Question 1

The basic financial statements include all of the following except:

Accepted Answer

A)  Balance Sheet. 
B)  Income Statement. 
C)  Statement of Retained Earnings. 
D)  Statement of Cash Flows. 
E)  Statement of Changes in Assets.

Question 2

Increases in equity from a company's sales of products or services are:

Accepted Answer

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

Question 3

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

Accepted Answer

A) True 
 B)False

Question 4

Charlie's Chocolates Inc.'s stockholders made investments of $50,000 and dividends of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Accepted Answer

A)  $30,000. 
B)  $83,000. 
C)  $64,000. 
D)  $19,000. 
E)  $49,000.

Question 5

Creditors' claims on assets that reflect company obligations to provide assets, products, or services to others are called ____________________.

Accepted Answer

The answer of Creditors' claims on assets that reflect company...

Question 6

Congress passed the ______________________ to help curb financial abuses at companies that issue their stock to the public.

Accepted Answer

The answer of Congress passed the ______________________ to help curb...

Question 7

________________________________ explains changes in the stockholders' claim on the business's assets from net income or loss, and dividends over a period of time.

Accepted Answer

The answer of ________________________________ explains changes in the stockholders' claim...

Question 8

A disadvantage of a sole proprietorship is the fact that the owner has ______________.

Accepted Answer

The answer of A disadvantage of a sole proprietorship is...

Question 9

Using the accounting equation, equity is equal to ________________________.

Accepted Answer

The answer of Using the accounting equation, equity is equal...

Question 10

Resources such as cash removed from the business by the business owner for personal use are called ____________.

Accepted Answer

The answer of Resources such as cash removed from the...

Question 11

The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code.

Accepted Answer

A) True 
 B)False

Question 12

The accounting equation implies that:
 Assets + Liabilities = Equity.

Accepted Answer

A) True 
 B)False

Question 13

Revenue is properly recognized:

Accepted Answer

A)  When the customer makes an order. 
B)  Only if the transaction creates an account receivable. 
C)  At the end of the accounting period. 
D)  Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. 
E)  When cash from a sale is received.

Question 14

Common stock is an increase in equity from a company's earnings activities.

Accepted Answer

A) True 
 B)False

Question 15

Risk is the _________________ about the return an investor expects to earn.

Accepted Answer

The answer of Risk is the _________________ about the return...

Question 16

An example of an investing activity is:

Accepted Answer

A)  Paying wages of employees. 
B)  Dividends paid by the company. 
C)  Purchase of land. 
D)  Selling inventory. 
E)  Contributions from s tockholders.

Question 17

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

Accepted Answer

A)  Assets would have increased $55,000. 
B)  Assets would have decreased $55,000. 
C)  Assets would have increased $19,000. 
D)  Assets would have decreased $19,000. 
E)  None of these.

Question 18

The characteristics below apply to at least one of the forms of business organization.
a. Is a separate legal entity.
b. Is allowed to be owned by one person only.
c. Partners or sole proprietors are personally liable for debts of the business.
d. Is a separately taxable entity.
e. Is a business entity.
f. May have a contract specifying the division of profits among the partners.
g. Has an unlimited life
Use the following format to indicate (with a "yes" or "no") whether or not a characteristic applies to each type of business organization. $$\begin{array} { | l | l | l | l | } 
\hline & \underline{\text { Proprietorthip }} &\underline{ \text { Partnership }} & \underline{\text { Corporation} } \
\hline \text { a. } & & & \
\hline \text { b. } & & & \
\hline \text { c. } & & & \
\hline \text { d } & & & \
\hline \text { e. } & & & \
\hline \text { f. } & & & \
\hline \text { g. } & & & \
\hline
\end{array}$$

Accepted Answer

The answer of The characteristics below apply to at least...

Question 19

The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

Accepted Answer

A) True 
 B)False

Question 20

External users include lenders, shareholders, customers, and regulators.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

The basic financial statements include all of the following except:

Increases in equity from a company's sales of products or services are:

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

Charlie's Chocolates Inc.'s stockholders made investments of $50,000 and dividends of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Creditors' claims on assets that reflect company obligations to provide assets, products, or services to others are called ____________________.

Congress passed the ______________________ to help curb financial abuses at companies that issue their stock to the public.

________________________________ explains changes in the stockholders' claim on the business's assets from net income or loss, and dividends over a period of time.

A disadvantage of a sole proprietorship is the fact that the owner has ______________.

Using the accounting equation, equity is equal to ________________________.

Resources such as cash removed from the business by the business owner for personal use are called ____________.

The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code.

The accounting equation implies that: Assets + Liabilities = Equity.

Revenue is properly recognized:

Common stock is an increase in equity from a company's earnings activities.

Risk is the _________________ about the return an investor expects to earn.

An example of an investing activity is:

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

External users include lenders, shareholders, customers, and regulators.