Question 1

Assets are economic resources that have no future benefits for the business.

Accepted Answer

A) True 
 B)False

Question 2

Indicate the effects on the accounting equation of the following business transactions of Smith Service Company for b)to d)below.Use proper account titles.Transaction a)is answered as a guide.
a)Received cash from the owner,Don Smith as an investment in the business.

Accepted Answer

b)Increase asset (Equipment);I

Question 3

The economic resources of a business such as furniture,building,and land are its ________.

Accepted Answer

A) liabilities 
B) revenues 
C) assets 
D) dividends 
A) liabilities 
B) revenues 
C) assets 
D) dividends

Question 4

Which of the following financial statements would be most useful if an analyst wants to know the profitability of a company?

Accepted Answer

A) income statement 
B) balance sheet 
C) statement of owner's equity 
D) statement of cash flows 
A) income statement 
B) balance sheet 
C) statement of owner's equity 
D) statement of cash flows

Question 5

Jackson Plumbing Services earned $500 by completing a job for Smith Company.The $500 earned by Jackson Plumbing Services is its ________.

Accepted Answer

A) revenue 
B) equity 
C) gain 
D) debt 
A) revenue 
B) equity 
C) gain 
D) debt

Question 6

The left side of the accounting equation measures the amount that the business owes to creditors and to the stockholders.

Accepted Answer

A) True 
 B)False

Question 7

Star Homes Company just recorded a transaction in its books.If this transaction increased the total liabilities by $10,000,then ________.

Accepted Answer

A) assets must increase,or equity must decrease by $10,000 
B) either assets or equity must decrease by $10,000 
C) both assets and equity must each decrease by $5,000 
D) assets must decrease by $10,000 
A) assets must increase,or equity must decrease by $10,000 
B) either assets or equity must decrease by $10,000 
C) both assets and equity must each decrease by $5,000 
D) assets must decrease by $10,000

Question 8

Managerial accounting focuses on information for external decision makers.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following will be categorized as a financing activity on the statement of cash flows?

Accepted Answer

A) Cash received by selling old equipment 
B) Cash paid for purchase of new machinery 
C) Cash paid for purchase of office supplies 
D) Cash received as a contribution from the owner 
A) Cash received by selling old equipment 
B) Cash paid for purchase of new machinery 
C) Cash paid for purchase of office supplies 
D) Cash received as a contribution from the owner

Question 10

Which of the following is true of assets?

Accepted Answer

A) Assets include cash,merchandise inventory,and accounts payable. 
B) Assets are something of value the business owns or controls. 
C) Assets do not need to provide future benefit to the business. 
D) Assets can be recorded at the expected cost if acquired at a bargain. 
A) Assets include cash,merchandise inventory,and accounts payable. 
B) Assets are something of value the business owns or controls. 
C) Assets do not need to provide future benefit to the business. 
D) Assets can be recorded at the expected cost if acquired at a bargain.

Question 11

Which of the following appears on both the statement of owner's equity and the balance sheet?

Accepted Answer

A) Ending capital account 
B) Total assets 
C) Total revenues 
D) Net income 
A) Ending capital account 
B) Total assets 
C) Total revenues 
D) Net income

Question 12

Equity decreases with expenses and revenues.

Accepted Answer

A) True 
 B)False

Question 13

Joshua Thomas Corporation manufactures and retails computer hardware.The president of the corporation bought a new car as a gift for his daughter and paid for it using cash from the business.Since the corporation paid for the car,it was recorded in its books as an asset.Which of the following concepts or principles of accounting did the corporation violate?

Accepted Answer

A) monetary unit assumption 
B) economic entity assumption 
C) cost principle 
D) going concern assumption 
A) monetary unit assumption 
B) economic entity assumption 
C) cost principle 
D) going concern assumption

Question 14

Which of the following statements is true of a sole proprietorship?

Accepted Answer

A) A sole proprietorship joins two or more individuals as co-owners. 
B) The sole proprietor is personally liable for the liabilities of the business. 
C) A sole proprietorship is taxed separately from the owner. 
D) A sole proprietorship has to pay business income taxes. 
A) A sole proprietorship joins two or more individuals as co-owners. 
B) The sole proprietor is personally liable for the liabilities of the business. 
C) A sole proprietorship is taxed separately from the owner. 
D) A sole proprietorship has to pay business income taxes.

Question 15

Frazier Service Company had a net income of $14,500 for the year ending December 31,2016.The total assets on January 1,2016 were $28,000.The total assets on December 31,2016 were $16,000.
Calculate Frazier's return on assets (ROA).Show your computations and label your work.Round your answer to one decimal place.

Accepted Answer

Return on Assets = Net Income

Question 16

Harris Landscaping Services incurred $500 as a labor expense and promised to pay the labor agency within 30 days.Which of the following accounts will increase as a result of this transaction?

Accepted Answer

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

Question 17

Accounting is referred to as the language of business because it is the method of communicating business information to decision makers.

Accepted Answer

A) True 
 B)False

Question 18

Johnson Company purchased land for $70,000.The president of Johnson Company believes that the land is actually worth $75,000.The land can be recorded at $75,000.

Accepted Answer

A) True 
 B)False

Question 19

Assume MetAmbit Company had a net income of $2,200 for the year ending December 2016.Its beginning and ending total assets were $34,500 and $18,500,respectively.Calculate MetAmbit's return on assets (ROA).(Round your percentage answer to two decimal places. )

Accepted Answer

A) 6.38% 
B) 11.89% 
C) 8.30% 
D) 4.15% 
A) 6.38% 
B) 11.89% 
C) 8.30% 
D) 4.15%

Question 20

Any person or business to whom a business owes money is called the business's creditor.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting and the Business Environment

Assets are economic resources that have no future benefits for the business.

Indicate the effects on the accounting equation of the following business transactions of Smith Service Company for b)to d)below.Use proper account titles.Transaction a)is answered as a guide. a)Received cash from the owner,Don Smith as an investment in the business.

The economic resources of a business such as furniture,building,and land are its ________.

Which of the following financial statements would be most useful if an analyst wants to know the profitability of a company?

Jackson Plumbing Services earned $500 by completing a job for Smith Company.The $500 earned by Jackson Plumbing Services is its ________.

The left side of the accounting equation measures the amount that the business owes to creditors and to the stockholders.

Star Homes Company just recorded a transaction in its books.If this transaction increased the total liabilities by $10,000,then ________.

Managerial accounting focuses on information for external decision makers.

Which of the following will be categorized as a financing activity on the statement of cash flows?

Which of the following is true of assets?

Which of the following appears on both the statement of owner's equity and the balance sheet?

Equity decreases with expenses and revenues.

Which of the following statements is true of a sole proprietorship?

Harris Landscaping Services incurred $500 as a labor expense and promised to pay the labor agency within 30 days.Which of the following accounts will increase as a result of this transaction?

Accounting is referred to as the language of business because it is the method of communicating business information to decision makers.

Johnson Company purchased land for $70,000.The president of Johnson Company believes that the land is actually worth $75,000.The land can be recorded at $75,000.

Assume MetAmbit Company had a net income of $2,200 for the year ending December 2016.Its beginning and ending total assets were $34,500 and $18,500,respectively.Calculate MetAmbit's return on assets (ROA).(Round your percentage answer to two decimal places. )

Any person or business to whom a business owes money is called the business's creditor.

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