Question 1

A net profit results from having more revenues than liabilities.

Accepted Answer

A) True 
 B)False

Question 2

The entity principle states that the affairs of the owners are not part of the financial
operations of a business entity and should be separated.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements regarding liquidity and profitability is not true?

Accepted Answer

A) If a business is unable to pay its debts as they come due,it is operating unprofitably. 
B) A business may be liquid,yet operate unprofitably for several years. 
C) A business may operate profitably,yet be unable to meet its obligations. 
D) In order to survive in the long run,a business must both remain liquid and operate profitably. 
A) If a business is unable to pay its debts as they come due,it is operating unprofitably. 
B) A business may be liquid,yet operate unprofitably for several years. 
C) A business may operate profitably,yet be unable to meet its obligations. 
D) In order to survive in the long run,a business must both remain liquid and operate profitably.

Question 4

If Cash at December 31,2018,is $26,000,total owners' equity is:

Accepted Answer

A) $160,000. 
B) $366,000. 
C) $606,000. 
D) $400,000. 
A) $160,000. 
B) $366,000. 
C) $606,000. 
D) $400,000.

Question 5

A revenue transaction may result in all of the following except:

Accepted Answer

A) An increase in assets. 
B) An increase in owners' equity. 
C) A positive cash flow in either the past,present,or future. 
D) An increase in liabilities. 
A) An increase in assets. 
B) An increase in owners' equity. 
C) A positive cash flow in either the past,present,or future. 
D) An increase in liabilities.

Question 6

A balance sheet:

Accepted Answer

A) Provides owners,investors,and other interested parties with all the financial information they need to evaluate the financial strength,profitability,and future prospects of a given business entity. 
B) Shows the current market value of the owners' equity in the business at the balance sheet date. 
C) Assists creditors in evaluating the debt-paying ability of a business by showing the assets and liabilities of the business,plus the assets and liabilities of its owner (or owners). 
D) Shows the assets,liabilities,and owners' equity of a business entity,valued in conformity with generally accepted accounting principles. 
A) Provides owners,investors,and other interested parties with all the financial information they need to evaluate the financial strength,profitability,and future prospects of a given business entity. 
B) Shows the current market value of the owners' equity in the business at the balance sheet date. 
C) Assists creditors in evaluating the debt-paying ability of a business by showing the assets and liabilities of the business,plus the assets and liabilities of its owner (or owners). 
D) Shows the assets,liabilities,and owners' equity of a business entity,valued in conformity with generally accepted accounting principles.

Question 7

If cash flows from operating activities is a positive amount,then:

Accepted Answer

A) The amount will be shown on the statement of cash flows in parentheses. 
B) The company must have had a net profit for the year. 
C) The company must have paid off more debts than it earned during the year. 
D) The company may still have a decrease in the total amount of cash for the period. 
A) The amount will be shown on the statement of cash flows in parentheses. 
B) The company must have had a net profit for the year. 
C) The company must have paid off more debts than it earned during the year. 
D) The company may still have a decrease in the total amount of cash for the period.

Question 8

The amount of owners' equity in a business is not affected by:

Accepted Answer

A) The percentage of total assets held in cash. 
B) The investments made in the business by the owner. 
C) The profitability of the business. 
D) The amount of dividends paid to stockholders. 
A) The percentage of total assets held in cash. 
B) The investments made in the business by the owner. 
C) The profitability of the business. 
D) The amount of dividends paid to stockholders.

Question 9

Retained earnings is:

Accepted Answer

A) The positive cash flows of a company. 
B) The net worth of a company. 
C) The owners' equity that has accumulated as a result of profitable operations. 
D) Equal to the total assets of a company. 
A) The positive cash flows of a company. 
B) The net worth of a company. 
C) The owners' equity that has accumulated as a result of profitable operations. 
D) Equal to the total assets of a company.

Question 10

If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used in a business:

Accepted Answer

A) Total assets are increased. 
B) Total liabilities are decreased. 
C) Total assets are decreased. 
D) The owners' equity is increased. 
A) Total assets are increased. 
B) Total liabilities are decreased. 
C) Total assets are decreased. 
D) The owners' equity is increased.

Question 11

[The following information applies to the questions displayed below.]
Waldorf Co.had the following transactions during the month of October 2018:
(1)Cash received from bank loans was $60,000.
(2)Dividends of $18,500 were paid to stockholders in cash.
(3)Revenues earned and received in cash amounted to $100,500.
(4)Expenses incurred and paid were $78,000.
-What amount of net income will be reported on an income statement for the month of October?

Accepted Answer

A) $ 18,500. 
B) $ 22,500. 
C) $ 78,000. 
D) $100,500. 
A) $ 18,500. 
B) $ 22,500. 
C) $ 78,000. 
D) $100,500.

