Question 1

Net income results when

Accepted Answer

A)  Assets > Liabilities. 
B)  Revenues = Expenses. 
C)  Revenues > Expenses. 
D)  Revenues < Expenses.

Question 2

A service proprietorship shows five transactions summarized below. The effect of each transaction on the accounting equation is shown, and also the new balance of each item in the equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.

Accepted Answer

The answer of A service proprietorship shows five transactions summarized...

Question 3

As of December 31, 2009, Sievers Company has assets of $35,000 and owner's equity of $20,000. What are the liabilities for Sievers Company as of December 31, 2009?

Accepted Answer

A)  $15,000 
B)  $10,000 
C)  $25,000 
D)  $20,000

Question 4

Sources of increases to owner's equity are

Accepted Answer

A)  additional investments by owners. 
B)  purchases of merchandise. 
C)  withdrawals by the owner. 
D)  expenses.

Question 5

All of the following are advantages cost has over other valuations except that it

Accepted Answer

A)  is reliable. 
B)  can be objectively measured. 
C)  can be verified. 
D)  is relevant.

Question 6

The partnership form of business organization

Accepted Answer

A)  is a separate legal entity. 
B)  is a common form of organization for service-type businesses. 
C)  enjoys an unlimited life. 
D)  has limited liability.

Question 7

At September 1, the balance sheet accounts for Stanley's Restaurant were as follows:  
The following transactions occurred during the next two days:
Stanley invested an additional $22,000 cash in the business. The accounts payable were paid in full. (No payment was made on the notes payable.)
Instructions
Prepare a balance sheet at September 3, 2009.

Accepted Answer

The answer of At September 1, the balance sheet accounts...

Question 8

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

Accepted Answer

A) True 
 B)False

Question 9

Owners' claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses.

Accepted Answer

A) True 
 B)False

Question 10

Accountants do not have to worry about issues of ethics.

Accepted Answer

A) True 
 B)False

Question 11

If total liabilities increased by $14,000 during a period of time and owner's equity decreased by $6,000 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)  $14,000 increase. 
B)  $20,000 increase. 
C)  $8,000 decrease. 
D)  $8,000 increase.

Question 12

At October 1, Smithson Enterprises reported owner's equity of $35,000. During October, the owner made additional investments of $2,000 and the company earned net income of $6,000. If owner's equity at October 31 totals $40,000, what amount of owner drawings were made during the month?

Accepted Answer

A)  $0 
B)  $3,000 
C)  $4,000 
D)  $5,000

Question 13

Owner's equity is decreased by all of the following except

Accepted Answer

A)  owner's investments. 
B)  owner's withdrawals. 
C)  expenses. 
D)  owner's drawings.

Question 14

External transactions involve economic events between the company and some other enterprise or party.

Accepted Answer

A) True 
 B)False

Question 15

Use the following information for questions 144-146.
Stahl Consulting started the year with total assets of $20,000 and total liabilities of $5,000. During the year, the business recorded $16,000 in catering revenues and $8,000 in expenses. Stahl made an additional investment of $3,000 and withdrew cash of $5,000 during the year.
-The net income reported by Stahl Consulting for the year was

Accepted Answer

A)  $16,000. 
B)  $11,000. 
C)  $8,000. 
D)  $3,000.

Question 16

Compute the missing amount in each category of the accounting equation.

Accepted Answer

The answer of Compute the missing amount in each category...

Question 17

Selected transactions for Parton Company are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities, and owner's equity.
Sample: Made initial cash investment in the business.
The answer would be-Increase in assets and increase in owner's equity.
1. Paid monthly utility bill.
2. Purchased new display case for cash.
3. Paid cash for repair work on security system.
4. Billed customers for services performed.
5. Received cash from customers billed in 4.
6. Withdrew cash for owner's personal use.
7. Incurred advertising expenses on account.
8. Paid monthly rent.
9. Received cash from customers when service was rendered.

Accepted Answer

The answer of Selected transactions for Parton Company are listed...

Question 18

Determine the missing amount for each of the following.

Accepted Answer

The answer of Determine the missing amount for each of...

Question 19

A proprietorship is a business

Accepted Answer

A)  owned by one person. 
B)  owned by two or more persons. 
C)  organized as a separate legal entity under state corporation law. 
D)  owned by a governmental agency.

Question 20

All of the financial statements are for a period of time except the

Accepted Answer

A)  income statement. 
B)  owner's equity statement. 
C)  balance sheet. 
D)  statement of cash flows.

Exam 1: Accounting in Action

Net income results when

A service proprietorship shows five transactions summarized below. The effect of each transaction on the accounting equation is shown, and also the new balance of each item in the equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.

As of December 31, 2009, Sievers Company has assets of $35,000 and owner's equity of $20,000. What are the liabilities for Sievers Company as of December 31, 2009?

Sources of increases to owner's equity are

All of the following are advantages cost has over other valuations except that it

The partnership form of business organization

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

Owners' claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses.

Accountants do not have to worry about issues of ethics.

If total liabilities increased by $14,000 during a period of time and owner's equity decreased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

At October 1, Smithson Enterprises reported owner's equity of $35,000. During October, the owner made additional investments of $2,000 and the company earned net income of $6,000. If owner's equity at October 31 totals $40,000, what amount of owner drawings were made during the month?

Owner's equity is decreased by all of the following except

External transactions involve economic events between the company and some other enterprise or party.

Compute the missing amount in each category of the accounting equation.

Determine the missing amount for each of the following.

A proprietorship is a business

All of the financial statements are for a period of time except the