Question 1

What is the purpose of return on assets as an analytical tool?

Accepted Answer

Return on assets is useful in

Question 2

Classify the following activities according to the appropriate section of the statement of cash flows.
a.Operating activity
b.Investing activity
c.Financing activity
____ 1.Cash received from a one-time sale of used office equipment.
____ 2.Cash paid for dividends.
____ 3.Cash received from customers.
____ 4.Cash received from stockholder contributions.
____ 5.Cash paid for utilities.
____ 6.Cash paid for a delivery van to be used in the business.

Accepted Answer

1.B; 2.C;

Question 3

The monetary unit assumption means that companies should express transactions in terms such as "a lot" or "very little."

Accepted Answer

A) True 
 B)False

Question 4

Which of the following accounts is not included in the asset section of the balance sheet?

Accepted Answer

A) Cash. 
B) Accounts receivable. 
C) Supplies. 
D) Land. 
E) Services revenue. 
A) Cash. 
B) Accounts receivable. 
C) Supplies. 
D) Land. 
E) Services revenue.

Question 5

The basic financial statements include all of the following except:

Accepted Answer

A) Balance Sheet. 
B) Income Statement. 
C) Statement of Retained Earnings. 
D) Statement of Cash Flows. 
E) Statement of Changes in Assets. 
A) Balance Sheet. 
B) Income Statement. 
C) Statement of Retained Earnings. 
D) Statement of Cash Flows. 
E) Statement of Changes in Assets.

Question 6

A partnership is a business owned by two or more people.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) Net losses. 
B) Expenses. 
C) Revenues. 
D) Equity. 
E) Liabilities. 
A) Net losses. 
B) Expenses. 
C) Revenues. 
D) Equity. 
E) Liabilities.

Question 8

Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year.Its assets at the beginning of the year were $400,000.At the end of the year assets were worth $450,000.Calculate its return on assets.

Accepted Answer

A) 7.1%. 
B) 7.5%. 
C) 6.7%. 
D) 20.0%. 
E) 18.8%. 
A) 7.1%. 
B) 7.5%. 
C) 6.7%. 
D) 20.0%. 
E) 18.8%.

Question 9

The materiality constraint:

Accepted Answer

A) Prescribes that accounting information is based on actual cost. 
B) Provides guidance on when a company must recognize revenue. 
C) Prescribes that only information that would influence the decisions of a reasonable person need be disclosed. 
D) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
A) Prescribes that accounting information is based on actual cost. 
B) Provides guidance on when a company must recognize revenue. 
C) Prescribes that only information that would influence the decisions of a reasonable person need be disclosed. 
D) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Question 10

Explain the accounting equation and define its terms.

Accepted Answer

The accounting equation is stated as: As

Question 11

The accounting equation implies that: Assets + Liabilities = Equity.

Accepted Answer

A) True 
 B)False

Question 12

The International Accounting Standards Board (IASB)issues International Financial Reporting Standards (IFRS)that identify preferred accounting practices.

Accepted Answer

A) True 
 B)False

Question 13

Clawback provisions and whistleblower provisions are components of which legislation?

Accepted Answer

A) Sarbanes-Oxley Act. 
B) Dodd-Frank Act. 
C) Glass-Steagall Act. 
D) Securities Exchange Act. 
E) Gramm-Leach-Bliley Act. 
A) Sarbanes-Oxley Act. 
B) Dodd-Frank Act. 
C) Glass-Steagall Act. 
D) Securities Exchange Act. 
E) Gramm-Leach-Bliley Act.

Question 14

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold,unless evidence shows that it will not continue,is the:

Accepted Answer

A) Going-concern assumption. 
B) Business entity assumption. 
C) Objectivity principle. 
D) Measurement (Cost)Principle. 
E) Monetary unit assumption. 
A) Going-concern assumption. 
B) Business entity assumption. 
C) Objectivity principle. 
D) Measurement (Cost)Principle. 
E) Monetary unit assumption.

Question 15

________,which is one part of accounting,is the recording of transactions and events,either manually or electronically.

Accepted Answer

Record-kee

Question 16

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash.This represents a(n):

Accepted Answer

A) Revenue activity. 
B) Operating activity. 
C) Expense activity. 
D) Investing activity. 
E) Financing activity. 
A) Revenue activity. 
B) Operating activity. 
C) Expense activity. 
D) Investing activity. 
E) Financing activity.

Question 17

Liabilities are owners' claims on assets.

Accepted Answer

A) True 
 B)False

Question 18

Flitter reported net income of $17,500 for the past year.At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities.By the end of the year,assets had increased to $300,000 and liabilities were $75,000.Calculate its return on assets:

Accepted Answer

A) 8.8%. 
B) 7.0%. 
C) 5.8%. 
D) 35.0%. 
E) 23.3%. 
A) 8.8%. 
B) 7.0%. 
C) 5.8%. 
D) 35.0%. 
E) 23.3%.

Question 19

Decreases in equity from costs of providing products or services to customers are called:

Accepted Answer

A) Liabilities. 
B) Equity. 
C) Withdrawals. 
D) Expenses. 
E) Stockholders' Investment. 
A) Liabilities. 
B) Equity. 
C) Withdrawals. 
D) Expenses. 
E) Stockholders' Investment.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

What is the purpose of return on assets as an analytical tool?

The monetary unit assumption means that companies should express transactions in terms such as "a lot" or "very little."

Which of the following accounts is not included in the asset section of the balance sheet?

The basic financial statements include all of the following except:

A partnership is a business owned by two or more people.

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

Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year.Its assets at the beginning of the year were $400,000.At the end of the year assets were worth $450,000.Calculate its return on assets.

The materiality constraint:

Explain the accounting equation and define its terms.

The accounting equation implies that: Assets + Liabilities = Equity.

The International Accounting Standards Board (IASB)issues International Financial Reporting Standards (IFRS)that identify preferred accounting practices.

Clawback provisions and whistleblower provisions are components of which legislation?

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold,unless evidence shows that it will not continue,is the:

________,which is one part of accounting,is the recording of transactions and events,either manually or electronically.

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash.This represents a(n):

Liabilities are owners' claims on assets.

Flitter reported net income of $17,500 for the past year.At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities.By the end of the year,assets had increased to $300,000 and liabilities were $75,000.Calculate its return on assets:

Decreases in equity from costs of providing products or services to customers are called:

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

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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