Question 12

Thirty percent of the total assets of Shanahan Corporation have been financed through borrowing.The total liabilities of the company are $600,000.What is the amount of owners' equity?

Accepted Answer

A) $ 180,000. 
B) $2,000,000. 
C) $1,400,000. 
D) $2,600,000. 
A) $ 180,000. 
B) $2,000,000. 
C) $1,400,000. 
D) $2,600,000.

Question 13

From an accounting viewpoint,when is a business considered as an entity separate from its owner(s)?

Accepted Answer

A) Only when organized as a sole proprietorship. 
B) Only when organized as a partnership. 
C) Only when organized as a corporation. 
D) A business is always considered as an accounting entity separate from the activities of the owner(s). 
A) Only when organized as a sole proprietorship. 
B) Only when organized as a partnership. 
C) Only when organized as a corporation. 
D) A business is always considered as an accounting entity separate from the activities of the owner(s).

Question 14

If Retained Earnings at December 31,2018,is $140,000,total assets amounts to:

Accepted Answer

A) $ 98,000. 
B) $377,000. 
C) $475,000. 
D) $188,000. 
A) $ 98,000. 
B) $377,000. 
C) $475,000. 
D) $188,000.

Question 15

Development of generally accepted accounting principles
(A. )What is meant by the phrase "generally accepted accounting principles"?
(B. )Explain the concept of the business entity and how it relates to generally accepted accounting principles.

Accepted Answer

(A. )Generally accepted accounting princ

Question 16

The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant's balance sheet.The reporting of this item in this manner violated the:

Accepted Answer

A) Cost principle. 
B) Business entity concept. 
C) Objectivity principle. 
D) Going-concern assumption. 
A) Cost principle. 
B) Business entity concept. 
C) Objectivity principle. 
D) Going-concern assumption.

Question 17

An expense is best defined as:

Accepted Answer

A) Any payment of cash for the benefit of the company. 
B) Past,present,or future payments of cash required to generate revenues. 
C) Past payments of cash required to generate revenues. 
D) Future payments of cash required to generate revenues. 
A) Any payment of cash for the benefit of the company. 
B) Past,present,or future payments of cash required to generate revenues. 
C) Past payments of cash required to generate revenues. 
D) Future payments of cash required to generate revenues.

Question 18

Each year,the accountant for Southern Real Estate Company adjusts the recorded value of each asset to its market value.Using these market value figures on the balance sheet violates:

Accepted Answer

A) The accounting equation. 
B) The stable-dollar assumption. 
C) The business entity concept. 
D) The cost principle. 
A) The accounting equation. 
B) The stable-dollar assumption. 
C) The business entity concept. 
D) The cost principle.

Question 19

Which of the following assets would most likely be listed last on a statement of financial position?

Accepted Answer

A) Land. 
B) Cash. 
C) Accounts receivable. 
D) Equipment. 
A) Land. 
B) Cash. 
C) Accounts receivable. 
D) Equipment.

Question 20

During the current year,the assets of Quality Stairs increased by $175,000 and the liabilities decreased by $15,000.If the owners' equity in the business is $475,000 at the end of the year,the owners' equity at the beginning of the year must have been:

Accepted Answer

A) $335,000. 
B) $285,000. 
C) $665,000. 
D) $615,000. 
A) $335,000. 
B) $285,000. 
C) $665,000. 
D) $615,000.

Exam 2: Basic Financial Statements

A net profit results from having more revenues than liabilities.

The entity principle states that the affairs of the owners are not part of the financial operations of a business entity and should be separated.

Which of the following statements regarding liquidity and profitability is not true?

If Cash at December 31,2018,is $26,000,total owners' equity is:

A revenue transaction may result in all of the following except:

A balance sheet:

If cash flows from operating activities is a positive amount,then:

The amount of owners' equity in a business is not affected by:

Retained earnings is:

If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used in a business:

Thirty percent of the total assets of Shanahan Corporation have been financed through borrowing.The total liabilities of the company are $600,000.What is the amount of owners' equity?

From an accounting viewpoint,when is a business considered as an entity separate from its owner(s)?

If Retained Earnings at December 31,2018,is $140,000,total assets amounts to:

Development of generally accepted accounting principles (A. )What is meant by the phrase "generally accepted accounting principles"? (B. )Explain the concept of the business entity and how it relates to generally accepted accounting principles.

The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant's balance sheet.The reporting of this item in this manner violated the:

An expense is best defined as:

Each year,the accountant for Southern Real Estate Company adjusts the recorded value of each asset to its market value.Using these market value figures on the balance sheet violates:

Which of the following assets would most likely be listed last on a statement of financial position?

During the current year,the assets of Quality Stairs increased by $175,000 and the liabilities decreased by $15,000.If the owners' equity in the business is $475,000 at the end of the year,the owners' equity at the beginning of the year must have been:

Accounting: Information for Decision Making

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters