Question 1

________ are the increases in equity from a company's sales of products and services to customers.

Accepted Answer

The answer of ________ are the increases in equity from...

Question 2

The statement of cash flows identifies cash flows separated into operating, investing, and financing activities over a period of time.

Accepted Answer

A) True 
 B)False

Question 3

Resources such as cash removed from the business by the business owner for personal use are called ________.

Accepted Answer

The answer of Resources such as cash removed from the...

Question 4

You are reviewing the accounting records of Buddy's Foreign Automotive, owned by Bruce Jones. You have uncovered the following situations. List the appropriate accounting principle related to each independent scenario and suggest a correct action for each.
1. In August, a check for $500 was written to Community Sports. This amount represents soccer camp for his daughter Cassie.
2. Bruce plans a Going Out of Business Sale for June, since he will be closing the business for a month-long vacation in July. He plans to reopen August 1 and will continue operating Buddy's Foreign Automotive indefinitely.
3. Buddy received a shipment of tools from Ontario, Canada. The invoice was stated in Canadian dollars.
4. Sandy Lane paid $1,500 for a major repair services. The amount was recorded as revenue. The parts for the repair must be ordered from overseas and the service won't be complete until the following month.

Accepted Answer

1. Business entity assumption. Buddy sho

Question 5

A corporation is:

Accepted Answer

A)  A business legally separate from its owners. 
B)  The same as a limited liability partnership. 
C)  Controlled by the FASB. 
D)  Not subject to double taxation. 
E)  Not responsible for its own acts and own debts. 
A)  A business legally separate from its owners. 
B)  The same as a limited liability partnership. 
C)  Controlled by the FASB. 
D)  Not subject to double taxation. 
E)  Not responsible for its own acts and own debts.

Question 6

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Accepted Answer

A)  Decreased $156,000. 
B)  Increased $89,000. 
C)  Decreased $22,000. 
D)  Increased $22,000. 
E)  Increased $156,000. 
A)  Decreased $156,000. 
B)  Increased $89,000. 
C)  Decreased $22,000. 
D)  Increased $22,000. 
E)  Increased $156,000.

Question 7

For each of the following transactions, identify the effects as reflected in the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively. Part A has been completed as an example.
 $$\begin{array} {| c | l | l | l |} 
\hline\text { a. } & \begin{array} { l } 
\text { L. Chester invested \$100,000 in a sole } \
\text { proprietor ship }
\end{array} & + \text { A } & + \mathrm { E } \
\hline \text { b. } & \begin{array} { l } 
\text { Land was purchased for \$50,000. } \
\text { A down payment of \$15,000 cash was } \
\text { made and a note was signed for the } \
\text { balance. }
\end{array} & & \
\hline \text { c. } & \begin{array} { l } 
\text { Services were rendered to customers for } \
\text { cash } 
\end{array} & & \
\hline \text { d. } & \text { A building was purchased for cash } & & \
\hline \text { e. } & \text { Supplies were purchased for cash } & & \
\hline \text { f. } & \text { Paid the offee secretary's salary. } & & \
\hline \text { g. } & \begin{array} { l } 
\text { The amount owed on the land from Part } \
\text { b) was paid. }
\end{array} & & \
\hline
\end{array}$$

Accepted Answer

a. +A +E
b. +A +L
c.

Question 8

According to the measurement (cost) principle, it is necessary for managers to report an approximation of an asset's market value upon purchase.

Accepted Answer

A) True 
 B)False

Question 9

The income statement reports on operating activities at a point in time.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Describe the three important guidelines for revenue recognition.

Accepted Answer

The three important guidelines for reven

Question 12

The accounts of Mason Company at the end of the past year report the following amounts:
 $$\begin{array} { l r } 
\text { Accounts } & \text { Amount } \
\hline \text { Owner Withdrawals, G. Mason } \ldots \ldots & \$ 15,500 \
\text { Revenues } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 97,000 \
\text { Expenses } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 43,800 \
\text { Owner investments } \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 2,000
\end{array}$$ If the beginning equity for the year was $173,000, calculate the ending equity for Mason Company.

