Question 1

A partnership is a business owned by two or more people.

Accepted Answer

A) True 
 B)False

Question 2

The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

Accepted Answer

A) True 
 B)False

Question 3

A company acquires equipment for $75,000 cash. This represents a(n):

Accepted Answer

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

Question 4

The difference between a company's assets and its liabilities, or net assets is:

Accepted Answer

A)  Net income. 
B)  Expense. 
C)  Equity. 
D)  Revenue. 
E)  Net loss.

Question 5

The area of accounting aimed at serving the decision making needs of internal users is:

Accepted Answer

A)  Financial accounting. 
B)  Managerial accounting. 
C)  External auditing. 
D)  SEC reporting. 
E)  Bookkeeping.

Question 6

Which of the following purposes would financial statements serve for external users?

Accepted Answer

A)  To find information about projected costs and revenues of proposed products. 
B)  To assess employee performance and compensation. 
C)  To assist in monitoring consumer needs and price concerns. 
D)  To fulfill regulatory requirements for companies whose stock is sold to the public. 
E)  To determine purchasing needs.

Question 7

If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:

Accepted Answer

A)  Accounts payable decreases $10,000. 
B)  Accounts payable increases $10,000. 
C)  Cash increases $10,000. 
D)  Revenue increases $10,000. 
E)  Revenue decreases $10,000

Question 8

Match between columns
                        Premises: A model that asserts the factors that must exist for a person to commit fraud.
An information and measurement system that identifies, records and communicates relevant reliable and comparable information about an organization's business activities.
The part of accounting that involves recording transactions and events, either electronically or manually.
Persons using accounting information who are directly involved in managing and operating the organization.
The area of accounting aimed at serving external users by providing them with general-purpose financial statements.
Beliefs that distinguish right from wrong, considered accepted standards of good and bad behavior.
Persons using accounting information who are not directly involved in running the organization.
Accounting specialists that have met educational and experience requirements, passed an examination and exhibit ethical characteristics to achieve a professional certification.
The area of accounting that serves the decision-making needs of internal users.

Accepted Answer

The Answer of Recordkeeping and Certified Public Accountant (CPA) and is...

Question 9

Owner financing refers to resources contributed by creditors or lenders.

Accepted Answer

A) True 
 B)False

Question 10

Planning involves defining an organization's ideas, goals, and actions.

Accepted Answer

A) True 
 B)False

Question 11

Zippy had cash inflows from operations $60,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:

Accepted Answer

A)  $38,500 increase. 
B)  $38,500 decrease. 
C)  $132,500 decrease. 
D)  $132,000 increase. 
E)  $11,500 decrease.

Question 12

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

Accepted Answer

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

Question 13

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

Accepted Answer

A)  Balance sheet. 
B)  Statement of retained earnings. 
C)  Statement of cash flows. 
D)  Income statement. 
E)  Statement of financial position.

Question 14

Use the following information for Meeker Corp to determine the amount of equity to report. Cash…………………… 70,000
Buildings........................ 125,000
Land………………….. 205,000
Liabilities……………… $130,000

Accepted Answer

A)  $390,000. 
B)  $140,000. 
C)  $20,000. 
D)  $530,000. 
E)  $270,000.

Question 15

If assets are $300,000 and liabilities are $192,000, then equity equals:

Accepted Answer

A)  $108,000. 
B)  $192,000. 
C)  $300,000. 
D)  $492,000. 
E)  $792,000.

Question 16

The term ___________ refers to a liability that promises a future outflow of resources.

Accepted Answer

The answer of The term ___________ refers to a liability...

Question 17

The monetary unit assumption means that all companies doing business in the United States must express transactions and events in US dollars.

Accepted Answer

A) True 
 B)False

Question 18

Objectivity means that financial information is supported by independent, unbiased evidence.

Accepted Answer

A) True 
 B)False

Question 19

If a company receives $12,000 from the stockholders to establish a corporation, the effect on the accounting equation would be:

Accepted Answer

A)  Assets decrease $12,000 and equity decreases $12,000. 
B)  Assets increase $12,000 and liabilities decrease $12,000. 
C)  Assets increase $12,000 and liabilities increase $12,000. 
D)  Liabilities increase $12,000 and equity decreases $12,000. 
E)  Assets increase $12,000 and equity increases $12,000.

Question 20

Use the following information as of December 31 to determine equity. Cash…………………… 57,000
Buildings........................ 175,000
Equipment…………….. 206,000
Liabilities……………… $141,000

Accepted Answer

A)  $57,000. 
B)  $141,000. 
C)  $297,000. 
D)  $438,000. 
E)  $579,000.

Exam 1: Accounting in Business

A partnership is a business owned by two or more people.

The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world.

A company acquires equipment for $75,000 cash. This represents a(n) :

The difference between a company's assets and its liabilities, or net assets is:

The area of accounting aimed at serving the decision making needs of internal users is:

Which of the following purposes would financial statements serve for external users?

If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:

Match the following terms with the appropriate definition.

Owner financing refers to resources contributed by creditors or lenders.

Planning involves defining an organization's ideas, goals, and actions.

Zippy had cash inflows from operations $60,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

Use the following information for Meeker Corp to determine the amount of equity to report. Cash…………………… 70,000 Buildings........................ 125,000 Land………………….. 205,000 Liabilities……………… $130,000

If assets are $300,000 and liabilities are $192,000, then equity equals:

The term ___________ refers to a liability that promises a future outflow of resources.

The monetary unit assumption means that all companies doing business in the United States must express transactions and events in US dollars.

Objectivity means that financial information is supported by independent, unbiased evidence.

If a company receives $12,000 from the stockholders to establish a corporation, the effect on the accounting equation would be:

Use the following information as of December 31 to determine equity. Cash…………………… 57,000 Buildings........................ 175,000 Equipment…………….. 206,000 Liabilities……………… $141,000