Question 1

Collection of a $1500 Accounts Receivable

Accepted Answer

A)  increases an asset $1500; decreases an asset $1500. 
B)  increases an asset $1500; decreases a liability $1500. 
C)  decreases a liability $1500; increases owner's equity $1500. 
D)  decreases an asset $1500; decreases a liability $1500.

Question 2

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

Accepted Answer

A)  Identification. 
B)  Communication. 
C)  Recording. 
D)  Analysis.

Question 3

In the owner's equity statement revenues are listed first followed by expenses and net income (or net loss).

Accepted Answer

A) True 
 B)False

Question 4

Match the following external users of financial accounting information with the type of decision that user will make with the information. a. Creditor
b. Investor
c. Regulatory Agency
d Internal Revenue Service
$\underline{\quad\quad}$(1) Is the company operating within prescribed guidelines?
$\underline{\quad\quad}$(2) Is the company complying with tax laws?
$\underline{\quad\quad}$(3) Is the company able to pay its debts?
$\underline{\quad\quad}$(4) Is the company a good investment?

Accepted Answer

The answer of Match the following external users of financial...

Question 5

Use the following information to calculate for the year ended December 31 2016 (a) net income (b) ending owner's equity and (c) total assets. $$\begin{array} { l r l r } 
\text { Supplies } & \$ 3,000 & \text { Revenues } & \$ 25,000 \
\text { Operating expenses } & 11,000 & \text { Cash } & 15,000 \
\text { Accounts payable } & 9,000 & \text { Drawings } & 1,000 \
\text { Accounts receivable } & 3,000 & \text { Notes payable } & 2,000 \
\text { Beginning Capital } & 5,000 & \text { Equipment } & 8,000
\end{array}$$
-Listed below in alphabetical order are the balance sheet items of Middleton Company at December 31 2016. Prepare a balance sheet and include a complete heading. $\begin{array}{lr}
\text { Accounts payable } & \$ 21,000 \
\text { Accounts receivable } & 15,000 \
\text { Buildings } & 91,000 \
\text { Cash } & 6,000 \
\text { Equipment } & 17,000 \
\text { Owner's Capital } & 108,000
\end{array}$

Accepted Answer

The answer of Use the following information to calculate for...

Question 6

The accounting process is correctly sequenced as

Accepted Answer

A)  identification communication recording. 
B)  recording communication identification. 
C)  identification recording communication. 
D)  communication recording identification.

Question 7

Owner's equity is decreased by

Accepted Answer

A)  assets. 
B)  revenues. 
C)  expenses. 
D)  liabilities.

Question 8

Mirah Company compiled the following financial information as of December 31 2016: $$\begin{array} { l r } 
\text { Revenues } & \$ 340,000 \
\text { Owner's Capital (1/1/16) } & 140,000 \
\text { Equipment } & 80,000 \
\text { Expenses } & 240,000 \
\text { Cash } & 90,000 \
\text { Owner's Drawings } & 20,000 \
\text { Supplies } & 20,000 \
\text { Accounts payable } & 40,000 \
\text { Accounts receivable } & 70,000
\end{array}$$ Mirah's owner's equity on December 31 2016 is

Accepted Answer

A)  $100000. 
B)  $140000. 
C)  $220000. 
D)  $260000.

Question 9

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

Accepted Answer

A) True 
 B)False

Question 10

If total liabilities decreased by $40000 and owner's equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

Accepted Answer

A)  $50000 decrease 
B)  $10000 decrease 
C)  $10000 increase 
D)  $50000 increase

Question 11

A partnership must have more than one owner.

Accepted Answer

A) True 
 B)False

Question 12

Martha Innocenzi Ito began the Innocenzi Company by investing $75000 of cash in the business. The company recorded revenues of $555000 expenses of $410000 and had owner drawings of $30000. What was Innocenzi's net income for the year?

Accepted Answer

A)  $115000. 
B)  $145000. 
C)  $175000. 
D)  $190000.

Question 13

Which of the following is not a reason one set of international accounting standards are needed?

Accepted Answer

A)  Multinational corporations. 
B)  Financial markets. 
C)  Information technology. 
D)  All of these answer choices are correct.

