Question 1

A business can be organized as a sole proprietorship,partnership,corporation,or limited-liability company (LLC).

Accepted Answer

A) True 
 B)False

Question 2

Felix Company has just completed operations for the year ended December 31,2016.This is the second year of operations for the company.The following data have been assembled for the business.
   
Prepare the balance sheet.Use a proper heading.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& ** Calculation of Capital:

Question 3

Which of the following is the correct order of preparation of financial statements?

Accepted Answer

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

Question 4

Which of the following financial statements reports expenses in decreasing order of their amounts,by stating the largest expense first?

Accepted Answer

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

Question 5

Zetom Company receives a bill from one of its suppliers for services received and will pay the supplier next month.How does the receipt of the bill from the supplier affect the accounting equation of Zetom?

Accepted Answer

A) assets and equity decrease 
B) liabilities increase and equity decreases 
C) assets and liabilities increase 
D) liabilities and equity increase 
A) assets and equity decrease 
B) liabilities increase and equity decreases 
C) assets and liabilities increase 
D) liabilities and equity increase

Question 6

Which of the following is shown on the balance sheet as well as the statement of cash flows?

Accepted Answer

A) Owner's equity (ending balance) 
B) Net income 
C) Total assets (ending balance) 
D) Cash (ending balance) 
A) Owner's equity (ending balance) 
B) Net income 
C) Total assets (ending balance) 
D) Cash (ending balance)

Question 7

The four types of events that affect equity are owner's contributions,owner's withdrawals,revenues,and expenses.

Accepted Answer

A) True 
 B)False

Question 8

Glendale Company had the following transactions in August:
Earned $5,000 of revenues on account;collected $2,000 from a customer for services provided last month;incurred $500 of repair expense and paid cash;paid $300 for rent that it owed from the previous month.
What is the net income in August?

Accepted Answer

A) $500 
B) $2,000 
C) $6,500 
D) $4,500 
A) $500 
B) $2,000 
C) $6,500 
D) $4,500

Question 9

The income statement presents a summary of an entity's revenues and expenses for a period of time.Which of the following statements is true of an income statement?

Accepted Answer

A) There is net income when total expenses are greater than total revenues. 
B) There is a net loss when total expenses are less than total revenue. 
C) There is a net loss when total expenses are greater than total liabilities. 
D) There is net income when total revenues are greater than total expenses. 
A) There is net income when total expenses are greater than total revenues. 
B) There is a net loss when total expenses are less than total revenue. 
C) There is a net loss when total expenses are greater than total liabilities. 
D) There is net income when total revenues are greater than total expenses.

Question 10

The income statement shows whether or not a business can generate enough cash to pay its liabilities.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a major reason why corporate ownership is popular in the United States?

Accepted Answer

A) Stockholders have limited liability for the debts of the corporation. 
B) Most corporations are small- or medium-sized. 
C) The life of a corporation is limited by the death of the owner. 
D) A corporation is usually managed by the owners. 
A) Stockholders have limited liability for the debts of the corporation. 
B) Most corporations are small- or medium-sized. 
C) The life of a corporation is limited by the death of the owner. 
D) A corporation is usually managed by the owners.

Question 12

The taxable income of a sole proprietorship is ________.

Accepted Answer

A) combined with the personal income of the proprietor 
B) not combined with the proprietor's personal income 
C) not taxable 
D) handled similarly to that of a corporation 
A) combined with the personal income of the proprietor 
B) not combined with the proprietor's personal income 
C) not taxable 
D) handled similarly to that of a corporation

Question 13

International Financial Reporting Standards (IFRS)is the main U.S.accounting rule book and is currently created and governed by the Financial Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 14

The Sarbanes-Oxley Act (SOX)________.

Accepted Answer

A) requires independent accountants to take responsibility for the accuracy and completeness of the financial reports 
B) created the SEC 
C) ensures that financial scandals will no longer occur 
D) requires companies to take responsibility for the accuracy and completeness of their financial reports 
A) requires independent accountants to take responsibility for the accuracy and completeness of the financial reports 
B) created the SEC 
C) ensures that financial scandals will no longer occur 
D) requires companies to take responsibility for the accuracy and completeness of their financial reports

Question 15

Which of the following financial statements reports cash receipts and cash payments during a period of time?

