Question 1

The primary purpose of Generally Accepted Accounting Principles is to ensure the usefulness of financial information.

Accepted Answer

A) True 
 B)False

Question 2

An audit

Accepted Answer

A)  is required for every business 
B)  is an independent review of an organization's accounting systems and records 
C)  is performed to add credibility to the financial statements 
D)  is only performed for companies with computerized accounting system 
E)  is an independent review of an organization's accounting systems and records and is performed to add credibility to the financial statements. 
A)  is required for every business 
B)  is an independent review of an organization's accounting systems and records 
C)  is performed to add credibility to the financial statements 
D)  is only performed for companies with computerized accounting system 
E)  is an independent review of an organization's accounting systems and records and is performed to add credibility to the financial statements.

Question 3

A primary operating objective of a business is to increase the equity of its owner or owners by

Accepted Answer

A)  acquiring assets 
B)  incurring liabilities 
C)  earning a profit 
D)  incurring expenses 
E)  increasing retained earnings 
A)  acquiring assets 
B)  incurring liabilities 
C)  earning a profit 
D)  incurring expenses 
E)  increasing retained earnings

Question 4

For each of the following transactions, identify the effect on the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively.

Accepted Answer

(a) +A +E
(b) +A +E

Question 5

Profit is the excess of expenses over revenues, whereas net loss is the excess of revenues over expenses.

Accepted Answer

A) True 
 B)False

Question 6

Sole proprietorships and partnerships are not subject to income tax in Canada.

Accepted Answer

A) True 
 B)False

Question 7

The excess of expenses over revenues for a period depict

Accepted Answer

A)  net assets 
B)  equity 
C)  loss 
D)  profit 
E)  a liability 
A)  net assets 
B)  equity 
C)  loss 
D)  profit 
E)  a liability

Question 8

Career opportunities in accounting include auditing, forensic accounting, and tax planning.

Accepted Answer

A) True 
 B)False

Question 9

Blu Lightning Co. performed testing services for the Cheetah Co. Blu Lightning Co. billed Cheetah Co. $5,000. Enter the appropriate amounts into the accounting equation format.

Accepted Answer

Assets = Liabilities

Question 10

Chuck Taylor withdrew $6,000 in cash for his personal use from his business. This amount should be included as an expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 11

Identify the form of business organization(s) to which the following characteristics apply.(a) Is a separate business entity.(b) Can be owned by one person.(c) Owner or owners are personally liable for debts of the business.(d) Is a taxable entity.(e) Is created by a charter from a provincial or the federal government.(f) Keeps the accounting of its transactions separate from the owner's(s') personal transactions.(g) May have a contract specifying the division of profits among the owners.(h) Owner or owners are not personally liable for debts of the business. Use the following format to indicate whether or not a characteristic applies to each type of business organization.

Accepted Answer

The answer of Identify the form of business organization(s) to...

Question 12

Liabilities represent non-owner financing.

Accepted Answer

A) True 
 B)False

Question 13

The bookkeeper of the Tide Company prepared a balance sheet immediately after each transaction was recorded. During September 2015, the first month of operation, the following balance sheets were prepared:
           Required:
Describe the nature of each of the five transactions that took place during the month of September.

Accepted Answer

The answer of The bookkeeper of the Tide Company prepared...

Question 14

The legitimate claims of a business's creditors take precedence over the claims of the business owner or owners.

Accepted Answer

A) True 
 B)False

Question 15

Lionel's Laundry has assets of $90,000 and liabilities of $20,000. Calculate the amount of equity.

Accepted Answer

The answer of Lionel's Laundry has assets of $90,000 and...

Question 16

The accounting principle that requires financial statements to be prepared on the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the

Accepted Answer

A)  historical cost principle 
B)  business entity principle 
C)  going concern principle. 
D)  currency principle 
E)  revenue recognition principle 
A)  historical cost principle 
B)  business entity principle 
C)  going concern principle. 
D)  currency principle 
E)  revenue recognition principle

Question 17

The value of assets exchanged for goods or services provided to customers as part of the main operations of a business are called

Accepted Answer

A)  assets 
B)  revenues 
C)  liabilities 
D)  equity 
E)  expenses 
A)  assets 
B)  revenues 
C)  liabilities 
D)  equity 
E)  expenses

Question 18

The accounting principle that states that revenue is recorded at the time that it is earned regardless of whether cash or another asset has been exchanged is the

Accepted Answer

A)  currency principle 
B)  business entity principle 
C)  going concern principle 
D)  revenue recognition principle 
E)  historical cost principle 
A)  currency principle 
B)  business entity principle 
C)  going concern principle 
D)  revenue recognition principle 
E)  historical cost principle

Question 19

Today, Cedar Park Company paid $600 of its accounts payable in cash. What is the effect on the accounting equation?

