Question 1

Joe purchased office equipment for $1,250 cash.What is the effect on accounts?

Accepted Answer

A)  One asset account increases; one liability account increases. 
B)  Two asset accounts increase. 
C)  One asset account increases; another asset account decreases. 
D)  One asset account increases; one equity account increases. 
A)  One asset account increases; one liability account increases. 
B)  Two asset accounts increase. 
C)  One asset account increases; another asset account decreases. 
D)  One asset account increases; one equity account increases.

Question 2

A proprietorship is created by:

Accepted Answer

A)  electing a board of directors. 
B)  obtaining a state charter. 
C)  issuing shares of stock. 
D)  one individual deciding to start a business. 
A)  electing a board of directors. 
B)  obtaining a state charter. 
C)  issuing shares of stock. 
D)  one individual deciding to start a business.

Question 3

Assets are $150,000 and total liabilities are $90,000.Total owners' equity will be:

Accepted Answer

A)  $180,000. 
B)  $300,000. 
C)  $240,000. 
D)  $60,000. 
A)  $180,000. 
B)  $300,000. 
C)  $240,000. 
D)  $60,000.

Question 4

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 net income?

Accepted Answer

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

Question 5

Ace Builders had the following transactions in June: Earned $4,000 "on account;" collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 to a supplier that it owed from the previous month; paid out $800 in cash drawings to the owner.
-What is the combined effect on Cash of the June transactions?

Accepted Answer

A)  Up $500 
B)  Down $5,700 
C)  Down $2,700 
D)  Up $4,500 
A)  Up $500 
B)  Down $5,700 
C)  Down $2,700 
D)  Up $4,500

Question 6

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 liabilities?

Accepted Answer

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

Question 7

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 cash balance?

Accepted Answer

A) $15,800 
B) $300 
C) $4,500 
D) $1,300 
A) $15,800 
B) $300 
C) $4,500 
D) $1,300

Question 8

Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month.What is the effect of the cash payment on accounts of the business?

Accepted Answer

A)  Materials account increases; Owner's capital account decreases. 
B)  Cash account decreases; Accounts payable increases. 
C)  Accounts payable increases; Owner's capital account decreases. 
D)  Cash account decreases; Accounts payable decreases. 
A)  Materials account increases; Owner's capital account decreases. 
B)  Cash account decreases; Accounts payable increases. 
C)  Accounts payable increases; Owner's capital account decreases. 
D)  Cash account decreases; Accounts payable decreases.

Question 9

Martin Supply Service received $1,000 cash from a customer which was owed to the business from the previous month.Which of the following accounts decreases?

Accepted Answer

A)  Cash 
B)  Owner's capital 
C)  Accounts payable 
D)  Accounts receivable 
A)  Cash 
B)  Owner's capital 
C)  Accounts payable 
D)  Accounts receivable

Question 10

IFRS are the international accounting rules that U.S.companies must follow for their international operations.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is the CORRECT accounting equation?

Accepted Answer

A)  Assets + Liabilities = Owners' equity 
B)  Assets = Liabilities + Owners' equity 
C)  Assets + Revenue = Owners' equity 
D)  Assets + Revenue = Liabilities + Expenses 
A)  Assets + Liabilities = Owners' equity 
B)  Assets = Liabilities + Owners' equity 
C)  Assets + Revenue = Owners' equity 
D)  Assets + Revenue = Liabilities + Expenses

Question 12

The balance sheet shows whether or not a business is earning a profit.

Accepted Answer

A) True 
 B)False

Question 13

The proprietor of Martin Supply Service took a $5,000 cash withdrawal.What is the effect of the withdrawal on the accounts of the business?

Accepted Answer

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

Question 14

Board members of a not-for-profit organization have fiduciary responsibilities which constitute legal obligations to manage the organization in a trust-worthy manner.

Accepted Answer

A) True 
 B)False

Question 15

The business collects a $5,000 account receivable from its customer.How is the accounting equation affected?

