Question 1

Net income is another term for revenues.

Accepted Answer

A) True 
 B)False

Question 2

Liquidity means not having enough funds on hand to pay debts when they fall due.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is legally a separate entity from its owner(s)?

Accepted Answer

A) Sole proprietorship only 
B) Sole proprietorship and partnership only 
C) Corporation only 
D) Partnership only 
A) Sole proprietorship only 
B) Sole proprietorship and partnership only 
C) Corporation only 
D) Partnership only

Question 4

A company's ability to attract and hold investment capital ultimately depends on its

Accepted Answer

A) budgeting. 
B) planning. 
C) liquidity. 
D) profitability. 
A) budgeting. 
B) planning. 
C) liquidity. 
D) profitability.

Question 5

Objectivity is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant.

Accepted Answer

A) True 
 B)False

Question 6

Explain why each of the following persons or groups would be interested in seeing the financial statements of a company.Also state whether each has a direct or indirect financial interest.
a.Potential investor
b.Internal Revenue Service
c.A labor union
d.Securities and Exchange Commission
e.Potential creditor
f.Management
g.Economic planners

Accepted Answer

a.To help determine if the prospects for

Question 7

Accountants focus on the needs for financial information by both internal and external decision makers.

Accepted Answer

A) True 
 B)False

Question 8

The obligation to provide services to another entity is a type of liability.

Accepted Answer

A) True 
 B)False

Question 9

Garcia Company's owner's equity equals one-half of the company's total assets.The company's liabilities are $140,000.What is the amount of the company's owner's equity?

Accepted Answer

Assets = Liabilities + Equity

Question 10

A proper heading for the income statement could include "For the Year Ended December 31,20--."

Accepted Answer

A) True 
 B)False

Question 11

The heading for a balance sheet might include the line "For the Month Ended December 31,20--."

Accepted Answer

A) True 
 B)False

Question 12

Fraudulent financial reporting at Enron resulted in

Accepted Answer

A) thousands of people losing their jobs. 
B) thousands of people losing their pensions and investment incomes. 
C) prison sentences and fines for corporate executives. 
D) all of these choices. 
A) thousands of people losing their jobs. 
B) thousands of people losing their pensions and investment incomes. 
C) prison sentences and fines for corporate executives. 
D) all of these choices.

Question 13

The terms "bookkeeping" and "accounting" are not synonymous.

Accepted Answer

A) True 
 B)False

Question 14

List five possible users of a set of financial statements and state what each would be interested in learning from its review.

Accepted Answer

Possible users and their reasons for int

Question 15

Which of the following items has no effect on owner's equity?

Accepted Answer

A) Receipt of cash owed to the business (accounts receivable) 
B) Sale of a service 
C) Payment of an expense 
D) Withdrawal by the owner 
A) Receipt of cash owed to the business (accounts receivable) 
B) Sale of a service 
C) Payment of an expense 
D) Withdrawal by the owner

Question 16

Which of the following is an example of an investing activity?

Accepted Answer

A) Purchasing a building 
B) Paying off a loan 
C) Employing workers 
D) Producing goods and services 
A) Purchasing a building 
B) Paying off a loan 
C) Employing workers 
D) Producing goods and services

Question 17

The net income figure appears in all the following financial statements except the

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 18

The Securities and Exchange Commission is an accounting information user with an indirect financial interest.

Accepted Answer

A) True 
 B)False

Question 19

Newberry Company's owner's equity equals one-fourth of the company's total assets.The company's liabilities are $309,000.What is the amount of the company's owner's equity?

Accepted Answer

Assets = Liabilities + Equity

Question 20

Which four types of transactions affect owner's equity,and how do they affect it?

Accepted Answer

Revenues and owner investments

Exam 1: Accounting Principles and the Financial Statements

Net income is another term for revenues.

Liquidity means not having enough funds on hand to pay debts when they fall due.

Which of the following is legally a separate entity from its owner(s)?

A company's ability to attract and hold investment capital ultimately depends on its

Objectivity is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant.

Accountants focus on the needs for financial information by both internal and external decision makers.

The obligation to provide services to another entity is a type of liability.

Garcia Company's owner's equity equals one-half of the company's total assets.The company's liabilities are $140,000.What is the amount of the company's owner's equity?

A proper heading for the income statement could include "For the Year Ended December 31,20--."

The heading for a balance sheet might include the line "For the Month Ended December 31,20--."

Fraudulent financial reporting at Enron resulted in

The terms "bookkeeping" and "accounting" are not synonymous.

List five possible users of a set of financial statements and state what each would be interested in learning from its review.

Which of the following items has no effect on owner's equity?

Which of the following is an example of an investing activity?

The net income figure appears in all the following financial statements except the

The Securities and Exchange Commission is an accounting information user with an indirect financial interest.

Newberry Company's owner's equity equals one-fourth of the company's total assets.The company's liabilities are $309,000.What is the amount of the company's owner's equity?

Which four types of transactions affect owner's equity,and how do they affect it?

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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