Exam 1: Accounting in Business

Assets created by selling goods and services on credit are:

The accounting equation can be restated as: Assets - Equity = Liabilities.

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

Identify the three basic forms of business organizations and their key attributes.

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

A net loss occurs when revenues exceed expenses.

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of May 31 of the current year?

All of the following are true regarding ethics except:

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

Revenues are increases in equity from a company's sales of products and services to customers.

A corporation is:

_________________ is net income divided by average total assets.

Prepare a December 31 balance sheet in proper form for Cane Property Management, Inc. using the following accounts and amounts: Commissions earned.................. \4 0,000 Accounts payable...................... 3,500 Accounts receivable................. 5,000 Stockholders' equity................. 104,500 Office equipment..................... 10,000 Advertising expense............... 3,200 Cash...................................... 7,500 Land...................................... 35,000 Note payable.......................... 50,000 Office supplies......................... 1,500 Salaries expense...................... 12,000 Salaries payable...................... 1,000 Building.................................. 100,000

The ______________ assumption assumes business will continue operating indefinitely instead of being closed or sold.

Resources a company owns or controls that are expected to yield future benefits are:

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

Return on assets reflects a company's ability to generate profit through productive use of its assets.