Question 1

A company's balance sheet shows: cash $24,000,accounts receivable $30,000,equipment $50,000,and equity $72,000.What is the amount of liabilities?

Accepted Answer

A)  $104,000. 
B)  $76,000. 
C)  $32,000. 
D)  $68,000. 
E)  $176,000.

Question 2

Opportunities in accounting include auditing,consulting,market research,and tax planning.

Accepted Answer

A) True 
 B)False

Question 3

The statement of cash flows identifies cash flows separated into operating,investing,and financing activities over a period of time.

Accepted Answer

A) True 
 B)False

Question 4

The records of Roadmaster Auto Rentals show the following information as of December 31.The sole stockholder,Rob Fletcher received dividends of $52,000 during the year.Prepare a December income statement,a December statement of retained earnings,and a December 31 balance sheet.
 $$\begin{array} { l lll } 
\text { Accounts payable } & \$ 36,000 & \text { Wages expense } & \$ 75,000 \
\text { Insurance expense } & 2,000 & \text { Advertising expense } & 22,000 \
\text { Accounts receivable } & 24,000 & \text { Cash } & 11,000 \
\text { Common stock } & 60,000& \text { Office Furniture } & 15,000 \
\text { Airplanes } & 150,000& \text { Maintenance expense } & 39,000 \
\text { Notes payable } & 47,000 & \text { Revenues } & 217,000 \
\text { Hangar } & 60,000& \text { Retained earnings, January 1 } & 90,000
\end{array}$$

Accepted Answer

The answer of The records of Roadmaster Auto Rentals show...

Question 5

The description of the relation between a company's assets,liabilities,and equity,which is expressed as Assets = Liabilities + Equity,is known as the:

Accepted Answer

A)  Income statement equation. 
B)  Accounting equation. 
C)  Business equation. 
D)  Return on equity ratio. 
E)  Net income.

Question 6

Net Income:

Accepted Answer

A)  Decreases equity. 
B)  Represents the amount of assets stockholders put into a business. 
C)  Equals assets minus liabilities. 
D)  Is the excess of revenues over expenses. 
E)  Represents stockholders' claims against assets.

Question 7

In the partnership form of business,the owners are called stockholders.

Accepted Answer

A) True 
 B)False

Question 8

The idea that a business will continue to operate instead of being closed or sold underlies the going-concern assumption.

Accepted Answer

A) True 
 B)False

Question 9

Match the following terms with the appropriate definition.
-Liabilities

Accepted Answer

A) The principle that assumes transactions and events can be expressed in money units. 
B) The cost of assets or services used to earn revenue. 
C) The principle that requires a business to be accounted for separately from its owners. 
D) Describes a company's revenues and expenses along with the resulting net income or loss over a period of time. 
E) Creditor's claims on assets.
F)The relation between a company's assets, liabilities, and equity.
G)The principle that revenue is recorded when earned through providing goods or services.
H)A financial statement that lists cash inflows (receipts) and cash outflows (payments); the cash flows are arranged by operating, investing, and financing activities.
I)Happenings, such as changes in market value, that effect the accounting equation and are reliably measured.

Question 10

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities.Which of the following transactions could have caused that effect?

Accepted Answer

A)  Cash was received from providing services to a customer. 
B)  Cash was received as a stockholder investment. 
C)  Equipment was purchased on credit. 
D)  Supplies were purchased for cash. 
E)  Advertising expense for the month was paid in cash.

Question 11

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.Owner or owners 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 owners.
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.
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { Proprietorship } & \text { Partnership } & \text { Corporation } \
\hline \text { a. } & & & \
\hline \text { b. } & & & \
\hline \text { c. } & & & \
\hline \text { d. } & & & \
\hline \text { e. } & & & \
\hline \text { f. } & & & \
\hline \text { g. } & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 12

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 13

How does the objectivity principle support ethical behavior?

Accepted Answer

The answer of How does the objectivity principle support ethical...

Question 14

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 15

Match the following activities with the appropriate section of the statement of cash flows.
-Cash paid for a delivery van to be used in the business.

Accepted Answer

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

Question 16

Match the following terms with the appropriate definition.
-An information and measurement system that identifies,records and communicates relevant reliable and comparable information about an organization's business activities.

Accepted Answer

A) Internal users 
B) Fraud triangle 
C) Managerial accounting 
D) Ethics 
E) External users
F)Certified Public Accountant (CP
A) 
G)Financial accounting
H)Accounting
I)Recordkeeping

Question 17

Revenues are increases in equity (via net income)from a company's sales of products and services to customers.

Accepted Answer

A) True 
 B)False

Question 18

Specific accounting principles are basic assumptions,concepts,and guidelines for preparing financial statements and arise out of long-used accounting practice.

Accepted Answer

A) True 
 B)False

Question 19

Using the accounting equation,equity is equal to ________.

Accepted Answer

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

Question 20

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

A company's balance sheet shows: cash $24,000,accounts receivable $30,000,equipment $50,000,and equity $72,000.What is the amount of liabilities?

Opportunities in accounting include auditing,consulting,market research,and tax planning.

The statement of cash flows identifies cash flows separated into operating,investing,and financing activities over a period of time.

The description of the relation between a company's assets,liabilities,and equity,which is expressed as Assets = Liabilities + Equity,is known as the:

Net Income:

In the partnership form of business,the owners are called stockholders.

The idea that a business will continue to operate instead of being closed or sold underlies the going-concern assumption.

Match the following terms with the appropriate definition. -Liabilities

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities.Which of the following transactions could have caused that effect?

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

How does the objectivity principle support ethical behavior?

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

Match the following activities with the appropriate section of the statement of cash flows. -Cash paid for a delivery van to be used in the business.

Match the following terms with the appropriate definition. -An information and measurement system that identifies,records and communicates relevant reliable and comparable information about an organization's business activities.

Revenues are increases in equity (via net income)from a company's sales of products and services to customers.

Specific accounting principles are basic assumptions,concepts,and guidelines for preparing financial statements and arise out of long-used accounting practice.

Using the accounting equation,equity is equal to ________.

Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.