Question 1

The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

Accepted Answer

A) True 
 B)False

Question 2

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Accepted Answer

A)  $92,000. 
B)  $45,000. 
C)  $282,000. 
D)  $98,000. 
E)  $210,000. 
A)  $92,000. 
B)  $45,000. 
C)  $282,000. 
D)  $98,000. 
E)  $210,000.

Question 3

Match the following terms with the appropriate definition.
a. Financial accounting
b. Ethics
c. Recordkeeping
d. Internal users
e. Accounting
f. Certified Public Accountant (CPA)
g. Fraud triangle
h. Managerial accounting
i. External users
____ 1. An information and measurement system that identifies, records and communicates relevant reliable and comparable information about an organization's business activities.
____ 2. The part of accounting that involves recording transactions and events, either electronically or manually.
____ 3. Persons using accounting information who are not directly involved in running the organization.
____ 4. Persons using accounting information who are directly involved in managing and operating the organization.
____ 5. The area of accounting that serves the decision-making needs of internal users.
____ 6. The area of accounting aimed at serving external users by providing them with
general-purpose financial statements.
____ 7. Accounting specialists that have met educational and experience requirements, passed an examination and exhibit ethical characteristics to achieve a professional certification.
____ 8. Beliefs that distinguish right from wrong, considered accepted standards of good and bad behavior.
____ 9. A model that asserts the factors that must exist for a person to commit fraud.

Accepted Answer

1. E; 2. C; 3. I; 4.

Question 4

Use the following information as of December 31 to determine equity. $$\begin{array} { l r } 
\text { Cash } & \$ 57,000 \
\text { Buildings } & 175,000 \
\text { Equipment } & 206,000 \
\text { Liabilities } & 141,000
\end{array}$$

Accepted Answer

A)  $141,000. 
B)  $579,000. 
C)  $297,000. 
D)  $438,000. 
E)  $57,000. 
A)  $141,000. 
B)  $579,000. 
C)  $297,000. 
D)  $438,000. 
E)  $57,000.

Question 5

All of the following are classified as liabilities except:

Accepted Answer

A)  Wages Payable. 
B)  Accounts Payable. 
C)  Taxes Payable. 
D)  Notes Payable. 
E)  Accounts Receivable. 
A)  Wages Payable. 
B)  Accounts Payable. 
C)  Taxes Payable. 
D)  Notes Payable. 
E)  Accounts Receivable.

Question 6

If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period, did the assets of the company increase or decrease? By what amount?

Accepted Answer

Assets inc

Question 7

________ explains changes in the owner's claim on the business's assets from net income or loss, owner investments, and owner withdrawals over a period of time.

Accepted Answer

The statem

Question 8

Owner financing refers to resources contributed by creditors or lenders.

Accepted Answer

A) True 
 B)False

Question 9

A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

Accepted Answer

A) True 
 B)False

Question 10

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit. How does this transaction affect the accounting equation for Atkins?

Accepted Answer

A)  Assets would increase $1,750 and equity would increase $1,750. 
B)  Liabilities would decrease $1,750 and equity would increase $1,750. 
C)  One asset would increase $1,750 and a different asset would decrease $1,750, causing no net change in the accounting equation. 
D)  Assets would decrease $1,750 and liabilities would decrease $1,750. 
E)  Assets would increase $1,750 and liabilities would increase $1,750. 
A)  Assets would increase $1,750 and equity would increase $1,750. 
B)  Liabilities would decrease $1,750 and equity would increase $1,750. 
C)  One asset would increase $1,750 and a different asset would decrease $1,750, causing no net change in the accounting equation. 
D)  Assets would decrease $1,750 and liabilities would decrease $1,750. 
E)  Assets would increase $1,750 and liabilities would increase $1,750.

Question 11

The ________ assumption assumes that a business will continue operating indefinitely instead of being closed or sold.

Accepted Answer

The answer of The ________ assumption assumes that a business...

