Question 1

An accounting system captures relevant data about transactions and then classifies, records, and reports data.

Accepted Answer

A) True 
 B)False

Question 2

If assets are $300,000 and liabilities are $192,000, then equity equals:

Accepted Answer

A) $492,000. 
B) $792,000. 
C) $108,000. 
D) $300,000. 
E) $192,000. 
A) $492,000. 
B) $792,000. 
C) $108,000. 
D) $300,000. 
E) $192,000.

Question 3

The business entity assumption:

Accepted Answer

A) 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. 
B) Means that we can express transactions and events in monetary, or money, units. 
C) Means that a business is accounted for separately from other business entities, including its owner. 
D) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
A) 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. 
B) Means that we can express transactions and events in monetary, or money, units. 
C) Means that a business is accounted for separately from other business entities, including its owner. 
D) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Question 4

What is the balance sheet? What is its purpose?

Accepted Answer

The balance sheet is one of the four req

Question 5

Risk is the uncertainty about the return we will earn.

Accepted Answer

A) True 
 B)False

Question 6

The materiality constraint looks at both the importance and relative size of an amount.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following combinations results in a net loss reported on the income statement?

Accepted Answer

A) Total revenues of $70,000 and total expenses of $74,000. 
B) Total revenues of $80,000 and total expenses of $74,000. 
C) Total revenues of $40,000 and total expenses of $31,000. 
D) Total revenues of $20,000 and total expenses of $16,000. 
E) Total revenues of $60,000 and total expenses of $52,000. 
A) Total revenues of $70,000 and total expenses of $74,000. 
B) Total revenues of $80,000 and total expenses of $74,000. 
C) Total revenues of $40,000 and total expenses of $31,000. 
D) Total revenues of $20,000 and total expenses of $16,000. 
E) Total revenues of $60,000 and total expenses of $52,000.

Question 8

Explain why ethics are an integral part of accounting.

Accepted Answer

The purpose of accounting is to provide

Question 9

The rule that requires financial statements to reflect 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) Objectivity principle. 
B) Monetary unit assumption. 
C) Business entity assumption. 
D) Going-concern assumption. 
E) Measurement (Cost)Principle. 
A) Objectivity principle. 
B) Monetary unit assumption. 
C) Business entity assumption. 
D) Going-concern assumption. 
E) Measurement (Cost)Principle.

Question 10

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Accepted Answer

A) $17,000. 
B) $71,000. 
C) $105,000. 
D) $88,000. 
E) $29,000. 
A) $17,000. 
B) $71,000. 
C) $105,000. 
D) $88,000. 
E) $29,000.

Question 11

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank)to:

Accepted Answer

A) Protect the taxpayer by ending bailouts. 
B) Promote accountability and transparency in the financial system. 
C) All of the above. 
D) Put an end to the notion of "too big to fail." 
E) Protect consumers from abusive financial services. 
A) Protect the taxpayer by ending bailouts. 
B) Promote accountability and transparency in the financial system. 
C) All of the above. 
D) Put an end to the notion of "too big to fail." 
E) Protect consumers from abusive financial services.

Question 12

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

Accepted Answer

A) Assets decrease $1,300 and equity decreases $1,300. 
B) Assets increase $1,300 and liabilities decrease $1,300. 
C) Assets increase $1,300 and liabilities increase $1,300. 
D) One asset increases $1,300 and another asset decreases $1,300, causing no effect. 
E) Assets decrease $1,300 and equity increases $1,300. 
A) Assets decrease $1,300 and equity decreases $1,300. 
B) Assets increase $1,300 and liabilities decrease $1,300. 
C) Assets increase $1,300 and liabilities increase $1,300. 
D) One asset increases $1,300 and another asset decreases $1,300, causing no effect. 
E) Assets decrease $1,300 and equity increases $1,300.

Question 13

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

Accepted Answer

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

Question 14

The expense recognition principle, also called the matching principle:

Accepted Answer

A) Provides guidance on when a company must recognize revenue. 
B) Prescribes that a company report the details behind financial statements that would impact users' decisions. 
C) Prescribes that accounting information is based on actual cost. 
D) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
A) Provides guidance on when a company must recognize revenue. 
B) Prescribes that a company report the details behind financial statements that would impact users' decisions. 
C) Prescribes that accounting information is based on actual cost. 
D) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Question 15

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed.

Accepted Answer

A) True 
 B)False

Question 16

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:

Accepted Answer

A) Statement of financial position. 
B) Statement of cash flows. 
C) Balance sheet. 
D) Statement of owner's equity. 
E) Income statement. 
A) Statement of financial position. 
B) Statement of cash flows. 
C) Balance sheet. 
D) Statement of owner's equity. 
E) Income statement.

Question 19

In a business decision where there are ethical concerns, the preferred course of action should be one that:

Accepted Answer

A) Results in maintaining operations at the current level. 
B) Is agreed upon by the most managers. 
C) Avoids casting doubt on the decision maker and upholds trust. 
D) Maximizes the company's profits. 
E) Costs the least to implement. 
A) Results in maintaining operations at the current level. 
B) Is agreed upon by the most managers. 
C) Avoids casting doubt on the decision maker and upholds trust. 
D) Maximizes the company's profits. 
E) Costs the least to implement.

Question 20

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

An accounting system captures relevant data about transactions and then classifies, records, and reports data.

If assets are $300,000 and liabilities are $192,000, then equity equals:

The business entity assumption:

What is the balance sheet? What is its purpose?

Risk is the uncertainty about the return we will earn.

The materiality constraint looks at both the importance and relative size of an amount.

Which of the following combinations results in a net loss reported on the income statement?

Explain why ethics are an integral part of accounting.

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank)to:

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

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

The expense recognition principle, also called the matching principle:

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed.

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

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

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:

In a business decision where there are ethical concerns, the preferred course of action should be one that:

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters

Exam 1: Accounting in Business

An accounting system captures relevant data about transactions and then classifies, records, and reports data.

If assets are $300,000 and liabilities are $192,000, then equity equals:

The business entity assumption:

What is the balance sheet? What is its purpose?

Risk is the uncertainty about the return we will earn.

The materiality constraint looks at both the importance and relative size of an amount.

Which of the following combinations results in a net loss reported on the income statement?

Explain why ethics are an integral part of accounting.

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank)to:

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

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

The expense recognition principle, also called the matching principle:

The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed.

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

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

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:

In a business decision where there are ethical concerns, the preferred course of action should be one that:

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters