Question 1

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

Question 2

Internal users include lenders,shareholders,brokers and managers.

Accepted Answer

A) True 
 B)False

Question 3

Net Income:

Accepted Answer

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

Question 4

The statement of owner's equity:

Accepted Answer

A) Reports how equity changes at a point in time. 
B) Reports how equity changes over a period of time. 
C) Reports on cash flows for operating, financing, and investing activities over a period of time. 
D) Reports on cash flows for operating, financing, and investing activities at a point in time. 
E) Reports on amounts for assets, liabilities, and equity at a point in time. 
A) Reports how equity changes at a point in time. 
B) Reports how equity changes over a period of time. 
C) Reports on cash flows for operating, financing, and investing activities over a period of time. 
D) Reports on cash flows for operating, financing, and investing activities at a point in time. 
E) Reports on amounts for assets, liabilities, and equity at a point in time.

Question 5

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 6

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n):

Accepted Answer

A) Revenue activity. 
B) Operating activity. 
C) Expense activity. 
D) Investing activity. 
E) Financing activity. 
A) Revenue activity. 
B) Operating activity. 
C) Expense activity. 
D) Investing activity. 
E) Financing activity.

Question 7

If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000,is assessed for tax purposes at $95,000,is recognized by its purchasers as easily being worth $140,000,and is sold for $137,000.At the time of the sale,assume that the seller still owed $30,000 to TrustOne Bank on the land that was purchased for $85,000.Immediately after the sale,the seller paid off the loan to TrustOne Bank.What is the effect of the sale and the payoff of the loan on the accounting equation?

Accepted Answer

A) Assets increase $52,000; owner's equity increases $22,000; liabilities decrease $30,000 
B) Assets increase $52,000; owner's equity increases $30,000; liabilities decrease $30,000 
C) Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000 
D) Assets decrease $30,000; owner's equity decreases $30,000; liabilities decrease $30,000 
E) Assets decrease $55,000; owner's equity decreases $55,000; liabilities decrease $30,000 
A) Assets increase $52,000; owner's equity increases $22,000; liabilities decrease $30,000 
B) Assets increase $52,000; owner's equity increases $30,000; liabilities decrease $30,000 
C) Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000 
D) Assets decrease $30,000; owner's equity decreases $30,000; liabilities decrease $30,000 
E) Assets decrease $55,000; owner's equity decreases $55,000; liabilities decrease $30,000

Question 8

A payment to an owner is called a(n):

Accepted Answer

A) Liability. 
B) Withdrawal. 
C) Expense. 
D) Contribution. 
E) Investment. 
A) Liability. 
B) Withdrawal. 
C) Expense. 
D) Contribution. 
E) Investment.

Question 9

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

Accepted Answer

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

Question 10

Increases in equity from a company's earnings activities are:

Accepted Answer

A) Assets. 
B) Revenues. 
C) Liabilities. 
D) Owner's Equity. 
E) Expenses. 
A) Assets. 
B) Revenues. 
C) Liabilities. 
D) Owner's Equity. 
E) Expenses.

Question 11

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Accepted Answer

A) True 
 B)False

Question 12

General accounting principles arise from long-used accounting practices.

Accepted Answer

A) True 
 B)False

Question 13

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net incomes and withdrawals.

Accepted Answer

A) True 
 B)False

Question 14

The financial statement that identifies where a company's cash came from and where it went during the period is the:

Accepted Answer

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

Question 15

Assets are the resources of a company and are expected to yield future benefits.

Accepted Answer

A) True 
 B)False

Question 16

Rent expense that is paid with cash appears on which of the following statements?

Accepted Answer

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

Question 17

A sole proprietorship is a business owned by one or more persons.

Accepted Answer

A) True 
 B)False

Question 18

Ethical behavior requires:

Accepted Answer

A) That auditors' pay not depend on the success of the client's business. 
B) Auditors to invest in businesses they audit. 
C) Analysts to report information favorable to their companies. 
D) Managers to use accounting information to benefit themselves. 
E) That auditors' pay depend on the success of the client's business. 
A) That auditors' pay not depend on the success of the client's business. 
B) Auditors to invest in businesses they audit. 
C) Analysts to report information favorable to their companies. 
D) Managers to use accounting information to benefit themselves. 
E) That auditors' pay depend on the success of the client's business.

Question 19

The monetary unit assumption means that all international transactions must be expressed in dollars.

Accepted Answer

A) True 
 B)False

Question 20

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

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

Internal users include lenders,shareholders,brokers and managers.

Net Income:

The statement of owner's equity:

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

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n):

A payment to an owner is called a(n):

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

Increases in equity from a company's earnings activities are:

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

General accounting principles arise from long-used accounting practices.

Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net incomes and withdrawals.

The financial statement that identifies where a company's cash came from and where it went during the period is the:

Assets are the resources of a company and are expected to yield future benefits.

Rent expense that is paid with cash appears on which of the following statements?

A sole proprietorship is a business owned by one or more persons.

Ethical behavior requires:

The monetary unit assumption means that all international transactions must be expressed in dollars.

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, 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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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