Question 1

A U.S.publicly traded company does not come under SEC regulations as long as it follows the rules of GAAP.

Accepted Answer

A) True 
 B)False

Question 2

Following is a list of account balances (except for owner's capital)of Wilson Mowing Service as of December 31 of the first year of operation: $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable } & \$ 2,500 \
\hline \text { Accounts payable } & 3,500 \
\hline \text { Salary expense } & 4,500 \
\hline \text { Repairs expense } & 800 \
\hline \text { Truck } & 8,500 \
\hline \text { Equipment } & 6,300 \
\hline \text { Notes payable } & 8,200 \
\hline \text { Cash } & 6,800 \
\hline \text { Supplies expense } & 1,600 \
\hline \text { Service revenue } & 31,900 \
\hline \text { Gasoline expense } & 3,800 \
\hline \text { Salary payable } & 200 \
\hline
\end{array}$$ 
-The proprietor,J.D.Wilson,contributed $3,000 at the beginning of the year; during the year,the proprietor took $12,000 in drawings.
At the end of the year,what is the amount of total assets?

Accepted Answer

A)  $12,200 
B)  $24,100 
C)  $11,900 
D)  $21,200 
A)  $12,200 
B)  $24,100 
C)  $11,900 
D)  $21,200

Question 3

A creditor is a party that has an ownership interest in a business.

Accepted Answer

A) True 
 B)False

Question 4

Total liabilities increase by $7,000.How is the accounting equation affected?

Accepted Answer

A)  Either assets have increased by $7,000, or owner's equity has decreased by $7,000. 
B)  Assets have decreased by $7,000. 
C)  Assets and owner's equity have each decreased by $3,500. 
D)  Owner's equity has increased by $7,000. 
A)  Either assets have increased by $7,000, or owner's equity has decreased by $7,000. 
B)  Assets have decreased by $7,000. 
C)  Assets and owner's equity have each decreased by $3,500. 
D)  Owner's equity has increased by $7,000.

Question 5

A business settles a liability by making a payment with cash.How does paying this liability affect the accounting equation?

Accepted Answer

A)  Assets decrease; liabilities decrease. 
B)  Liabilities decrease; owner's equity increases. 
C)  Assets increase; liabilities increase. 
D)  Assets increase; liabilities decrease. 
A)  Assets decrease; liabilities decrease. 
B)  Liabilities decrease; owner's equity increases. 
C)  Assets increase; liabilities increase. 
D)  Assets increase; liabilities decrease.

Question 6

Assets are $270,000 and owner's equity is $90,000.Liabilities will be:

Accepted Answer

A)  $60,000. 
B)  $360,000. 
C)  $270,000. 
D)  $180,000. 
A)  $60,000. 
B)  $360,000. 
C)  $270,000. 
D)  $180,000.

Question 7

Different users of financial statements (investors,creditors,tax authorities,etc.)all focus on the same parts of the financial statements for the information they need.

Accepted Answer

A) True 
 B)False

Question 8

An individual asset has increased.Which of the following is possible?

Accepted Answer

A)  There is an equal decrease in another asset. 
B)  There is an equal decrease in owner's equity. 
C)  There is an equal decrease in a liability account. 
D)  Both liabilities and owner's equity decrease. 
A)  There is an equal decrease in another asset. 
B)  There is an equal decrease in owner's equity. 
C)  There is an equal decrease in a liability account. 
D)  Both liabilities and owner's equity decrease.

Question 9

Which of the following concepts (or principles)would most likely require that data be complete,neutral,and free from error?

Accepted Answer

A)  Cost principle 
B)  Faithful representation principle 
C)  Entity concept 
D)  Going-concern concept 
A)  Cost principle 
B)  Faithful representation principle 
C)  Entity concept 
D)  Going-concern concept

Question 10

The AICPA's Code of Professional Conduct for Accountants provides guidance to CPAs in the performance of their work.

Accepted Answer

A) True 
 B)False

Question 11

Dylan Chase is a partner in a CPA practice.One of Dylan's partners sometimes takes a very aggressive position when auditing clients.Which of the following business types would protect Dylan's personal assets from malpractice liability for his partner's aggressive auditing tactics?

Accepted Answer

A)  Limited liability partnership 
B)  Traditional partnership 
C)  Not-for-profit 
D)  Proprietorship 
A)  Limited liability partnership 
B)  Traditional partnership 
C)  Not-for-profit 
D)  Proprietorship

Question 12

Business owners use accounting information to set goals,evaluate progress toward those goals,and take corrective action when needed.

Accepted Answer

A) True 
 B)False

Question 13

Items such as buildings and land are:

Accepted Answer

A)  liabilities. 
B)  equity. 
C)  assets. 
D)  revenues. 
A)  liabilities. 
B)  equity. 
C)  assets. 
D)  revenues.

Question 14

A business owner starts a new business and invests $6,000 of capital.This transaction results in an increase in the business's liabilities.

