Question 1

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

Accepted Answer

A)  Cash was received from providing services to a customer. 
B)  A utility bill was received for the current month, to be paid in the following month. 
C)  The company paid an amount due on credit. 
D)  Equipment was purchased for cash. 
E)  Advertising expense for the month was paid in cash. 
A)  Cash was received from providing services to a customer. 
B)  A utility bill was received for the current month, to be paid in the following month. 
C)  The company paid an amount due on credit. 
D)  Equipment was purchased for cash. 
E)  Advertising expense for the month was paid in cash.

Question 2

On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Accepted Answer

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

Question 3

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Accepted Answer

A)  Liabilities increase $12,000 and equity decreases $12,000. 
B)  Assets increase $12,000 and liabilities increase $12,000. 
C)  Assets decrease $12,000 and equity decreases $12,000. 
D)  Assets increase $12,000 and equity increases $12,000. 
E)  Assets increase $12,000 and liabilities decrease $12,000. 
A)  Liabilities increase $12,000 and equity decreases $12,000. 
B)  Assets increase $12,000 and liabilities increase $12,000. 
C)  Assets decrease $12,000 and equity decreases $12,000. 
D)  Assets increase $12,000 and equity increases $12,000. 
E)  Assets increase $12,000 and liabilities decrease $12,000.

Question 4

________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

Accepted Answer

The answer of ________ are beliefs that separate right from...

Question 5

The area of accounting aimed at serving the decision making needs of internal users is:

Accepted Answer

A)  Financial accounting. 
B)  SEC reporting. 
C)  External auditing. 
D)  Managerial accounting. 
E)  Bookkeeping. 
A)  Financial accounting. 
B)  SEC reporting. 
C)  External auditing. 
D)  Managerial accounting. 
E)  Bookkeeping.

Question 6

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

Accepted Answer

A)  Going-concern assumption. 
B)  Business entity assumption. 
C)  Objectivity principle. 
D)  Revenue recognition principle. 
E)  Monetary unit assumption. 
A)  Going-concern assumption. 
B)  Business entity assumption. 
C)  Objectivity principle. 
D)  Revenue recognition principle. 
E)  Monetary unit assumption.

Question 7

A balance sheet covers activities over a period of time such as a month or year.

Accepted Answer

A) True 
 B)False

Question 8

________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Accepted Answer

Financial

Question 9

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net income and withdrawals.

Accepted Answer

A) True 
 B)False

Question 10

Risk is the uncertainty about the return we will earn.

Accepted Answer

A) True 
 B)False

Question 11

All of the following are classified as assets except:

Accepted Answer

A)  Prepaid Insurance. 
B)  Accounts Receivable. 
C)  Supplies. 
D)  Accounts Payable. 
E)  Cash. 
A)  Prepaid Insurance. 
B)  Accounts Receivable. 
C)  Supplies. 
D)  Accounts Payable. 
E)  Cash.

Question 12

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Accepted Answer

A)  $17,000. 
B)  $71,000. 
C)  $105,000. 
D)  $88,000. 
E)  $29,000. 
A)  $17,000. 
B)  $71,000. 
C)  $105,000. 
D)  $88,000. 
E)  $29,000.

Question 13

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information.
a. Suppliers
b. Lenders
c. Shareholders
d. Purchasing Managers
e. Regulators
____ 1. Know what, when, and how much to purchase.
____ 2. Judge the soundness of a customer before making sales on credit.
____ 3. Assess whether a company has paid all required taxes and complied with securities rules.
____ 4. Assess whether an organization is likely to repay its loans with interest.
____ 5. Decide whether to buy, hold, or sell a company's stock.

Accepted Answer

1. D; 2. A

Question 14

Match each of the following items 1 through 8 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement.
a. Income statement
b. Statement of owner's equity
c. Balance sheet
d. Statement of cash flows
 . Assets.
_____2. Withdrawals.
_____3. Revenues.
_____4. Cash from investing activities.
_____5. Expenses.
_____6. Liabilities.
7. Cash from operating activities.
8. Cash from financing activities.

Accepted Answer

1. C; 2. B

Question 15

Identifying the proper ethical path is usually easy.

Accepted Answer

A) True 
 B)False

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

Question 17

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and withdrawals by the owner of $12,000. The owner made no investments during the year. Calculate the ending equity.

Accepted Answer

A)  $29,000. 
B)  $(5,000). 
C)  $75,000. 
D)  $5,000. 
E)  $99,000. 
A)  $29,000. 
B)  $(5,000). 
C)  $75,000. 
D)  $5,000. 
E)  $99,000.

Question 18

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?

Accepted Answer

A)  Assets would increase $2,000 and equity would increase $2,000. 
B)  Liabilities would decrease $2,000 and equity would increase $2,000. 
C)  Assets would decrease $2,000 and equity would decrease $2,000. 
D)  Assets would increase $2,000 and liabilities would increase $2,000. 
E)  Assets would decrease $2,000 and liabilities would decrease $2,000. 
A)  Assets would increase $2,000 and equity would increase $2,000. 
B)  Liabilities would decrease $2,000 and equity would increase $2,000. 
C)  Assets would decrease $2,000 and equity would decrease $2,000. 
D)  Assets would increase $2,000 and liabilities would increase $2,000. 
E)  Assets would decrease $2,000 and liabilities would decrease $2,000.

Question 19

Net income occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 20

The balance sheet is based on the accounting equation.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

The area of accounting aimed at serving the decision making needs of internal users is:

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

A balance sheet covers activities over a period of time such as a month or year.

________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net income and withdrawals.

Risk is the uncertainty about the return we will earn.

All of the following are classified as assets except:

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Identifying the proper ethical path is usually easy.

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

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and withdrawals by the owner of $12,000. The owner made no investments during the year. Calculate the ending equity.

Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?

Net income occurs when revenues exceed expenses.

The balance sheet is based on the accounting equation.

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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