Question 14

The basic accounting equation may be expressed as

Accepted Answer

A)  Assets = Equities. 
B)  Assets - Liabilities = Owner's Equity. 
C)  Assets = Liabilities + Owner's Equity. 
D)  All of these answer choices are correct..

Question 15

If total liabilities increased by $9000 during a period of time and owner's equity decreased by $25000 during the same period then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

Accepted Answer

A)  $34000 decrease. 
B)  $16000 decrease. 
C)  $16000 increase. 
D)  $34000 increase.

Question 16

On June 1 2016 Secretly Canadian Company prepared a balance sheet that shows the following: $\begin{array}{lrr}
  \text {Assets (no cash)   } &\$100,000\
 \text { Liabilities. } &45,000\
 \text {  Owner's Equity } &55,000
\end{array}$
 Shortly thereafter all of the assets were sold for cash. How would the balance sheet appear immediately after the sale of the assets for cash for each of the following cases? $\begin{array}{lcccc}
&\text { Cash Received for }&\text { Balances Immediately After Sale }\
&\text { the Assets }&\text { Assets }- &\text { Liabilities }=&\text { Owner's Equity }\
 \text { Cash A } & \$ 110,000 & \$\underline{\quad\quad}&\$\underline{\quad\quad}&\$ \underline{\quad\quad}\
\text { Cash B } & 100,000 &\underline{\quad\quad} &\underline{\quad\quad}&\underline{\quad\quad} \
\text { Cash C } &90,000
\end{array}$

Accepted Answer

The answer of On June 1 2016 Secretly Canadian Company...

Question 17

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that

Accepted Answer

A)  they are both governmental agencies. 
B)  the SEC is a private organization of accountants. 
C)  the SEC often mandates guidelines when no accounting principles exist. 
D)  the SEC and FASB rarely cooperate in developing accounting standards.

Question 18

If an owner makes a withdrawal of cash from a proprietorship then

Accepted Answer

A)  there has been a violation of accounting principles. 
B)  owner's equity will increase. 
C)  owner's equity will decrease. 
D)  there will be a new liability showing the owner owes money to the business.

Question 19

Balance sheet amounts as of December 31 2016 for K-12 Tutoring Service are listed below. Prepare a balance sheet in good form. $\begin{array} { l r } 
\text { Accounts Payable } & \$ 300 \
\text { Accounts Receivable } & 1,000 \
\text { Cash } & 500 \
\text { Owner's Capital } & ?
\end{array}$

Accepted Answer

The answer of Balance sheet amounts as of December 31...

Question 20

Alicia Keyes Company began the year with owner's equity of $280000. During the year the company recorded revenues of $375000 expenses of $265000 and had owner drawings of $30000. What was Alicia Keyes' owner's equity at the end of the year?

Accepted Answer

A)  $280000. 
B)  $360000. 
C)  $390000. 
D)  $420000.

Exam 1: Accounting in Action

Collection of a $1500 Accounts Receivable

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

In the owner's equity statement revenues are listed first followed by expenses and net income (or net loss).

The accounting process is correctly sequenced as

Owner's equity is decreased by

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

If total liabilities decreased by $40000 and owner's equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

A partnership must have more than one owner.

Martha Innocenzi Ito began the Innocenzi Company by investing $75000 of cash in the business. The company recorded revenues of $555000 expenses of $410000 and had owner drawings of $30000. What was Innocenzi's net income for the year?

Which of the following is not a reason one set of international accounting standards are needed?

The basic accounting equation may be expressed as

If total liabilities increased by $9000 during a period of time and owner's equity decreased by $25000 during the same period then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that

If an owner makes a withdrawal of cash from a proprietorship then

Balance sheet amounts as of December 31 2016 for K-12 Tutoring Service are listed below. Prepare a balance sheet in good form. $\begin{array} { l r } \text { Accounts Payable } & \$ 300 \\\text { Accounts Receivable } & 1,000 \\\text { Cash } & 500 \\\text { Owner's Capital } & ?\end{array}$

Alicia Keyes Company began the year with owner's equity of $280000. During the year the company recorded revenues of $375000 expenses of $265000 and had owner drawings of $30000. What was Alicia Keyes' owner's equity at the end of the year?