Question 1

If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:

Accepted Answer

A)  Assets increase $4,500 and liabilities decrease $4,500. 
B)  Equity decreases $4,500 and liabilities increase $4,500. 
C)  Liabilities decrease $4,500 and assets increase $4,500. 
D)  Assets increase $4,500 and liabilities increase $4,500. 
E)  Equity increases $4,500 and liabilities decrease $4,500.

Question 2

The income statement reports all of the following except:

Accepted Answer

A)  Revenues earned by a business. 
B)  Expenses incurred by a business. 
C)  Assets owned by a business. 
D)  Net income or loss earned by a business. 
E)  The time period over which the earnings occurred.

Question 3

Match between columns
                        Premises: Expenses.
Dividends .
Liabilities.
Cash from operating activities.
Cash from investing activities.
Assets.
Revenues.
Cash from financing activities.

Accepted Answer

The Answer of Income statement and Statement of retained earnings is...

Question 4

A partnership:

Accepted Answer

A)  Is also called a sole proprietorship. 
B)  Has unlimited liability for its partners. 
C)  Has to have a written agreement in order to be legal. 
D)  Is a legal organization separate from its owners. 
E)  Has owners called shareholders.

Question 5

All of the following are classified as liabilities except:

Accepted Answer

A)  Accounts Receivable. 
B)  Notes Payable. 
C)  Wages Payable. 
D)  Accounts Payable. 
E)  Taxes Payable.

Question 6

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and dividends to stockholders of $9,000. Calculate the ending equity.

Accepted Answer

A)  $88,000. 
B)  $25,000. 
C)  $97,000. 
D)  $38,000. 
E)  $47,000.

Question 7

The business entity assumption means that a business is accounted for separately from other business entities, including its owner or owners.

Accepted Answer

A) True 
 B)False

Question 8

The three common forms of business ownership include sole proprietorship, partnership, and non-profit.

Accepted Answer

A) True 
 B)False

Question 9

______________________, which is one part of accounting, is the recording of transactions and events, either manually or electronically.

Accepted Answer

The answer of ______________________, which is one part of accounting,...

Question 10

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n):

Accepted Answer

A)  Revenue activity. 
B)  Operating activity. 
C)  Expense activity. 
D)  Investing activity. 
E)  Financing activity.

Question 11

The accounts of Odie Company with the increases or decreases that occurred during the past year are as follows:
$\begin{array}{llcc}
\text {Account  } &\text {  Increase} &\text { Decrease  } \
   \hline\text {Cash.................................  } &\$425,000\
 \text {Accounts receivable...........  } &&\$(5,000)\
 \text { Accounts payable.............. } &&(11,000)\
 \text { Notes payable................... } &16,000\
\end{array}$

Except for net income, an investment of $3,000 by the stockholder, and a dividend of $11,000 by the stockholder, no other items affected the stockholders' equity balance. Using the balance sheet equation, compute net income for the past year.

Accepted Answer

The answer of The accounts of Odie Company with the...

Question 12

To include the personal assets and transactions of a business's stockholders in the records and reports of the business would be in conflict with the:

Accepted Answer

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

Question 13

The income statement shows the financial position of a business on a specific date.

Accepted Answer

A) True 
 B)False

Question 14

In a business decision where there are ethical concerns, the preferred course of action should be one that:

Accepted Answer

A)  Is agreed upon by the most managers. 
B)  Maximizes the company's profits. 
C)  Results in maintaining operations at the current level. 
D)  Costs the least to implement. 
E)  Avoids casting doubt on the decision maker and upholds trust.

Question 15

Internal operating activities include research and development, distribution, and human resources.

Accepted Answer

A) True 
 B)False

Question 16

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholders' equity?

Accepted Answer

A)  $17,000. 
B)  $29,000. 
C)  $71,000. 
D)  $88,000. 
E)  $105,000.

Question 17

U. S. Government Treasury bonds provide low return and low risk to investors.

Accepted Answer

A) True 
 B)False

Question 18

Internal users include lenders, shareholders, brokers and managers.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following accounts is not included in the calculation of a company's ending stockholders' equity?

Accepted Answer

A)  Revenues. 
B)  Expenses. 
C)  Dividends. 
D)  Common stock. 
E)  Cash.

Question 20

Rushing had income of $150 million and average invested assets of $1,800 million. Its return on assets is:

Accepted Answer

A)  8.3%. 
B)  83.3%. 
C)  12%. 
D)  120%. 
E)  16.7%.

Exam 1: Accounting in Business

If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:

The income statement reports all of the following except:

Match each of the following items with the financial statement . An item may appear on more than one statement.

A partnership:

All of the following are classified as liabilities except:

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and dividends to stockholders of $9,000. Calculate the ending equity.

The business entity assumption means that a business is accounted for separately from other business entities, including its owner or owners.

The three common forms of business ownership include sole proprietorship, partnership, and non-profit.

______________________, which is one part of accounting, is the recording of transactions and events, either manually or electronically.

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

To include the personal assets and transactions of a business's stockholders in the records and reports of the business would be in conflict with the:

The income statement shows the financial position of a business on a specific date.

In a business decision where there are ethical concerns, the preferred course of action should be one that:

Internal operating activities include research and development, distribution, and human resources.

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholders' equity?

U. S. Government Treasury bonds provide low return and low risk to investors.

Internal users include lenders, shareholders, brokers and managers.

Which of the following accounts is not included in the calculation of a company's ending stockholders' equity?

Rushing had income of $150 million and average invested assets of $1,800 million. Its return on assets is: