Question 1

An exchange of value between two entities is called:

Accepted Answer

A)  The accounting equation. 
B)  Recordkeeping or bookkeeping. 
C)  An external transaction. 
D)  An asset. 
E)  Net Income. 
A)  The accounting equation. 
B)  Recordkeeping or bookkeeping. 
C)  An external transaction. 
D)  An asset. 
E)  Net Income. C

Question 2

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

Accepted Answer

A)  Going-concern assumption. 
B)  Business entity assumption. 
C)  Objectivity principle. 
D)  Cost Principle. 
E)  Monetary unit assumption. 
A)  Going-concern assumption. 
B)  Business entity assumption. 
C)  Objectivity principle. 
D)  Cost Principle. 
E)  Monetary unit assumption. A

Question 3

Technology

Accepted Answer

A)  Has replaced accounting. 
B)  Has not changed the work that accountants do. 
C)  Has closely linked accounting with consulting, planning, and other financial services. 
D)  In accounting has replaced the need for decision makers. 
E)  In accounting is only available to large corporations. 
A)  Has replaced accounting. 
B)  Has not changed the work that accountants do. 
C)  Has closely linked accounting with consulting, planning, and other financial services. 
D)  In accounting has replaced the need for decision makers. 
E)  In accounting is only available to large corporations. C

Question 4

Match each of the following items 1 through 5 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement.

Accepted Answer

The answer of Match each of the following items 1...

Question 5

A net loss occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 6

The accounting equation is _____________________________.

Accepted Answer

Assets = L

Question 7

Using the accounting equation, equity is equal to _______________________.

Accepted Answer

Assets min

Question 8

Rent expense that is paid with cash appears on which of the following statements?

Accepted Answer

A)  Balance sheet. 
B)  Income statement. 
C)  Statement of changes in equity. 
D)  Income statement and statement of cash flows. 
E)  Statement of cash flows only. 
A)  Balance sheet. 
B)  Income statement. 
C)  Statement of changes in equity. 
D)  Income statement and statement of cash flows. 
E)  Statement of cash flows only.

Question 9

Decreases in equity that represent costs of assets or services used to earn revenues are called:

Accepted Answer

A)  Liabilities. 
B)  Equity. 
C)  Withdrawals. 
D)  Expenses. 
E)  Owner's Investment. 
A)  Liabilities. 
B)  Equity. 
C)  Withdrawals. 
D)  Expenses. 
E)  Owner's Investment.

Question 10

Graham Roofing Company, owned by R. Graham, began operations in May and completed the following transactions during that first month of operations. Show the effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns in the table below. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance.

Accepted Answer

The answer of Graham Roofing Company, owned by R. Graham,...

Question 11

All of the following are regarding ethics except:

Accepted Answer

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

Question 12

If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:

Accepted Answer

A)  $95,000. 
B)  $137,000. 
C)  $138,500. 
D)  $140,000. 
E)  $150,000. 
A)  $95,000. 
B)  $137,000. 
C)  $138,500. 
D)  $140,000. 
E)  $150,000.

Question 13

The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:

Accepted Answer

A)  Time-period assumption. 
B)  Business entity assumption. 
C)  Going-concern assumption. 
D)  Revenue recognition principle. 
E)  Cost principle. 
A)  Time-period assumption. 
B)  Business entity assumption. 
C)  Going-concern assumption. 
D)  Revenue recognition principle. 
E)  Cost principle.

Question 14

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:

Accepted Answer

A)  Statement of financial position. 
B)  Statement of cash flows. 
C)  Balance sheet. 
D)  Income statement. 
E)  Statement of changes in equity. 
A)  Statement of financial position. 
B)  Statement of cash flows. 
C)  Balance sheet. 
D)  Income statement. 
E)  Statement of changes in equity.

Question 15

Identify and describe the four basic financial statements:

Accepted Answer

The four basic financial statements are

Question 16

_________________ is net income divided by average total assets.

Accepted Answer

The answer of _________________ is net income divided by average...

Question 17

Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?

Accepted Answer

A)  Monetary unit assumption. 
B)  Going-concern assumption. 
C)  Cost principle. 
D)  Business entity assumption. 
E)  Matching principle. 
A)  Monetary unit assumption. 
B)  Going-concern assumption. 
C)  Cost principle. 
D)  Business entity assumption. 
E)  Matching principle.

Question 18

The accounting equation implies that: Assets + Liabilities = Equity.

Accepted Answer

A) True 
 B)False

Question 19

Owner's withdrawals are expenses.

Accepted Answer

A) True 
 B)False

Question 20

If assets are $99,000 and liabilities are $32,000, then equity equals:

Accepted Answer

A)  $32,000. 
B)  $67,000. 
C)  $99,000. 
D)  $131,000. 
E)  $198,000. 
A)  $32,000. 
B)  $67,000. 
C)  $99,000. 
D)  $131,000. 
E)  $198,000.

Exam 1: Accounting in Business

An exchange of value between two entities is called:

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

Technology

Match each of the following items 1 through 5 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement.

A net loss occurs when revenues exceed expenses.

The accounting equation is _____________________________.

Using the accounting equation, equity is equal to _______________________.

Rent expense that is paid with cash appears on which of the following statements?

Decreases in equity that represent costs of assets or services used to earn revenues are called:

All of the following are regarding ethics except:

If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:

The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:

Identify and describe the four basic financial statements:

_________________ is net income divided by average total assets.

Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?

The accounting equation implies that: Assets + Liabilities = Equity.

Owner's withdrawals are expenses.

If assets are $99,000 and liabilities are $32,000, then equity equals:

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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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