Accepted Answer

The answer of The accounts of Mason Company at the...

Question 13

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

Accepted Answer

A)  Accounts receivable. 
B)  Notes payable. 
C)  Wages payable. 
D)  Accounts payable. 
E)  Taxes payable. 
A)  Accounts receivable. 
B)  Notes payable. 
C)  Wages payable. 
D)  Accounts payable. 
E)  Taxes payable.

Question 14

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Accepted Answer

A) True 
 B)False

Question 15

If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation during the first month?

Accepted Answer

A)  Liabilities would decrease $700 and equity would increase $700. 
B)  Assets would increase $700 and equity would increase $700. 
C)  Assets would decrease $700 and equity would increase $700. 
D)  Assets would increase $700 and equity would decrease $700. 
E)  Assets would decrease $700 and liabilities would decrease $700. 
A)  Liabilities would decrease $700 and equity would increase $700. 
B)  Assets would increase $700 and equity would increase $700. 
C)  Assets would decrease $700 and equity would increase $700. 
D)  Assets would increase $700 and equity would decrease $700. 
E)  Assets would decrease $700 and liabilities would decrease $700.

Question 16

The owner's claim on assets, also known as net assets, is called ________.

Accepted Answer

The answer of The owner's claim on assets, also known...

Question 17

The revenue recognition principle:

Accepted Answer

A)  Provides guidance on when a company must recognize revenue. 
B)  Prescribes that a company record the expenses it incurred to generate the revenue reported. 
C)  Prescribes that a company report the details behind financial statements that would impact users' decisions. 
D)  Prescribes that accounting information is based on actual cost. 
E)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
A)  Provides guidance on when a company must recognize revenue. 
B)  Prescribes that a company record the expenses it incurred to generate the revenue reported. 
C)  Prescribes that a company report the details behind financial statements that would impact users' decisions. 
D)  Prescribes that accounting information is based on actual cost. 
E)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Question 18

Return on assets is useful in evaluating management, analyzing and forecasting profits, and planning activities.

Accepted Answer

A) True 
 B)False

Question 19

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?

Accepted Answer

A)  Assets increase by $75,000 and liabilities increase by $75,000. 
B)  Liabilities increase by $75,000 and expenses decrease by $75,000. 
C)  Assets increase by $75,000 and expenses decrease by $75,000. 
D)  Assets increase by $75,000 and expenses increase by $75,000. 
E)  Assets decrease by $75,000 and expenses decrease by $75,000. 
A)  Assets increase by $75,000 and liabilities increase by $75,000. 
B)  Liabilities increase by $75,000 and expenses decrease by $75,000. 
C)  Assets increase by $75,000 and expenses decrease by $75,000. 
D)  Assets increase by $75,000 and expenses increase by $75,000. 
E)  Assets decrease by $75,000 and expenses decrease by $75,000.

Question 20

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of owner's equity as of August 31 of the current year?

Accepted Answer

A)  $12,100. 
B)  $49,100. 
C)  $30,900. 
D)  $10,900. 
E)  $32,100. 
A)  $12,100. 
B)  $49,100. 
C)  $30,900. 
D)  $10,900. 
E)  $32,100.

Exam 1: Accounting in Business

________ are the increases in equity from a company's sales of products and services to customers.

The statement of cash flows identifies cash flows separated into operating, investing, and financing activities over a period of time.

Resources such as cash removed from the business by the business owner for personal use are called ________.

A corporation is:

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

According to the measurement (cost) principle, it is necessary for managers to report an approximation of an asset's market value upon purchase.

The income statement reports on operating activities at a point in time.

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

Describe the three important guidelines for revenue recognition.

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

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation during the first month?

The owner's claim on assets, also known as net assets, is called ________.

The revenue recognition principle:

Return on assets is useful in evaluating management, analyzing and forecasting profits, and planning activities.

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of owner's equity as of August 31 of the current year?

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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