Accepted Answer

A) Statement of cash flows 
B) Balance sheet 
C) Cash receipts budget 
D) Statement of owner's equity 
A) Statement of cash flows 
B) Balance sheet 
C) Cash receipts budget 
D) Statement of owner's equity

Question 16

________ are professional accountants who serve the general public,not one particular company.

Accepted Answer

A) Certified public accountants 
B) Certified financial accountants 
C) Audit accountants 
D) Controllers 
A) Certified public accountants 
B) Certified financial accountants 
C) Audit accountants 
D) Controllers

Question 17

Which of the following statements,regarding International Financial Reporting Standards (IFRS),is correct?

Accepted Answer

A) International Financial Reporting Standards are issued by the Financial Accounting Standards Board. 
B) The Securities and Exchange Commission is the private organization that oversees the creation and governance of International Financial Reporting Standards. 
C) International Financial Reporting Standards represent a set of global accounting standards that are generally more specific and based less on principle than U.S.Generally Accepted Accounting Principles. 
D) Companies who are incorporated in or do significant business in another country might be required to publish financial statements using International Financial Reporting Standards. 
A) International Financial Reporting Standards are issued by the Financial Accounting Standards Board. 
B) The Securities and Exchange Commission is the private organization that oversees the creation and governance of International Financial Reporting Standards. 
C) International Financial Reporting Standards represent a set of global accounting standards that are generally more specific and based less on principle than U.S.Generally Accepted Accounting Principles. 
D) Companies who are incorporated in or do significant business in another country might be required to publish financial statements using International Financial Reporting Standards.

Question 18

Business owners use accounting information to set goals,evaluate progress toward those goals,and make adjustments when needed.

Accepted Answer

A) True 
 B)False

Question 19

As per the economic entity assumption,an organization and its owners should be seen as the same entity.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements best defines financial statements?

Accepted Answer

A) Financial statements are the information systems that record monetary and nonmonetary business transactions. 
B) Financial statements are the verbal statements made to business news organizations by chief financial officers. 
C) Financial statements are documents that report on a business in monetary terms,providing information to help people make informed business decisions. 
D) Financial statements are plans and forecasts for future time periods based on information from past financial periods. 
A) Financial statements are the information systems that record monetary and nonmonetary business transactions. 
B) Financial statements are the verbal statements made to business news organizations by chief financial officers. 
C) Financial statements are documents that report on a business in monetary terms,providing information to help people make informed business decisions. 
D) Financial statements are plans and forecasts for future time periods based on information from past financial periods.

Exam 1: Accounting and the Business Environment

A business can be organized as a sole proprietorship,partnership,corporation,or limited-liability company (LLC).

Felix Company has just completed operations for the year ended December 31,2016.This is the second year of operations for the company.The following data have been assembled for the business. Prepare the balance sheet.Use a proper heading.

Which of the following is the correct order of preparation of financial statements?

Which of the following financial statements reports expenses in decreasing order of their amounts,by stating the largest expense first?

Zetom Company receives a bill from one of its suppliers for services received and will pay the supplier next month.How does the receipt of the bill from the supplier affect the accounting equation of Zetom?

Which of the following is shown on the balance sheet as well as the statement of cash flows?

The four types of events that affect equity are owner's contributions,owner's withdrawals,revenues,and expenses.

Glendale Company had the following transactions in August: Earned $5,000 of revenues on account;collected $2,000 from a customer for services provided last month;incurred $500 of repair expense and paid cash;paid $300 for rent that it owed from the previous month. What is the net income in August?

The income statement presents a summary of an entity's revenues and expenses for a period of time.Which of the following statements is true of an income statement?

The income statement shows whether or not a business can generate enough cash to pay its liabilities.

Which of the following is a major reason why corporate ownership is popular in the United States?

The taxable income of a sole proprietorship is ________.

International Financial Reporting Standards (IFRS)is the main U.S.accounting rule book and is currently created and governed by the Financial Accounting Standards Board.

The Sarbanes-Oxley Act (SOX)________.

Which of the following financial statements reports cash receipts and cash payments during a period of time?

________ are professional accountants who serve the general public,not one particular company.

Which of the following statements,regarding International Financial Reporting Standards (IFRS),is correct?

Business owners use accounting information to set goals,evaluate progress toward those goals,and make adjustments when needed.

As per the economic entity assumption,an organization and its owners should be seen as the same entity.

Which of the following statements best defines financial statements?

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

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