Exam 1: Accounting in Business

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

(True/False)

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Question 221

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

(Multiple Choice)

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Question 222

Accounting is an information and measurement system that does all of the following except:

(Multiple Choice)

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Question 223

If assets are $99,000 and liabilities are $32,000, then equity equals:

(Multiple Choice)

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Question 224

Determine the net income of a company for which the following information is available for the month of September. Service revenue......................... $300,000 Rent expense............................. 48,000 Utilities expense........................ 3,200 Salaries expense........................ 81,000

(Multiple Choice)

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Question 225

Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or dividends to stockholders.

(True/False)

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Question 226

If the liabilities of a business increased $75,000 during a period of time and the stockholders' equity in the business decreased $30,000 during the same period, the assets of the business must have:

(Multiple Choice)

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Question 227

Creditors' claims on the assets of a company are called:

(Multiple Choice)

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Question 228

The ________________ assumption states that transactions and events are expressed in money units.

(Short Answer)

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Question 229

The first section of the income statement reports cash flows from operating activities.

(True/False)

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Question 230

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

(True/False)

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Question 231

If assets are $365,000 and equity is $120,000, then liabilities are:

(Multiple Choice)

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Question 232

The statement of cash flows reports all of the following except:

(Multiple Choice)

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Question 233

Another name for equity is:

(Multiple Choice)

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Question 234

Describe the income statement and the relation between revenues, expenses, and net income or loss.

(Essay)

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Question 235

Match the following terms with definitions.

Balance sheet

A principle that requires the information in financial statements to be supported by independent unbiased evidence.

Time period assumption

A report that describes a company's financial position at a point in time.

Full disclosure principle

The governmental agency that has the legal authority to establish accounting rules.

Correct Answer:

Verified

Balance sheet

Time period assumption

Full disclosure principle

Objectivity principle

Securities and Exchange Commission

IASB

Generally accepted accounting principles

Statement of retained earnings.

Cost principle

Statement of cash flows

(Matching)

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Question 236

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

(True/False)

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Question 237

An example of an operating activity is:

(Multiple Choice)

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Question 238

Dividends are expenses.

(True/False)

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Question 239

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

(True/False)

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Question 240

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Accounting is an information and measurement system that does all of the following except:

If assets are $99,000 and liabilities are $32,000, then equity equals:

Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or dividends to stockholders.

If the liabilities of a business increased $75,000 during a period of time and the stockholders' equity in the business decreased $30,000 during the same period, the assets of the business must have:

Creditors' claims on the assets of a company are called:

The ________________ assumption states that transactions and events are expressed in money units.

The first section of the income statement reports cash flows from operating activities.

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

If assets are $365,000 and equity is $120,000, then liabilities are:

The statement of cash flows reports all of the following except:

Another name for equity is:

Describe the income statement and the relation between revenues, expenses, and net income or loss.

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

An example of an operating activity is:

Dividends are expenses.

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

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