Question 1

Assets created by selling goods and services on credit are:

Accepted Answer

A)  Accounts payable. 
B)  Accounts receivable. 
C)  Liabilities. 
D)  Expenses. 
E)  Equity.

Question 2

The accounting equation can be restated as:
 Assets - Equity = Liabilities.

Accepted Answer

A) True 
 B)False

Question 3

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

Accepted Answer

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

Question 4

Identify the three basic forms of business organizations and their key attributes.

Accepted Answer

The answer of Identify the three basic forms of business...

Question 5

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Accepted Answer

A)  Statement of financial position. 
B)  Statement of cash flows. 
C)  Balance sheet. 
D)  Income statement. 
E)  Statement of changes in stockholders' equity.

Question 6

A net loss occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 7

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of May 31 of the current year?

Accepted Answer

A)  $8,300 
B)  $13,050 
C)  $20,500 
D)  $31,100 
E)  $40,400

Question 8

All of the following are true regarding ethics except:

Accepted Answer

A)  Ethics are beliefs that separate right from wrong. 
B)  Ethics rules are often set for CPAs. 
C)  Ethics do not affect the operations or outcome of a company. 
D)  Are critical in accounting. 
E)  Ethics can be difficult to apply.

Question 9

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Accepted Answer

A) True 
 B)False

Question 10

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises: Cash paid for dividends to stockholders.
Cash paid for utilities.
Cash received from customers.
Cash paid for a delivery van to be used in the business.
Cash received from owner contributions.
Cash received from a one-time sale of used office equipment.

Accepted Answer

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

Question 12

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

Accepted Answer

A)  An increase of $80,000. 
B)  A decrease of $80,000. 
C)  An increase of $30,000. 
D)  A decrease of $30,000. 
E)  An increase of $25,000.

Question 13

Revenues are increases in equity from a company's sales of products and services to customers.

Accepted Answer

A) True 
 B)False

Question 14

A corporation is:

Accepted Answer

A)  A business legally separate from its owners. 
B)  Controlled by the FASB. 
C)  Not responsible for its own acts and own debts. 
D)  The same as a limited liability partnership. 
E)  Not subject to double taxation.

Question 15

_________________ is net income divided by average total assets.

Accepted Answer

The answer of _________________ is net income divided by average...

Question 16

Prepare a December 31 balance sheet in proper form for Cane Property Management, Inc. using the following accounts and amounts: $\begin{array}{llcc}
  \text {  Commissions earned..................} &\$40,000\
 \text {Accounts payable......................  } &3,500\
 \text { Accounts receivable................. } &5,000\
 \text {Stockholders' equity.................  } &104,500\
 \text {Office equipment.....................  } &10,000\
 \text {  Advertising expense...............} &3,200\
  \text { Cash...................................... } &7,500\
 \text { Land...................................... } &35,000\
 \text { Note payable.......................... } &50,000\
 \text {Office supplies.........................  } &1,500\
 \text { Salaries expense...................... } &12,000\
 \text { Salaries payable...................... } &1,000\
 \text { Building.................................. } &100,000\
\end{array}$

Accepted Answer

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

Question 17

The ______________ assumption assumes business will continue operating indefinitely instead of being closed or sold.

Accepted Answer

The answer of The ______________ assumption assumes business will continue...

Question 18

Resources a company owns or controls that are expected to yield future benefits are:

Accepted Answer

A)  Assets. 
B)  Revenues. 
C)  Liabilities. 
D)  Stockholders' Equity. 
E)  Expenses.

Question 19

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

Accepted Answer

A) True 
 B)False

Question 20

Return on assets reflects a company's ability to generate profit through productive use of its assets.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

Assets created by selling goods and services on credit are:

The accounting equation can be restated as: Assets - Equity = Liabilities.

Identify the three basic forms of business organizations and their key attributes.

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

A net loss occurs when revenues exceed expenses.

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of May 31 of the current year?

All of the following are true regarding ethics except:

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Classify the following the appropriate section of the statement of cash flows with activities according.

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

Revenues are increases in equity from a company's sales of products and services to customers.

A corporation is:

_________________ is net income divided by average total assets.

The ______________ assumption assumes business will continue operating indefinitely instead of being closed or sold.

Resources a company owns or controls that are expected to yield future benefits are:

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

Return on assets reflects a company's ability to generate profit through productive use of its assets.