Question 12

All of the following are true regarding ethics except:

Accepted Answer

A)  Ethics can be difficult to apply. 
B)  Ethics are beliefs that distinguish right from wrong. 
C)  Are critical in accounting. 
D)  Ethics rules are often set for CPAs. 
E)  Ethics do not affect the operations or outcome of a company. 
A)  Ethics can be difficult to apply. 
B)  Ethics are beliefs that distinguish right from wrong. 
C)  Are critical in accounting. 
D)  Ethics rules are often set for CPAs. 
E)  Ethics do not affect the operations or outcome of a company.

Question 13

Internal operating activities include research and development, distribution, and human resources.

Accepted Answer

A) True 
 B)False

Question 14

What distinguishes liabilities from equity?

Accepted Answer

Liabilities are creditors' claims on ass

Question 15

The International Accounting Standards Board (IASB):

Accepted Answer

A)  Only applies to companies that are members of the European Union. 
B)  Is the only source of generally accepted accounting principles (GAAP). 
C)  Has the authority to impose its standards on companies around the world. 
D)  Hopes to create harmony among accounting practices of different countries to improve comparability. 
E)  Is the government group that establishes reporting requirements for companies that issue stock to the investing public. 
A)  Only applies to companies that are members of the European Union. 
B)  Is the only source of generally accepted accounting principles (GAAP). 
C)  Has the authority to impose its standards on companies around the world. 
D)  Hopes to create harmony among accounting practices of different countries to improve comparability. 
E)  Is the government group that establishes reporting requirements for companies that issue stock to the investing public.

Question 16

A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

Accepted Answer

$570,000. The Measurement (Cos

Question 17

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Accepted Answer

A)  Assets, $30,000 decrease; liabilities, $30,000 increase. 
B)  Assets, $30,000 decrease; equity $30,000 decrease. 
C)  Assets, $30,000 increase; equity, $30,000 increase. 
D)  Liabilities, $30,000 decrease; equity, $30,000 increase. 
E)  Assets, $30,000 decrease; liabilities, $30,000 decrease. 
A)  Assets, $30,000 decrease; liabilities, $30,000 increase. 
B)  Assets, $30,000 decrease; equity $30,000 decrease. 
C)  Assets, $30,000 increase; equity, $30,000 increase. 
D)  Liabilities, $30,000 decrease; equity, $30,000 increase. 
E)  Assets, $30,000 decrease; liabilities, $30,000 decrease.

Question 18

The monetary assumption:

Accepted Answer

A)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
B)  Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. 
C)  Means that we can express transactions and events in monetary, or money, units. 
D)  Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E)  Means that a business is accounted for separately from other business entities, including its owner. 
A)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
B)  Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. 
C)  Means that we can express transactions and events in monetary, or money, units. 
D)  Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E)  Means that a business is accounted for separately from other business entities, including its owner.

Question 19

The three major types of business activities are operating, financing, and investing.

Accepted Answer

A) True 
 B)False

Question 20

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Use the following information as of December 31 to determine equity. Cash \ 57,000 Buildings 175,000 Equipment 206,000 Liabilities 141,000

All of the following are classified as liabilities except:

If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period, did the assets of the company increase or decrease? By what amount?

________ explains changes in the owner's claim on the business's assets from net income or loss, owner investments, and owner withdrawals over a period of time.

Owner financing refers to resources contributed by creditors or lenders.

A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit. How does this transaction affect the accounting equation for Atkins?

The ________ assumption assumes that a business will continue operating indefinitely instead of being closed or sold.

All of the following are true regarding ethics except:

Internal operating activities include research and development, distribution, and human resources.

What distinguishes liabilities from equity?

The International Accounting Standards Board (IASB):

A parcel of land is offered for sale at $600,000, is assessed for tax purposes at $500,000, is recognized by its purchasers as easily being worth $575,000, and is sold for $570,000. At what amount should the land be recorded in the purchaser's books? What accounting principle supports your answer?

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

The monetary assumption:

The three major types of business activities are operating, financing, and investing.

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed.

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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