Accepted Answer

A)  Assets increase $5,000; liabilities decrease $5,000. 
B)  One asset increases by $5,000; another asset decreases $5,000. 
C)  Assets increase $5,000; liabilities increase $5,000. 
D)  Assets increase $5,000; owner's equity increases $5,000. 
A)  Assets increase $5,000; liabilities decrease $5,000. 
B)  One asset increases by $5,000; another asset decreases $5,000. 
C)  Assets increase $5,000; liabilities increase $5,000. 
D)  Assets increase $5,000; owner's equity increases $5,000.

Question 16

The explanation of why the net income differs from change in cash balance for the period is explained in which of the following statements?

Accepted Answer

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

Question 17

You can evaluate the economic resources,debt,and overall financial position of a company in which of the following financial statements?

Accepted Answer

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

Question 18

A business performs services for its customers.Payment is expected to be received next month.How does the performance of services affect the accounting equation?

Accepted Answer

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

Question 19

The most that a proprietor can lose,as a result of business debts or lawsuits,is limited to the amount he/she has invested in the proprietorship itself.

Accepted Answer

A) True 
 B)False

Question 20

The balance sheet,or statement of financial position,is like a snapshot of the entity.Which of the following items are included on the balance sheet?

Accepted Answer

A)  Revenues 
B)  Expenses 
C)  Assets 
D)  Drawings 
A)  Revenues 
B)  Expenses 
C)  Assets 
D)  Drawings

Joe purchased office equipment for $1,250 cash.What is the effect on accounts?

A proprietorship is created by:

Assets are $150,000 and total liabilities are $90,000.Total owners' equity will be:

Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month.What is the effect of the cash payment on accounts of the business?

Martin Supply Service received $1,000 cash from a customer which was owed to the business from the previous month.Which of the following accounts decreases?

IFRS are the international accounting rules that U.S.companies must follow for their international operations.

Which of the following is the CORRECT accounting equation?

The balance sheet shows whether or not a business is earning a profit.

The proprietor of Martin Supply Service took a $5,000 cash withdrawal.What is the effect of the withdrawal on the accounts of the business?

Board members of a not-for-profit organization have fiduciary responsibilities which constitute legal obligations to manage the organization in a trust-worthy manner.

The business collects a $5,000 account receivable from its customer.How is the accounting equation affected?

The explanation of why the net income differs from change in cash balance for the period is explained in which of the following statements?

You can evaluate the economic resources,debt,and overall financial position of a company in which of the following financial statements?

A business performs services for its customers.Payment is expected to be received next month.How does the performance of services affect the accounting equation?

The most that a proprietor can lose,as a result of business debts or lawsuits,is limited to the amount he/she has invested in the proprietorship itself.

The balance sheet,or statement of financial position,is like a snapshot of the entity.Which of the following items are included on the balance sheet?

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

Joe purchased office equipment for $1,250 cash.What is the effect on accounts?

A proprietorship is created by:

Assets are $150,000 and total liabilities are $90,000.Total owners' equity will be:

Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month.What is the effect of the cash payment on accounts of the business?

Martin Supply Service received $1,000 cash from a customer which was owed to the business from the previous month.Which of the following accounts decreases?

IFRS are the international accounting rules that U.S.companies must follow for their international operations.

Which of the following is the CORRECT accounting equation?

The balance sheet shows whether or not a business is earning a profit.

The proprietor of Martin Supply Service took a $5,000 cash withdrawal.What is the effect of the withdrawal on the accounts of the business?

Board members of a not-for-profit organization have fiduciary responsibilities which constitute legal obligations to manage the organization in a trust-worthy manner.

The business collects a $5,000 account receivable from its customer.How is the accounting equation affected?

The explanation of why the net income differs from change in cash balance for the period is explained in which of the following statements?

You can evaluate the economic resources,debt,and overall financial position of a company in which of the following financial statements?

A business performs services for its customers.Payment is expected to be received next month.How does the performance of services affect the accounting equation?

The most that a proprietor can lose,as a result of business debts or lawsuits,is limited to the amount he/she has invested in the proprietorship itself.

The balance sheet,or statement of financial position,is like a snapshot of the entity.Which of the following items are included on the balance sheet?

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