Accepted Answer

A)  Assets, $600 increase; liabilities, no effect; equity, $600 increase. 
B)  Assets, $600 decrease; liabilities, $600 decrease; equity, no effect. 
C)  Assets, $600 decrease; liabilities, $400 increase; equity, $200 decrease. 
D)  Assets, no effect; liabilities, $600 decrease; equity, $400 increase. 
E)  There is no effect. 
A)  Assets, $600 increase; liabilities, no effect; equity, $600 increase. 
B)  Assets, $600 decrease; liabilities, $600 decrease; equity, no effect. 
C)  Assets, $600 decrease; liabilities, $400 increase; equity, $200 decrease. 
D)  Assets, no effect; liabilities, $600 decrease; equity, $400 increase. 
E)  There is no effect.

Question 20

A characteristic of assets is their ability to provide current benefits to the business.

Accepted Answer

A) True 
 B)False

The primary purpose of Generally Accepted Accounting Principles is to ensure the usefulness of financial information.

An audit

A primary operating objective of a business is to increase the equity of its owner or owners by

For each of the following transactions, identify the effect on the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively.

Profit is the excess of expenses over revenues, whereas net loss is the excess of revenues over expenses.

Sole proprietorships and partnerships are not subject to income tax in Canada.

The excess of expenses over revenues for a period depict

Career opportunities in accounting include auditing, forensic accounting, and tax planning.

Blu Lightning Co. performed testing services for the Cheetah Co. Blu Lightning Co. billed Cheetah Co. $5,000. Enter the appropriate amounts into the accounting equation format.

Chuck Taylor withdrew $6,000 in cash for his personal use from his business. This amount should be included as an expense on the income statement.

Liabilities represent non-owner financing.

The legitimate claims of a business's creditors take precedence over the claims of the business owner or owners.

Lionel's Laundry has assets of $90,000 and liabilities of $20,000. Calculate the amount of equity.

The accounting principle that requires financial statements to be prepared on the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the

The value of assets exchanged for goods or services provided to customers as part of the main operations of a business are called

The accounting principle that states that revenue is recorded at the time that it is earned regardless of whether cash or another asset has been exchanged is the

Today, Cedar Park Company paid $600 of its accounts payable in cash. What is the effect on the accounting equation?

A characteristic of assets is their ability to provide current benefits to the business.

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters

Exam 1: Accounting in Business

The primary purpose of Generally Accepted Accounting Principles is to ensure the usefulness of financial information.

An audit

A primary operating objective of a business is to increase the equity of its owner or owners by

For each of the following transactions, identify the effect on the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively.

Profit is the excess of expenses over revenues, whereas net loss is the excess of revenues over expenses.

Sole proprietorships and partnerships are not subject to income tax in Canada.

The excess of expenses over revenues for a period depict

Career opportunities in accounting include auditing, forensic accounting, and tax planning.

Blu Lightning Co. performed testing services for the Cheetah Co. Blu Lightning Co. billed Cheetah Co. $5,000. Enter the appropriate amounts into the accounting equation format.

Chuck Taylor withdrew $6,000 in cash for his personal use from his business. This amount should be included as an expense on the income statement.

Liabilities represent non-owner financing.

The legitimate claims of a business's creditors take precedence over the claims of the business owner or owners.

Lionel's Laundry has assets of $90,000 and liabilities of $20,000. Calculate the amount of equity.

The accounting principle that requires financial statements to be prepared on the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the

The value of assets exchanged for goods or services provided to customers as part of the main operations of a business are called

The accounting principle that states that revenue is recorded at the time that it is earned regardless of whether cash or another asset has been exchanged is the

Today, Cedar Park Company paid $600 of its accounts payable in cash. What is the effect on the accounting equation?

A characteristic of assets is their ability to provide current benefits to the business.

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters