Exam 1: Accounting in Business

Soo Lin began an Internet Consulting practice and completed these transactions during April of the current year: $Soo Lin began an Internet Consulting practice and completed these transactions during April of the current year: Show the effects of the above transactions on the accounting equation of Soo Lin, Consultant. Use the following format for your answers. The first item is shown as an example. Increase = I Decrease = D No effect = N \begin{array} { | c | c | c | c | } \hline \text { Date } & \text { Assets } & \text { Liabilities } & \text { Equity } \\ \hline \text { Example: } & & & \\ \hline \text { April 1 } & \text { I } & \text { N } & \text { I } \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{array}$ Show the effects of the above transactions on the accounting equation of Soo Lin, Consultant. Use the following format for your answers. The first item is shown as an example. Increase = I Decrease = D No effect = N Date Assets Liabilities Equity Example: April 1 I N I

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Question 1

Correct Answer:

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$\begin{array}{|c|c|c|c|}\hline \text { Date } & \text { Assets } & \text { Liabilities } & \text { Equity } \\\hline \text { April 1 } & \mathrm{I} & \mathrm{N} & \mathrm{I} \\\hline \text { April 2 } & \mathrm{D} & \mathrm{N} & \mathrm{D} \\\hline \text { April 3 } & \mathrm{I}, \mathrm{D} & \mathrm{I} & \mathrm{N} \\\hline \text { April 4 } & \mathrm{I}, \mathrm{D} & \mathrm{N} & \mathrm{N} \\\hline \text { April 8 } & \mathrm{I} & \mathrm{N} & \mathrm{I} \\\hline \text { April 15 } & \mathrm{I} & \mathrm{N} & \mathrm{I} \\\hline \text { April 20 } & \mathrm{I}, \mathrm{D} & \mathrm{N} & \mathrm{N} \\\hline\end{array}$

$\begin{array} { | l | l | l | l | } \hline \text { April 30 } & \text { D } & \text { N } & \text { D } \\\hline \text { Apri 30 } & \text { D } & \text { N } & \text { D } \\\hline\end{array}$

Financing activities provide the means organizations use to pay for resources such as land, buildings, and equipment.

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Question 2

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The statement of cash flows reports all of the following except:

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Question 3

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In the partnership form of business, the owners are called stockholders.

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Question 4

The International Accounting Standards Board (IASB) is the government group that establishes reporting requirements for companies that issue stock to the public.

(True/False)

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Question 5

There are three major types of business activities. ________ activities involve the acquisition and disposal of resources that an organization uses to acquire and sell its products or services.

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Question 6

If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:

(Multiple Choice)

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Question 7

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

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Question 8

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

(True/False)

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Question 9

Accounting is an information and measurement system that does all of the following except:

(Multiple Choice)

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Question 10

Identify the risk and the return in each of the following examples. a. Investing $500 in a certificate of deposit at 4.5% interest. b. Placing a $100 bet on an NBA game. c. Investing $10,000 in Microsoft stock. d. Borrowing $20,000 in student loans.

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Question 11

Explain the role of accounting in the information age.

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Question 12

The measurement principle, also called the cost principle:

(Multiple Choice)

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Question 13

The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

(True/False)

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Question 14

External users of accounting information include all of the following except:

(Multiple Choice)

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Question 15

The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

(True/False)

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Question 16

At the beginning of the year, a company had $120,000 worth of liabilities. During the year, assets increased by $160,000 and at year-end they equaled $360,000. Liabilities decreased $20,000 during the year. Calculate the beginning and ending values of equity.

(Short Answer)

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Question 17

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

(True/False)

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Question 18

The full disclosure principle:

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Question 19

The statement of owner's equity:

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Question 20

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Exam 1: Accounting in Business

Financing activities provide the means organizations use to pay for resources such as land, buildings, and equipment.

The statement of cash flows reports all of the following except:

In the partnership form of business, the owners are called stockholders.

The International Accounting Standards Board (IASB) is the government group that establishes reporting requirements for companies that issue stock to the public.

There are three major types of business activities. ________ activities involve the acquisition and disposal of resources that an organization uses to acquire and sell its products or services.

If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

Accounting is an information and measurement system that does all of the following except:

Identify the risk and the return in each of the following examples. a. Investing $500 in a certificate of deposit at 4.5% interest. b. Placing a $100 bet on an NBA game. c. Investing $10,000 in Microsoft stock. d. Borrowing $20,000 in student loans.

Explain the role of accounting in the information age.

The measurement principle, also called the cost principle:

The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

External users of accounting information include all of the following except:

The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

At the beginning of the year, a company had $120,000 worth of liabilities. During the year, assets increased by $160,000 and at year-end they equaled $360,000. Liabilities decreased $20,000 during the year. Calculate the beginning and ending values of equity.

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

The full disclosure principle:

The statement of owner's equity:

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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