Question 1

Charlie's Chocolates' stockholders made investments of $50,000 and received 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 2

Net income is sometimes called earnings or profit.

Accepted Answer

A) True 
 B)False

Question 3

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information.
-Decide whether to buy,hold,or sell a company's stock.

Accepted Answer

A) Purchasing Managers 
B) Lenders 
C) Suppliers 
D) Regulators 
E) Shareholders

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 monetary assumption:

Accepted Answer

A)  Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
B)  Means that we can express transactions and events in monetary, or money, units. 
C)  Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. 
D)  Means that a business is accounted for separately from other business entities, including its owners. 
E)  Prescribes that a company record the expenses it incurred to generate the revenue reported.

Question 6

Planning is a part of each business activity (Operating,investing,and financing),and gives each activity meaning and focus.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A balance sheet covers activities over a period of time such as a month or year.

Accepted Answer

A) True 
 B)False

Question 9

An example of a financing activity is:

Accepted Answer

A)  Buying office supplies. 
B)  Obtaining a long-term loan. 
C)  Buying office equipment. 
D)  Selling inventory. 
E)  Buying land.

Question 10

The International Accounting Standards Board (IASB)is the government group that establishes reporting requirements for companies that issue stock to the public.

Accepted Answer

A) True 
 B)False

Question 11

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 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 12

The assets of a company total $700,000; the liabilities,$200,000.What are the net assets?

Accepted Answer

A)  $900,000. 
B)  $700,000. 
C)  $500,000. 
D)  $200,000. 
E)  It is impossible to determine unless the amount of stockholder investments is known.

Question 13

The independent group that is attempting to harmonize accounting practices of different countries is the:

Accepted Answer

A)  AICPA. 
B)  IASB. 
C)  CAP. 
D)  SEC. 
E)  FASB.

Question 14

Determine the net income of a company for which the following information is available for the month of September.
$$\begin{array} { l r r } 
\text { Service revenue } & \$  300,000 \
\text { Rent expense } & 48,000 \
\text { Utilities expense } & 3,200 \
\text { Salaries expense } &  81,000
\end{array}$$

Accepted Answer

A)  $263,800. 
B)  $432,200. 
C)  $171,000. 
D)  $167,800. 
E)  $252,000.

Question 15

Financing activities provide the means organizations use to pay for resources such as land,buildings,and equipment.

Accepted Answer

A) True 
 B)False

Question 16

Chou Co.has a net income of $43,000,assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000.Compute its return on assets.

Accepted Answer

A)  8.4%. 
B)  17.2%. 
C)  14.3%. 
D)  15.6%. 
E)  1.5%.

Question 17

Match the following activities with the appropriate section of the statement of cash flows.
-Cash received from stockholders in exchange for common stock.

Accepted Answer

A) Financing activity 
B) Investing activity 
C) Operating activity

Question 18

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 19

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash.This represents a(n):

Accepted Answer

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

Question 20

Match the following terms with the appropriate definition.
-Full disclosure principle

Accepted Answer

A) The governmental agency that has the legal authority to establish accounting rules. 
B) Prescribes that assets and services to be recorded initially on a cash or equal-to-cash basis. 
C) A report that describes a company's financial position at a point in time. 
D) A financial statement that reports the changes in equity over the reporting period; including increases from net income and decreases from dividends or net losses. 
E) The concepts and rules that govern financial accounting.
F)A report that identifies cash receipts and cash payments over a period of time.
G)A principle that requires the information in financial statements to be supported by independent unbiased evidence.
H)An independent group consisting of individuals from many countries that identify preferred accounting practices.
I)Presumes that the life of a company can be divided into periods for reporting purposes.
J)Prescribes that a company report the details behind financial statements that would impact user decisions.

Exam 1: Accounting in Business

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

Net income is sometimes called earnings or profit.

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information. -Decide whether to buy,hold,or sell a company's stock.

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

The monetary assumption:

Planning is a part of each business activity (Operating,investing,and financing),and gives each activity meaning and focus.

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

A balance sheet covers activities over a period of time such as a month or year.

An example of a financing activity is:

The International Accounting Standards Board (IASB)is the government group that establishes reporting requirements for companies that issue stock to the public.

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 equity as of August 31 of the current year?

The assets of a company total $700,000; the liabilities,$200,000.What are the net assets?

The independent group that is attempting to harmonize accounting practices of different countries is the:

Determine the net income of a company for which the following information is available for the month of September. $\begin{array} { l r r } \text { Service revenue } & \$ 300,000 \\\text { Rent expense } & 48,000 \\\text { Utilities expense } & 3,200 \\\text { Salaries expense } & 81,000\end{array}$

Financing activities provide the means organizations use to pay for resources such as land,buildings,and equipment.

Chou Co.has a net income of $43,000,assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000.Compute its return on assets.

Match the following activities with the appropriate section of the statement of cash flows. -Cash received from stockholders in exchange for common stock.

Revenues are:

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash.This represents a(n) :

Match the following terms with the appropriate definition. -Full disclosure principle