tumbler's accounting equation?

Accepted Answer

A) Increase Assets and Stockholders' Equity by $50,000 
B) Increase Liabilities and Stockholders' Equity by $50,000 
C) Increase Assets by $50,000 and decrease Liabilities by $50,000 
D) Increase Assets by $50,000 and increase Liabilities by $50,000 
A) Increase Assets and Stockholders' Equity by $50,000 
B) Increase Liabilities and Stockholders' Equity by $50,000 
C) Increase Assets by $50,000 and decrease Liabilities by $50,000 
D) Increase Assets by $50,000 and increase Liabilities by $50,000

Question 19

Consider Accounts Receivable and Accounts Payable. Which of the following statements is TRUE?

Accepted Answer

A) Accounts Receivable is a liability and Accounts Payable is an asset. 
B) Accounts Receivable is an asset and Accounts Payable is an asset. 
C) Accounts Receivable is an asset and Accounts Payable is a liability. 
D) Accounts Receivable is a liability and Accounts Payable is a liability. 
A) Accounts Receivable is a liability and Accounts Payable is an asset. 
B) Accounts Receivable is an asset and Accounts Payable is an asset. 
C) Accounts Receivable is an asset and Accounts Payable is a liability. 
D) Accounts Receivable is a liability and Accounts Payable is a liability.

Question 20

Which of the following is a disadvantage of the corporate form of business?

Accepted Answer

A) Ease of raising capital 
B) Double taxation 
C) Limited resources 
D) Limited liability 
A) Ease of raising capital 
B) Double taxation 
C) Limited resources 
D) Limited liability

Financial statements are historical reports of what has taken place financially in a business.

Which of the following do NOT pay taxes on the business income through their individual owners?

Beginning Retained Earnings for the period would be shown on the:

Accounting is important because the process "keeps score" of the financial aspects of a business.

Information for the Alaska Alehouse's first month of operations is presented below: How much did Alaska Alehouse pay out in dividends?

Assets are defined as:

What is an example of objective evidence?

Illusions, Inc. produces high-end mirrors, which are sold in specialty boutiques throughout the country. What type and legal form of business is Illusions, Inc. ?

Payment of cash dividends will decrease an asset and increase stockholders' equity.

Purchasing supplies on account will increase both assets and liabilities.

The owner of Sassycat Designs wrote a company check to pay her personal credit card bill. What accounting principle did she violate?

The value of an item is determined by taking the revenue from a sale and deducting the cost of the sale.

The Balance Sheet presents changes to assets and liabilities over a period of time.

FASB is made up of how many members?

A tax preparation business is primarily a:

Fiona's Flowers buys a new van for the business using cash. The effect on the accounting equation is to:

The method of accounting that recognizes a transaction when it occurs is:

Tumbler, Inc. purchased office supplies on account for $50,000. How would this transaction affect Tumbler's accounting equation?

Consider Accounts Receivable and Accounts Payable. Which of the following statements is TRUE?

Which of the following is a disadvantage of the corporate form of business?

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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Exam 1: Business, Accounting, and You

Financial statements are historical reports of what has taken place financially in a business.

Which of the following do NOT pay taxes on the business income through their individual owners?

Beginning Retained Earnings for the period would be shown on the:

Accounting is important because the process "keeps score" of the financial aspects of a business.

Information for the Alaska Alehouse's first month of operations is presented below: How much did Alaska Alehouse pay out in dividends?

Assets are defined as:

What is an example of objective evidence?

Illusions, Inc. produces high-end mirrors, which are sold in specialty boutiques throughout the country. What type and legal form of business is Illusions, Inc. ?

Payment of cash dividends will decrease an asset and increase stockholders' equity.

Purchasing supplies on account will increase both assets and liabilities.

The owner of Sassycat Designs wrote a company check to pay her personal credit card bill. What accounting principle did she violate?

The value of an item is determined by taking the revenue from a sale and deducting the cost of the sale.

The Balance Sheet presents changes to assets and liabilities over a period of time.

FASB is made up of how many members?

A tax preparation business is primarily a:

Fiona's Flowers buys a new van for the business using cash. The effect on the accounting equation is to:

The method of accounting that recognizes a transaction when it occurs is:

Tumbler, Inc. purchased office supplies on account for $50,000. How would this transaction affect Tumbler's accounting equation?

Consider Accounts Receivable and Accounts Payable. Which of the following statements is TRUE?

Which of the following is a disadvantage of the corporate form of business?

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters