Question 1

Accounting communicates financial information about a business enterprise to both internal and external users.

Accepted Answer

A) True 
 B)False  True

Question 2

The study of accounting is not useful for a business career unless your career objective is to become an accountant.

Accepted Answer

A) True 
 B)False  False

Question 3

Identifying is the process of keeping a chronological diary of events measured in dollars and cents.

Accepted Answer

A) True 
 B)False  False

Question 4

Management of a business enterprise is the major external user of information.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not part of the accounting process?

Accepted Answer

A)  Recording 
B)  Identifying 
C)  Financial decision making 
D)  Communicating 
A)  Recording 
B)  Identifying 
C)  Financial decision making 
D)  Communicating

Question 6

Owner's equity can be described as

Accepted Answer

A)  creditorship claim on total assets. 
B)  ownership claim on total assets. 
C)  benefactor's claim on total assets. 
D)  debtor claim on total assets. 
A)  creditorship claim on total assets. 
B)  ownership claim on total assets. 
C)  benefactor's claim on total assets. 
D)  debtor claim on total assets.

Question 7

Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners.

Accepted Answer

A) True 
 B)False

Question 8

The private sector organization involved in developing accounting principles is the

Accepted Answer

A)  Feasible Accounting Standards Body. 
B)  Financial Accounting Studies Board. 
C)  Financial Accounting Standards Board. 
D)  Financial Auditors' Standards Body. 
A)  Feasible Accounting Standards Body. 
B)  Financial Accounting Studies Board. 
C)  Financial Accounting Standards Board. 
D)  Financial Auditors' Standards Body.

Question 9

Which one of the following is not an external user of accounting information?

Accepted Answer

A)  Regulatory agencies 
B)  Customers 
C)  Investors 
D)  All of these are external users 
A)  Regulatory agencies 
B)  Customers 
C)  Investors 
D)  All of these are external users

Question 10

Benito Company began the year with owner's equity of $175,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and had owner drawings of $20,000. What was Benito's owner's equity at the end of the year?

Accepted Answer

A)  $255,000 
B)  $215,000 
C)  $405,000 
D)  $235,000 
A)  $255,000 
B)  $215,000 
C)  $405,000 
D)  $235,000

Question 11

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called

Accepted Answer

A)  communicating. 
B)  identifying. 
C)  processing. 
D)  recording. 
A)  communicating. 
B)  identifying. 
C)  processing. 
D)  recording.

Question 12

Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.

Accepted Answer

A) True 
 B)False

Question 13

On January 1, 2009, Affleck Company reported owner's equity of $470,000. During the year, the owner withdrew cash of $20,000. At December 31, 2009, the balance in owner's equity was $500,000. What amount of net income or net loss would the company report for 2009?

Accepted Answer

A)  Net income of $30,000 
B)  Net loss of $50,000 
C)  Net income of $10,000 
D)  Net income of $50,000 
A)  Net income of $30,000 
B)  Net loss of $50,000 
C)  Net income of $10,000 
D)  Net income of $50,000

Question 14

GAAP stands for

Accepted Answer

A)  Generally Accepted Auditing Procedures. 
B)  Generally Accepted Accounting Principles. 
C)  Generally Accepted Auditing Principles. 
D)  Generally Accepted Accounting Procedures. 
A)  Generally Accepted Auditing Procedures. 
B)  Generally Accepted Accounting Principles. 
C)  Generally Accepted Auditing Principles. 
D)  Generally Accepted Accounting Procedures.

Question 15

If total liabilities decreased by $25,000 and owner's equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?

Accepted Answer

A)  $20,000 decrease 
B)  $20,000 increase 
C)  $25,000 increase 
D)  $30,000 increase 
A)  $20,000 decrease 
B)  $20,000 increase 
C)  $25,000 increase 
D)  $30,000 increase

Question 16

Private accountants are accountants who are not employees of business enterprises.

Accepted Answer

A) True 
 B)False

Question 17

The primary accounting standard-setting body in the United States is the International Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 18

The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm.

Accepted Answer

A) True 
 B)False

Question 19

Selected transactions for Tall Timber Tree Service are listed below.
1. Made cash investment to start business.
2. Paid for monthly advertising.
3. Purchased supplies on account.
4. Billed customers for services performed.
5. Withdrew cash for owner's personal use.
6. Received cash from customers billed in (4).
7. Incurred utilities expense on account.
8. Purchased additional supplies for cash.
9. Received cash from customers when service was performed.
Instructions
List the numbers of the above transactions and describe the effect of each transaction on assets,
liabilities, and owner's equity. For example, the first answer is: (1) Increase in assets and increase in owner's equity.

Accepted Answer

1. Increase in assets and increase in ow

Question 20

Which of the following would not be considered an internal user of accounting data for the GHI Company?

Accepted Answer

A)  President of the company 
B)  Production manager 
C)  Merchandise inventory clerk 
D)  President of the employees' labor union 
A)  President of the company 
B)  Production manager 
C)  Merchandise inventory clerk 
D)  President of the employees' labor union

Exam 1: Accounting in Action

Accounting communicates financial information about a business enterprise to both internal and external users.

The study of accounting is not useful for a business career unless your career objective is to become an accountant.

Identifying is the process of keeping a chronological diary of events measured in dollars and cents.

Management of a business enterprise is the major external user of information.

Which of the following is not part of the accounting process?

Owner's equity can be described as

Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners.

The private sector organization involved in developing accounting principles is the

Which one of the following is not an external user of accounting information?

Benito Company began the year with owner's equity of $175,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and had owner drawings of $20,000. What was Benito's owner's equity at the end of the year?

Keeping a systematic, chronological diary of events that are measured in dollars and cents is called

Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.

On January 1, 2009, Affleck Company reported owner's equity of $470,000. During the year, the owner withdrew cash of $20,000. At December 31, 2009, the balance in owner's equity was $500,000. What amount of net income or net loss would the company report for 2009?

GAAP stands for

If total liabilities decreased by $25,000 and owner's equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?

Private accountants are accountants who are not employees of business enterprises.

The primary accounting standard-setting body in the United States is the International Accounting Standards Board.

The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm.

Which of the following would not be considered an internal user of accounting data for the GHI Company?

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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