Question 1

If the revenue of a period exceeds the expenses, the excess represents a net loss.

Accepted Answer

A) True 
 B)False  False

Question 2

Match the terms with the definitions.
-Withdrawals that reduce owner's equity as a result of the owner taking cash or other assets out of the business for personal use.

Accepted Answer

A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity 
A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity J

Question 3

The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet.

Accepted Answer

A) True 
 B)False  False

Question 4

Match the terms with the definitions.
-Consists of the three basic accounting elements: assets = liabilities + owner's equity.

Accepted Answer

A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity 
A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity

Question 5

Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business?

Accepted Answer

A)  input 
B)  processing 
C)  output 
D)  summarizing 
A)  input 
B)  processing 
C)  output 
D)  summarizing

Question 6

If owner's equity and liabilities increased during the period, then assets must also have increased.

Accepted Answer

A) True 
 B)False

Question 7

Falana received $7,000 in cash from a client for professional services rendered. This transaction would

Accepted Answer

A)  increase assets and increase owner's equity. 
B)  decrease assets and increase owner's equity. 
C)  increase liabilities and decrease owner's equity. 
D)  decrease assets and decrease owner's equity. 
A)  increase assets and increase owner's equity. 
B)  decrease assets and increase owner's equity. 
C)  increase liabilities and decrease owner's equity. 
D)  decrease assets and decrease owner's equity.

Question 8

The income statement provides information about events over a period of a month, year, or other period of time.

Accepted Answer

A) True 
 B)False

Question 9

Recognizing the effects of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business is the processing function.

Accepted Answer

A) True 
 B)False

Question 10

Match the terms with the definitions.
-The excess of total revenues over total expenses for the period.

Accepted Answer

A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity 
A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity

Question 11

The statement of owner's equity shows the state of the business on a specific date.

Accepted Answer

A) True 
 B)False

Question 12

Withdrawing cash from a business entity will result in an increase in owner's equity.

Accepted Answer

A) True 
 B)False

Question 13

Match the terms with the definitions.
-The amount by which the business assets exceed the business liabilities.

Accepted Answer

A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity 
A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity

Question 14

Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

The balance sheet reports assets, liabilities, and owner's equity on a specific date.

Accepted Answer

A) True 
 B)False

Question 16

Revenues received during an accounting period increase owner's equity.

Accepted Answer

A) True 
 B)False

Question 17

The accounting equation may be expressed as

Accepted Answer

A)  owner's equity = assets − liabilities. 
B)  revenue − expenses = net income. 
C)  revenue = net income − expenses. 
D)  liabilities − owner's equity = assets. 
A)  owner's equity = assets − liabilities. 
B)  revenue − expenses = net income. 
C)  revenue = net income − expenses. 
D)  liabilities − owner's equity = assets.

Question 18

According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.

Accepted Answer

A) True 
 B)False

Question 19

Since insurance lasts for several months, it is recorded as owner's equity.

Accepted Answer

A) True 
 B)False

Question 20

Match the terms with the definitions.
-The concept that nonbusiness assets and liabilities are not included in the business' accounting records.

Accepted Answer

A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity 
A) account 
B) accounts payable 
C) accounts receivable 
D) accounting equation 
E) assets
F)balance sheet
G)business entity
H)business entity concept
I)business transaction
J)drawing
K)expenses
L)income statement
M)liability
N)net income
O)net loss
P)notes payable
Q)owner's equity
R)revenues
S)statement of owner's equity

Exam 2: Analyzing Transactions: the Accounting Equation

If the revenue of a period exceeds the expenses, the excess represents a net loss.

Match the terms with the definitions. -Withdrawals that reduce owner's equity as a result of the owner taking cash or other assets out of the business for personal use.

The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet.

Match the terms with the definitions. -Consists of the three basic accounting elements: assets = liabilities + owner's equity.

Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business?

If owner's equity and liabilities increased during the period, then assets must also have increased.

Falana received $7,000 in cash from a client for professional services rendered. This transaction would

The income statement provides information about events over a period of a month, year, or other period of time.

Recognizing the effects of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business is the processing function.

Match the terms with the definitions. -The excess of total revenues over total expenses for the period.

The statement of owner's equity shows the state of the business on a specific date.

Withdrawing cash from a business entity will result in an increase in owner's equity.

Match the terms with the definitions. -The amount by which the business assets exceed the business liabilities.

Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.

The balance sheet reports assets, liabilities, and owner's equity on a specific date.

Revenues received during an accounting period increase owner's equity.

The accounting equation may be expressed as

According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.

Since insurance lasts for several months, it is recorded as owner's equity.

Match the terms with the definitions. -The concept that nonbusiness assets and liabilities are not included in the business' accounting records.

Introduction to Accounting

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

Filters