Accepted Answer

A) True 
 B)False

Question 15

The total assets and the total liabilities of Ty Williams Financial Services,are shown below.During the year,the proprietor made no additional capital contributions,and took drawings of $15,000. $\begin{array}{|l|r|r|} 
\hline& \text { Assets } & \text { Liabilities } \
\hline \text { Beginning of year } & \$ 395,000 & \$ 290,000 \
\hline \text { End of year } & 455,000 & 320,000\\hline
\end{array}$ What was the amount of net income for the year?

Accepted Answer

A)  $85,000 
B)  $40,000 
C)  $45,000 
D)  $135,000 
A)  $85,000 
B)  $40,000 
C)  $45,000 
D)  $135,000

Question 16

Which of the following are likely to be users of financial accounting information?

Accepted Answer

A)  Taxing authorities 
B)  Creditors 
C)  Potential investors 
D)  All of the above 
A)  Taxing authorities 
B)  Creditors 
C)  Potential investors 
D)  All of the above

Question 17

Tim contributes capital into his business.The two accounts affected are:

Accepted Answer

A)  an asset and a liability. 
B)  an asset and an equity. 
C)  a liability and an equity. 
D)  two asset accounts. 
A)  an asset and a liability. 
B)  an asset and an equity. 
C)  a liability and an equity. 
D)  two asset accounts.

Question 18

Similar to partnerships,in a limited-liability company (LLC),the members are personally liable for the debts and obligations of the business.

Accepted Answer

A) True 
 B)False

Question 19

Regarding accounting information and records,a proprietorship is an entity entirely separate from its:

Accepted Answer

A)  stockholders. 
B)  vendors. 
C)  customers. 
D)  proprietor. 
A)  stockholders. 
B)  vendors. 
C)  customers. 
D)  proprietor.

Question 20

Which of the following are most likely to be users of managerial accounting information?

Accepted Answer

A)  Potential investors 
B)  Creditors 
C)  Customers 
D)  Company managers 
A)  Potential investors 
B)  Creditors 
C)  Customers 
D)  Company managers

A U.S.publicly traded company does not come under SEC regulations as long as it follows the rules of GAAP.

A creditor is a party that has an ownership interest in a business.

Total liabilities increase by $7,000.How is the accounting equation affected?

A business settles a liability by making a payment with cash.How does paying this liability affect the accounting equation?

Assets are $270,000 and owner's equity is $90,000.Liabilities will be:

Different users of financial statements (investors,creditors,tax authorities,etc.)all focus on the same parts of the financial statements for the information they need.

An individual asset has increased.Which of the following is possible?

Which of the following concepts (or principles)would most likely require that data be complete,neutral,and free from error?

The AICPA's Code of Professional Conduct for Accountants provides guidance to CPAs in the performance of their work.

Dylan Chase is a partner in a CPA practice.One of Dylan's partners sometimes takes a very aggressive position when auditing clients.Which of the following business types would protect Dylan's personal assets from malpractice liability for his partner's aggressive auditing tactics?

Business owners use accounting information to set goals,evaluate progress toward those goals,and take corrective action when needed.

Items such as buildings and land are:

A business owner starts a new business and invests $6,000 of capital.This transaction results in an increase in the business's liabilities.

Which of the following are likely to be users of financial accounting information?

Tim contributes capital into his business.The two accounts affected are:

Similar to partnerships,in a limited-liability company (LLC),the members are personally liable for the debts and obligations of the business.

Regarding accounting information and records,a proprietorship is an entity entirely separate from its:

Which of the following are most likely to be users of managerial accounting information?

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 1: Accounting and the Business Environment

A U.S.publicly traded company does not come under SEC regulations as long as it follows the rules of GAAP.

A creditor is a party that has an ownership interest in a business.

Total liabilities increase by $7,000.How is the accounting equation affected?

A business settles a liability by making a payment with cash.How does paying this liability affect the accounting equation?

Assets are $270,000 and owner's equity is $90,000.Liabilities will be:

Different users of financial statements (investors,creditors,tax authorities,etc.)all focus on the same parts of the financial statements for the information they need.

An individual asset has increased.Which of the following is possible?

Which of the following concepts (or principles)would most likely require that data be complete,neutral,and free from error?

The AICPA's Code of Professional Conduct for Accountants provides guidance to CPAs in the performance of their work.

Dylan Chase is a partner in a CPA practice.One of Dylan's partners sometimes takes a very aggressive position when auditing clients.Which of the following business types would protect Dylan's personal assets from malpractice liability for his partner's aggressive auditing tactics?

Business owners use accounting information to set goals,evaluate progress toward those goals,and take corrective action when needed.

Items such as buildings and land are:

A business owner starts a new business and invests $6,000 of capital.This transaction results in an increase in the business's liabilities.

Which of the following are likely to be users of financial accounting information?

Tim contributes capital into his business.The two accounts affected are:

Similar to partnerships,in a limited-liability company (LLC),the members are personally liable for the debts and obligations of the business.

Regarding accounting information and records,a proprietorship is an entity entirely separate from its:

Which of the following are most likely to be users of managerial accounting information?

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters