Question 1

The statement of cash flows informs users about how much of the earnings were kept and reinvested in the company.

Accepted Answer

A) True 
 B)False

Question 2

Venus,Inc.paid $5,000 on accounts payable.How does this transaction affect the accounting equation of Venus?

Accepted Answer

A) assets decrease by $5,000 and equity increases by $5,000 
B) assets decrease by $5,000 and liabilities decrease by $5,000 
C) assets increase by $5,000 and equity decreases by $5,000 
D) assets increase by $5,000 and liabilities increase by $5,000 
A) assets decrease by $5,000 and equity increases by $5,000 
B) assets decrease by $5,000 and liabilities decrease by $5,000 
C) assets increase by $5,000 and equity decreases by $5,000 
D) assets increase by $5,000 and liabilities increase by $5,000

Question 3

Equity increases when revenues are earned.

Accepted Answer

A) True 
 B)False

Question 4

Owner's contributions to a business are referred to as owner's capital.

Accepted Answer

A) True 
 B)False

Question 5

For each user of accounting information,identify if the user would use financial accounting (FA)or managerial accounting (MA).

Accepted Answer

The answer of For each user of accounting information,identify if...

Question 6

________ represent the right to receive cash in the future from customers for goods sold or for services performed.

Accepted Answer

A) Accounts Receivable 
B) Accounts Payable 
C) Equity 
D) Expenses 
A) Accounts Receivable 
B) Accounts Payable 
C) Equity 
D) Expenses

Question 7

Investors primarily use managerial accounting information for decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 8

The formation of a partnership firm requires a minimum of ________.

Accepted Answer

A) four partners 
B) three partners 
C) one partner 
D) two partners 
A) four partners 
B) three partners 
C) one partner 
D) two partners

Question 9

The balance of owner's equity at the beginning of the year and the end of the year was $40,000 and $63,000,respectively.The company received no new contributions during the year.Owner's withdrawals were $20,000.What was the net income or loss for the year?

Accepted Answer

A) net income of $83,000 
B) net loss of $83,000 
C) net loss of $43,000 
D) net income of $43,000 
A) net income of $83,000 
B) net loss of $83,000 
C) net loss of $43,000 
D) net income of $43,000

Question 10

Financial analysts perform reviews of companies to ensure compliance to rules and regulations.

Accepted Answer

A) True 
 B)False

Question 11

The Public Company Accounting Oversight Board is a watchdog agency that monitors the work of independent accountants who audit public companies.

Accepted Answer

A) True 
 B)False

Question 12

The field of accounting that focuses on providing information for external decision makers is ________.

Accepted Answer

A) managerial accounting 
B) financial accounting 
C) cost accounting 
D) nonmonetary accounting 
A) managerial accounting 
B) financial accounting 
C) cost accounting 
D) nonmonetary accounting

Question 13

The balance sheet is a snapshot of the entity.Which of the following is included on the balance sheet?

Accepted Answer

A) Revenues 
B) Expenses 
C) Assets 
D) Owner's withdrawals 
A) Revenues 
B) Expenses 
C) Assets 
D) Owner's withdrawals

Question 14

Which of the following financial statements lists the entity's assets,liabilities,and stockholders' equity as of a specific date?

Accepted Answer

A) Balance sheet 
B) Statement of owner's equity 
C) Income statement 
D) Statement of cash flows 
A) Balance sheet 
B) Statement of owner's equity 
C) Income statement 
D) Statement of cash flows

Question 15

Corporations pay their own income tax on corporate income.Stockholders pay personal income tax on the dividends received from corporations.This is an example of ________.

Accepted Answer

A) double taxation 
B) indefinite life 
C) personal liability 
D) a limited-liability company 
A) double taxation 
B) indefinite life 
C) personal liability 
D) a limited-liability company

Question 16

A lawyer provides legal services for clients who do not pay immediately.There is no effect on the counting equation until the client pays for the services.

Accepted Answer

A) True 
 B)False

Question 17

A corporation has which of the following sets of characteristics?

Accepted Answer

A) subject to personal liability,not a separate taxable entity,terminates at the stockholder's death 
B) not taxed,two or more owners,an alternative organizational form to partnerships 
C) taxed on earnings,subject to personal liability,used primarily by professional organizations 
D) one or more stockholders,indefinite life,no personal liability 
A) subject to personal liability,not a separate taxable entity,terminates at the stockholder's death 
B) not taxed,two or more owners,an alternative organizational form to partnerships 
C) taxed on earnings,subject to personal liability,used primarily by professional organizations 
D) one or more stockholders,indefinite life,no personal liability

Question 18

Marsh Supply Services paid $350 cash to a materials supplier,the amount owed from the previous month.Which of the following accounts decreases?

Accepted Answer

A) Accounts Receivable 
B) Accounts Payable 
C) Owner's Capital 
D) Office Supplies 
A) Accounts Receivable 
B) Accounts Payable 
C) Owner's Capital 
D) Office Supplies

Question 19

The heading of a balance sheet will show the date as a specific date,not a period of time.

Accepted Answer

A) True 
 B)False

Question 20

Genity Company records business transactions in dollars and disregards changes in the value of a dollar over time.Which of the following accounting assumptions does this represent?

Accepted Answer

A) economic entity assumption 
B) going concern assumption 
C) accounting period assumption 
D) monetary unit assumption 
A) economic entity assumption 
B) going concern assumption 
C) accounting period assumption 
D) monetary unit assumption

Exam 1: Accounting and the Business Environment

The statement of cash flows informs users about how much of the earnings were kept and reinvested in the company.

Venus,Inc.paid $5,000 on accounts payable.How does this transaction affect the accounting equation of Venus?

Equity increases when revenues are earned.

Owner's contributions to a business are referred to as owner's capital.

For each user of accounting information,identify if the user would use financial accounting (FA)or managerial accounting (MA).

________ represent the right to receive cash in the future from customers for goods sold or for services performed.

Investors primarily use managerial accounting information for decision-making purposes.

The formation of a partnership firm requires a minimum of ________.

The balance of owner's equity at the beginning of the year and the end of the year was $40,000 and $63,000,respectively.The company received no new contributions during the year.Owner's withdrawals were $20,000.What was the net income or loss for the year?

Financial analysts perform reviews of companies to ensure compliance to rules and regulations.

The Public Company Accounting Oversight Board is a watchdog agency that monitors the work of independent accountants who audit public companies.

The field of accounting that focuses on providing information for external decision makers is ________.

The balance sheet is a snapshot of the entity.Which of the following is included on the balance sheet?

Which of the following financial statements lists the entity's assets,liabilities,and stockholders' equity as of a specific date?

Corporations pay their own income tax on corporate income.Stockholders pay personal income tax on the dividends received from corporations.This is an example of ________.

A lawyer provides legal services for clients who do not pay immediately.There is no effect on the counting equation until the client pays for the services.

A corporation has which of the following sets of characteristics?

Marsh Supply Services paid $350 cash to a materials supplier,the amount owed from the previous month.Which of the following accounts decreases?

The heading of a balance sheet will show the date as a specific date,not a period of time.

Genity Company records business transactions in dollars and disregards changes in the value of a dollar over time.Which of the following accounting assumptions does this represent?

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters