Question 1

Each financial statement includes a heading giving three pieces of data.Which of the following items is NOT included in these headings?

Accepted Answer

A)  Name of the financial statement 
B)  Date or time period covered 
C)  Name of the preparer of the statement 
D)  Name of the business 
A)  Name of the financial statement 
B)  Date or time period covered 
C)  Name of the preparer of the statement 
D)  Name of the business

Question 2

The business receives cash from a customer that is owed to the company "on account," based on services rendered to the customer previously.How does the collection of the cash affect the accounting equation?

Accepted Answer

A)  Assets increase; owner's equity increases. 
B)  Assets increase; liabilities increase. 
C)  One asset increases; one asset decreases. 
D)  Assets decrease; owner's equity decreases. 
A)  Assets increase; owner's equity increases. 
B)  Assets increase; liabilities increase. 
C)  One asset increases; one asset decreases. 
D)  Assets decrease; owner's equity decreases.

Question 3

IFRS accounting rules apply to all U.S.corporations.

Accepted Answer

A) True 
 B)False

Question 4

The financial statements should be prepared in what order?

Accepted Answer

A)  Income statement, statement of owner's equity, balance sheet, statement of cash flows 
B)  Statement of owner's equity, balance sheet, income statement, statement of cash flows 
C)  Balance sheet, statement of owner's equity, income statement, statement of cash flows 
D)  Balance sheet, income statement, statement of owner's equity, statement of cash flows 
A)  Income statement, statement of owner's equity, balance sheet, statement of cash flows 
B)  Statement of owner's equity, balance sheet, income statement, statement of cash flows 
C)  Balance sheet, statement of owner's equity, income statement, statement of cash flows 
D)  Balance sheet, income statement, statement of owner's equity, statement of cash flows

Question 5

Which of the following financial statements shows the changes in Owner's capital during a period of time?

Accepted Answer

A)  Income statement 
B)  Statement of owner's equity 
C)  Statement of cash flows 
D)  Balance sheet 
A)  Income statement 
B)  Statement of owner's equity 
C)  Statement of cash flows 
D)  Balance sheet

Question 6

Which of the following is a licensed accountant who serves the general public rather than an accountant who serves one particular company?

Accepted Answer

A)  CPA 
B)  CMA 
C)  SEC 
D)  FASB 
A)  CPA 
B)  CMA 
C)  SEC 
D)  FASB

Question 7

David has decided to open an auto-detailing business.He will pick up an automobile from the client,take it to his parents' garage,detail it,and return it to the client.If he does all of the work himself and takes no legal steps to form a special organization,which type of business organization,in effect,has he chosen?

Accepted Answer

A)  Limited liability company 
B)  Partnership 
C)  Corporation 
D)  Proprietorship 
A)  Limited liability company 
B)  Partnership 
C)  Corporation 
D)  Proprietorship

Question 8

Hamilton Lawn Service earned $1,000 for services rendered.The customer promised to pay at a later time.What is the effect on accounts?

Accepted Answer

A)  Accounts receivable decreases; Owner's capital increases. 
B)  Cash and Accounts receivable both increase. 
C)  Cash account increases; Accounts receivable decreases. 
D)  Accounts receivable increases; Owner's capital increases. 
A)  Accounts receivable decreases; Owner's capital increases. 
B)  Cash and Accounts receivable both increase. 
C)  Cash account increases; Accounts receivable decreases. 
D)  Accounts receivable increases; Owner's capital increases.

Question 9

The Sarbanes-Oxley Act ("SOX")made it a criminal offense to:

Accepted Answer

A)  steal shareholders' money. 
B)  default on loans from creditors. 
C)  declare bankruptcy. 
D)  falsify financial information. 
A)  steal shareholders' money. 
B)  default on loans from creditors. 
C)  declare bankruptcy. 
D)  falsify financial information.

Question 10

An investor is someone who loans money to a business.

Accepted Answer

A) True 
 B)False

Question 11

Lindsey Smith decided to start her own CPA practice as a professional corporation,Smith CPA PC.Her corporation purchased an office building for $35,000 which her real estate agent said was worth $50,000 in the current market.The corporation records the building as a $50,000 asset because Lindsey believes that is the real value of the building.Which of the following concepts or principles of accounting is being violated?

Accepted Answer

A)  Cost principle 
B)  Entity concept 
C)  Stable monetary unit concept 
D)  Going-concern concept 
A)  Cost principle 
B)  Entity concept 
C)  Stable monetary unit concept 
D)  Going-concern concept

Question 12

The relative proportion of economic resources and obligations would be shown by the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

A proprietor has unlimited liability for the debts and obligations of the proprietorship.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following financial statements reports cash receipts and cash payments during a period of time?

