Question 1

Bookkeeping is the recording of transactions and events and is only part of accounting.

Accepted Answer

A) True 
 B)False  True

Question 2

The financial statement that shows the beginning balance of retained earnings; the changes in retained earnings that resulted from , net income (or net loss); dividends; 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 retained earnings. E

Question 3

How does the objectivity principle support ethical behavior?

Accepted Answer

The objectivity principle supports ethical behavior since it requires that financial information be documented by independent, unbiased evidence. Consequently, the impact of belief and opinions on the recording and reporting of business transactions and events is lessened.

Question 4

Flitter reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets:

Accepted Answer

A)   8.8%
B)   7.0%
C)   5.8%
D)   35.0%
E)   23.3%

Question 5

Risk is the uncertainty about the return we will earn.

Accepted Answer

A) True 
 B)False

Question 6

The _______________ principle requires that financial information is supported by independent, unbiased evidence.

Accepted Answer

The answer of The _______________ principle requires that financial information...

Question 7

Opportunities in accounting include auditing, consulting, market research, and tax planning.

Accepted Answer

A) True 
 B)False

Question 8

On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Accepted Answer

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

Question 9

When expenses exceed revenues, the resulting change in equity is:

Accepted Answer

A)   Net assets.
B)   Negative equity.
C)   Net loss.
D)   Net income.
E)   A liability.

Question 10

The independent group that is attempting to harmonize accounting practices of different countries is the:

Accepted Answer

A)   AICPA.
B)   IASB.
C)   CAP.
D)   SEC.
E)   FASB.

Question 11

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:

Accepted Answer

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

Question 12

An exchange of value between two entities that yields a change in the accounting equation is called:

Accepted Answer

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

Question 13

The accounts of Mason Company at the end of the past year report the following amounts:
$\begin{array}{llcc}
  \text { Accounts } &\text {Amount   } \
 \hline\text { Dividends..................} &\$15,500\
 \text {Revenues............................  } &\$79,000\
 \text {Expenses..................................  } &\$43,800\
 \text { Common stock.............. } &2,000\

\end{array}$

If the beginning equity for the year was $173,000, calculate the ending equity for Mason Company.

Accepted Answer

The answer of The accounts of Mason Company at the...

Question 14

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Accepted Answer

A)   Total assets decrease and equity increases.
B)   Both total assets and total liabilities decrease.
C)   Neither assets, total liabilities, nor equity are changed.
D)   Both total assets and equity are unchanged and liabilities increase.
E)   Total assets increase and equity decreases.

Question 15

In the partnership form of business, the owners are called stockholders.

Accepted Answer

A) True 
 B)False

Question 16

A limited partnership:

Accepted Answer

A)   Includes a general partner with unlimited liability.
B)   Is subject to double taxation.
C)   Has owners called stockholders.
D)   Is the same as a corporation.
E)   May only have two partners.

Question 17

The idea that a business will continue to operate instead of being closed or sold underlies the going-concern assumption.

Accepted Answer

A) True 
 B)False

Question 18

Match between columns
                        Premises: Borrowed money from a bank on a long-term note.
Paid employee wages.
Purchase of land.
Sale of used equipment.
Received investment from owner.
Paid utilities expenses.
Paid an amount due on a long-term bank loan.
Withdrawal of funds by stockholders.

Accepted Answer

The Answer of Financing and Operating and Investing is...

Question 19

A balance sheet lists:

Accepted Answer

A)   The types and amounts of the revenues and expenses of a business.
B)   Only the information about what happened to equity during a time period.
C)   The types and amounts of assets, liabilities, and equity of a business as of a specific date.
D)   The inflows and outflows of cash during the period.
E)   The assets and liabilities of a company but not the retained earnings.

Question 20

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.

Exam 1: Accounting in Business

Bookkeeping is the recording of transactions and events and is only part of accounting.

The financial statement that shows the beginning balance of retained earnings; the changes in retained earnings that resulted from , net income (or net loss) ; dividends; and the ending balance, is the:

How does the objectivity principle support ethical behavior?

Flitter reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets:

Risk is the uncertainty about the return we will earn.

The _______________ principle requires that financial information is supported by independent, unbiased evidence.

Opportunities in accounting include auditing, consulting, market research, and tax planning.

When expenses exceed revenues, the resulting change in equity is:

The independent group that is attempting to harmonize accounting practices of different countries is the:

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:

An exchange of value between two entities that yields a change in the accounting equation is called:

Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

In the partnership form of business, the owners are called stockholders.

A limited partnership:

The idea that a business will continue to operate instead of being closed or sold underlies the going-concern assumption.

Identify each of the following business activities into the appropriate category

A balance sheet lists:

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: