Exam 1: Accounting Principles and the Financial Statements

Buying and selling goods and services are examples of operating activities.

The day-by-day accumulation of interest is considered a transaction involving an exchange of value.

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

The Sarbanes-Oxley Act orders the SEC to hold chief executives and CFOs responsible for the accuracy of their company's financial statements.

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

Which of the following transactions does not involve an exchange of value?

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

The topic of foreign exchange rates relates most closely to the concept of

Payment to a creditor is an example of a nonexchange business transaction.

At the beginning of the year,Pullman Company's assets were $270,000 and its owner's equity was $201,000.During the year,assets decreased by $35,000 and liabilities increased by $10,000.What was owner's equity at the end of the year?

An accounting measurement is concerned with all except which of the following?

Generally accepted accounting principles encompass the conventions,rules,and procedures necessary to define accepted accounting practice at a particular time.

Financial position may be assessed by referring to a balance sheet.

On the right side of the accounting equation are two types of claims against resources.Explain what they are and give an example of an item that would increase each.Which type of claim has priority?

An audit is an examination of a company's

Feldman Company had a balance of $360,000 in Saul Feldman,Capital on December 31,2013.During 2014,the company reported a net income of $48,000,and the owner withdrew $36,000 during the year,while making no additional investments.Prepare the company's statement of owner's equity for the year ended December 31,2014.

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

The evaluation and interpretation of financial statements and related performance measures is called technical analysis.

Use the following information to calculate at or for the year ended December 31,2014: (a)net income,(b)owner's capital,(c)total liabilities and owner's equity,and (d)accounts receivable.

Why would it be less risky for a wealthy individual to incorporate his or her business rather than to operate it as a sole proprietorship or partnership?