Accepted Answer

A)  Statement of cash flows 
B)  Balance sheet 
C)  Income statement 
D)  Statement of owner's equity 
A)  Statement of cash flows 
B)  Balance sheet 
C)  Income statement 
D)  Statement of owner's equity

Question 15

Sharon Samson starts a plumbing service named Reliable Waterworks.Selected transactions are described as follows:
A.Sharon deposits $7,000 into a new checking account for the business,recording the capital contribution.
B.Reliable pays $4,000 cash for equipment to be used for plumbing repairs.
C.Reliable borrows $15,000 from a local bank and deposits the money in the checking account.
D.Reliable pays $600 rent for the first month.
E.Reliable pays $400 cash for plumbing supplies to be used on various jobs in the future.
F.Reliable completes a plumbing repair project for a local lawyer and receives $1,300 cash.
G.Sharon takes a cash withdrawal of $2,500.
-
After all of the transactions,what is net income?

Accepted Answer

A) $700 
B) $300 
C) $4,500 
D) $1,300 
A) $700 
B) $300 
C) $4,500 
D) $1,300

Question 16

Which of the following financial statements lists the entity's assets,liabilities,and owner's equity as of a specific date?

Accepted Answer

A)  Balance sheet 
B)  Statement of owner's equity 
C)  Income statement 
D)  Statement of cash flows 
A)  Balance sheet 
B)  Statement of owner's equity 
C)  Income statement 
D)  Statement of cash flows

Question 17

The statement of owner's equity shows the changes in Owner's capital.Which one of these statements is TRUE?

Accepted Answer

A)  Decreases in Owner's equity result from owner investments. 
B)  Decreases in Owner's equity result from net losses. 
C)  Decreases in Owner's equity result from net income. 
D)  Decreases in Owner's equity result from revenues earned. 
A)  Decreases in Owner's equity result from owner investments. 
B)  Decreases in Owner's equity result from net losses. 
C)  Decreases in Owner's equity result from net income. 
D)  Decreases in Owner's equity result from revenues earned.

Question 18

Which of the following is a characteristic of a limited liability partnership (LLP)?

Accepted Answer

A)  A limited liability partnership issues shares of stock to shareholders. 
B)  Each partner is liable only for the actions under his or her control. 
C)  A limited liability partnership is owned by a single investor. 
D)  The limited liability partners are subject to "double taxation." 
A)  A limited liability partnership issues shares of stock to shareholders. 
B)  Each partner is liable only for the actions under his or her control. 
C)  A limited liability partnership is owned by a single investor. 
D)  The limited liability partners are subject to "double taxation."

Question 19

There are four major forms of business organizations.

Accepted Answer

A) True 
 B)False

Question 20

Scott's Camera Shop started the year with total assets of $80,000 and total liabilities of $40,000.During the year,the business earned revenues of $120,000 and incurred expenses of $70,000.Scott made no capital contributions during the year,but did make withdrawals of $60,000. What is the amount of Scott's owner's equity at the end of the year?

Accepted Answer

A)  $40,000 
B)  $50,000 
C)  $30,000 
D)  $10,000 
A)  $40,000 
B)  $50,000 
C)  $30,000 
D)  $10,000

Each financial statement includes a heading giving three pieces of data.Which of the following items is NOT included in these headings?

The business receives cash from a customer that is owed to the company "on account," based on services rendered to the customer previously.How does the collection of the cash affect the accounting equation?

IFRS accounting rules apply to all U.S.corporations.

The financial statements should be prepared in what order?

Which of the following financial statements shows the changes in Owner's capital during a period of time?

Which of the following is a licensed accountant who serves the general public rather than an accountant who serves one particular company?

Hamilton Lawn Service earned $1,000 for services rendered.The customer promised to pay at a later time.What is the effect on accounts?

The Sarbanes-Oxley Act ("SOX")made it a criminal offense to:

An investor is someone who loans money to a business.

The relative proportion of economic resources and obligations would be shown by the balance sheet.

A proprietor has unlimited liability for the debts and obligations of the proprietorship.

Which of the following financial statements reports cash receipts and cash payments during a period of time?

Which of the following financial statements lists the entity's assets,liabilities,and owner's equity as of a specific date?

The statement of owner's equity shows the changes in Owner's capital.Which one of these statements is TRUE?

Which of the following is a characteristic of a limited liability partnership (LLP)?

There are four major forms of business organizations.

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

Each financial statement includes a heading giving three pieces of data.Which of the following items is NOT included in these headings?

The business receives cash from a customer that is owed to the company "on account," based on services rendered to the customer previously.How does the collection of the cash affect the accounting equation?

IFRS accounting rules apply to all U.S.corporations.

The financial statements should be prepared in what order?

Which of the following financial statements shows the changes in Owner's capital during a period of time?

Which of the following is a licensed accountant who serves the general public rather than an accountant who serves one particular company?

Hamilton Lawn Service earned $1,000 for services rendered.The customer promised to pay at a later time.What is the effect on accounts?

The Sarbanes-Oxley Act ("SOX")made it a criminal offense to:

An investor is someone who loans money to a business.

The relative proportion of economic resources and obligations would be shown by the balance sheet.

A proprietor has unlimited liability for the debts and obligations of the proprietorship.

Which of the following financial statements reports cash receipts and cash payments during a period of time?

Which of the following financial statements lists the entity's assets,liabilities,and owner's equity as of a specific date?

The statement of owner's equity shows the changes in Owner's capital.Which one of these statements is TRUE?

Which of the following is a characteristic of a limited liability partnership (LLP)?

There are four major forms of business organizations.

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