Question 1

An income statement reports on investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 2

Explain the accounting equation and define its terms.

Accepted Answer

The answer of Explain the accounting equation and define its...

Question 3

The conceptual framework that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are attempting to converge and enhance includes the following broad areas to guide standard setting except:

Accepted Answer

A)  Objectives 
B)  Qualitative characteristics 
C)  Uniformity 
D)  Elements 
E)  Recognition and measurement

Question 4

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

Accepted Answer

A)  Cash was received from providing services to a customer. 
B)  Cash was received in exchange for common stock. 
C)  Equipment was purchased on credit. 
D)  Supplies were purchased for cash. 
E)  Advertising expense for the month was paid in cash.

Question 5

Prepare a December 31 balance sheet in proper form for Smokey River Supplies, Inc. from the following list of the accounts: $\begin{array}{llcc}
  \text {  Cash...............................} &\$10,000\
\
 \text {Accounts receivable.........  } &8,000\
 \text { Supplies.......................... } &12,000\
 \text { Equipment...................... } &35,000\
 \text {Land................................  } &18,000\
 \text { Accounts payable............ } &13,000\
 \text {Notes payable...................  } &41,000\
 \text { Stockholders' equity......... } &29,000\
\end{array}$

Accepted Answer

The answer of Prepare a December 31 balance sheet in...

Question 6

A stockholder's investment in a business normally creates an asset (cash), a liability (note payable), and stockholders' equity (investment.)

Accepted Answer

A) True 
 B)False

Question 7

Data for Kennedy Realty are as follows: $\begin{array}{llcc}
  \text { Total assets at January 1.................... } &\$100,000\
 \text {Total liabilities at January 1................  } &35,000\
 \text {Total revenues for the year..................  } &79,000\
 \text { Total expenses for the year................. } &47,000\
\end{array}$
 The owner, Finn Kennedy, received a dividend of $30,000 during the year. Using the above data, prepare Kennedy Realty's Statement of Retained Earnings for the year ended December 31.

Accepted Answer

The answer of Data for Kennedy Realty are as follows:...

Question 8

Define risk and return and discuss the relation between them.

Accepted Answer

The answer of Define risk and return and discuss the...

Question 9

Identify the users and uses of accounting information.

Accepted Answer

The answer of Identify the users and uses of accounting...

Question 10

Financial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

Accepted Answer

A) True 
 B)False

Question 11

External users of accounting information include all of the following except:

Accepted Answer

A)  Shareholders. 
B)  Customers. 
C)  Purchasing managers. 
D)  Government regulators. 
E)  Creditors.

Question 12

Cage Company had income of $350 million and average invested assets of $2,000 million. Its return on assets (ROA) is:

Accepted Answer

A)  1.8%. 
B)  35%. 
C)  17.5%. 
D)  5.7%. 
E)  3.5%.

Question 13

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

Accepted Answer

A) True 
 B)False

Question 14

A ____________________ is a business that is owned by only one person.

Accepted Answer

The answer of A ____________________ is a business that is...

Question 15

Technology:

Accepted Answer

A)  Has replaced accounting. 
B)  Has not improved the clerical accuracy of accounting. 
C)  Reduces the time, effort and cost of recordkeeping. 
D)  In accounting has replaced the need for decision makers. 
E)  In accounting is only available to large corporations.

Question 16

There are three major types of business activities. ______________ activities involve using resources to research, develop, purchase, produce, distribute, and market products and services and receiving amounts from selling products and services.

Accepted Answer

The answer of There are three major types of business...

Question 17

There are at least three types of partnerships that limit the partners' liability. They are 1)_____________________, 2) ___________________, and 3)______________________.

Accepted Answer

The answer of There are at least three types of...

Question 18

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Accepted Answer

A) True 
 B)False

Question 19

Distributions of cash or other resources by a business to its stockholders are called:

Accepted Answer

A)  Dividends. 
B)  Expenses. 
C)  Assets. 
D)  Retained earnings. 
E)  Net Income.

Question 20

Soo Lin, the sole stockholder, began an Internet Consulting practice organized as a corporation and completed these transactions during April of the current year:  $\begin{array}{llcc}
  \text { April } & \text {1\quad Invested $ \$ 100,000 $ of her personal savings into a checking  }\
& \text {\quad account opened in the name of the business. } &\ 
 &\text {2\quad Rented office space and paid $ \$ 1,200 $ cash for the month of  } &\
& \text {  September. } &\
& \text { 3\quad Purchased office equipment for $ \$ 30,000 $, paying $ \$ 8,000 $ cash } &\
& \text {  and agreeing to pay the balance in one year. } &\
& \text { 4\quad Purchased office supplies for $ \$ 750 $ cash. } &\
 &\text {8\quad Completed work for a client and immediately collected  } &\
& \text { $ \$ 2,700 $ cash for the services.  } &\
& \text { 15\quad Completed $ \$ 3,600 $ services for a client on credit. } &\
& \text {20\quad Received $ \$ 3,600 $ from a client for the work completed on  } &\
& \text { September 15 . } &\
 &\text {30\quad Paid the office secretary's monthly salary, $ \$ 3,000 $ cash.  } &\
& \text {  30\quad The corporation paid a $ \$ 2,000 $ dividend.} &\
\end{array}$
 Show the effects of the above transactions on the accounting equation of Soo Lin, Consultant. Use the following format for your answers. The first item is shown as an example.
Increase = I Decrease = D No effect = N $$\begin{array} { | c | c | c | c | } 
\hline \text { Date } & \text { Assets } & \text { Liabilities } & \text { Equity } \
\hline \text { Example: } & & & \
\hline \text { Apri 1 } & \text { I } & \text { N } & \text { I } \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Soo Lin, the sole stockholder, began an...

Exam 1: Accounting in Business

An income statement reports on investing and financing activities.

Explain the accounting equation and define its terms.

The conceptual framework that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are attempting to converge and enhance includes the following broad areas to guide standard setting except:

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

A stockholder's investment in a business normally creates an asset (cash), a liability (note payable), and stockholders' equity (investment.)

Define risk and return and discuss the relation between them.

Identify the users and uses of accounting information.

Financial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

External users of accounting information include all of the following except:

Cage Company had income of $350 million and average invested assets of $2,000 million. Its return on assets (ROA) is:

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

A ____________________ is a business that is owned by only one person.

Technology:

There are three major types of business activities. ______________ activities involve using resources to research, develop, purchase, produce, distribute, and market products and services and receiving amounts from selling products and services.

There are at least three types of partnerships that limit the partners' liability. They are 1)___________, 2) _, and 3)______________.

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Distributions of cash or other resources by a business to its stockholders are called: