Question 1

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of stockholders' equity as of August 31 of the current year?

Accepted Answer

A)  $49,100 
B)  $32,100 
C)  $12,100 
D)  $10,900 
E)  $30,900

Question 2

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Accepted Answer

A) True 
 B)False

Question 3

The primary objective of financial accounting is to:

Accepted Answer

A)  Serve the decision-making needs of internal users. 
B)  Provide accounting information that serves external users. 
C)  Monitor and control company activities. 
D)  Provide information on both the costs and benefits of looking after products and services. 
E)  Know what, when, and how much product to produce.

Question 4

______________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Accepted Answer

The answer of ______________ is the area of accounting aimed...

Question 5

______________ users of accounting information are not directly involved in running the organization.

Accepted Answer

The answer of ______________ users of accounting information are not...

Question 6

The Financial Accounting Standards Board is the governmental agency that sets both broad and specific accounting principles.

Accepted Answer

A) True 
 B)False

Question 7

Billington Corp borrows $80,000 cash from Second National Bank. How does this transaction affect the accounting equation for Billington?

Accepted Answer

A)  Assets would decrease $80,000 and liabilities would decrease $80,000. 
B)  Assets would decrease $80,000 and equity would increase $80,000. 
C)  Assets would increase $80,000 and equity would decrease $80,000. 
D)  Assets would increase $80,000 and liabilities would increase $80,000. 
E)  Liabilities would decrease $80,000 and equity would increase $80,000.

Question 8

Revenues are:

Accepted Answer

A)  The same as net income. 
B)  The excess of expenses over assets. 
C)  Resources owned or controlled by a company 
D)  The increase in equity from a company's sales of products and services. 
E)  The costs of assets or services used.

Question 9

From the information given below, prepare a November income statement, a November statement of retained earnings, and a November 30 balance sheet. On November 1 of the current year, Victoria Garza began Garza Décor, Inc. with an initial investment of $50,000 cash. On November 30, her records showed the following (alphabetically arranged) items and amounts. $\begin{array}{c}
\begin{array}{lll}
 \text {Accounts payable....................}&\$12,000\
 \text {Accounts receivable.............}&19,000\
 \text {Cash...............................}&21,200\
 \text {Fees earned.................}&34,000\
 \text {Notes pavable..............}&4,250\ 
\end{array}
\begin{array}{lr}
\text { Office furnishings ........ } & \$ 40,000 \
\text { Dividends ..... } & 6,000 \
\text { Rent expense .......... } & 9,600 \
\text { Salaries expense ....... } & 4,200 \
\text { Telephone expense ..... } &250
\end{array}
\end{array}$

Accepted Answer

The answer of From the information given below, prepare a...

Question 10

Speedy has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.

Accepted Answer

A)  7.7%. 
B)  8.5%. 
C)  9.5%. 
D)  11.8%. 
E)  13.0%.

Question 11

If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation when the first rent payment is collected?

Accepted Answer

A)  Assets would decrease $700 and liabilities would decrease $700. 
B)  Assets would decrease $700 and equity would increase $700. 
C)  Assets would increase $700 and equity would decrease $700. 
D)  Assets would increase $700 and equity would increase $700. 
E)  Liabilities would decrease $700 and equity would increase $700.

Question 12

Match between columns
                        Premises: Monetary unit principle
Accounting equation
Events
Business entity principle
Expenses
Revenue recognition principle
Liabilities
Income statement
Statement of cash flows

Accepted Answer

The Answer of The relation between a company's assets, liabilities, is...

Question 13

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Accepted Answer

A)  $45,000. 
B)  $92,000. 
C)  $98,000. 
D)  $210,000. 
E)  $282,000.

Question 14

In accounting, the rule that requires that assets, services, and liabilities be recorded initially at the cash or cash-equivalent value of what was given up or of the item received is called the ______________________________.

Accepted Answer

The answer of In accounting, the rule that requires that...

Question 15

A sole proprietorship is a business owned by one or more persons.

Accepted Answer

A) True 
 B)False

Question 16

Accounts payable appear on which of the following statements?

Accepted Answer

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

Question 17

The ____________________ describes a company's revenues and expenses along with the resulting net income or net loss over a period of time due to earnings activities.

Accepted Answer

The answer of The ____________________ describes a company's revenues and...

Question 18

All of the following regarding a Certified Public Accountant are true except:

Accepted Answer

A)  Must meet education and experience requirements. 
B)  Must pass an examination. 
C)  Must exhibit ethical character. 
D)  May also be a Certified Management Accountant. 
E)  Cannot hold any certificate other than a CPA.

Question 19

The accounting equation is ______________________________.

Accepted Answer

The answer of The accounting equation is ______________________________....

Question 20

Net income occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of stockholders' equity as of August 31 of the current year?

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

The primary objective of financial accounting is to:

______________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

______________ users of accounting information are not directly involved in running the organization.

The Financial Accounting Standards Board is the governmental agency that sets both broad and specific accounting principles.

Billington Corp borrows $80,000 cash from Second National Bank. How does this transaction affect the accounting equation for Billington?

Revenues are:

Speedy has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.

If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation when the first rent payment is collected?

Match the following terms with definitions.

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

In accounting, the rule that requires that assets, services, and liabilities be recorded initially at the cash or cash-equivalent value of what was given up or of the item received is called the ______________________________.

A sole proprietorship is a business owned by one or more persons.

Accounts payable appear on which of the following statements?

The ____________________ describes a company's revenues and expenses along with the resulting net income or net loss over a period of time due to earnings activities.

All of the following regarding a Certified Public Accountant are true except:

The accounting equation is ______________________________.

Net income occurs when revenues exceed expenses.