Question 1

Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)?

Accepted Answer

A)  SEC 
B)  PCAOB 
C)  FASB 
D)  AICPA 
A)  SEC 
B)  PCAOB 
C)  FASB 
D)  AICPA A

Question 2

Corporate ownership is a very popular type of ownership in the United States.Which of the following is a major reason that corporate ownership is popular?

Accepted Answer

A)  Corporate shareholders have limited liability for the debts of the corporation. 
B)  Most corporations are small or medium-sized. 
C)  The life of a corporation is limited by the death of an owner. 
D)  A corporation is usually managed by the owners. 
A)  Corporate shareholders have limited liability for the debts of the corporation. 
B)  Most corporations are small or medium-sized. 
C)  The life of a corporation is limited by the death of an owner. 
D)  A corporation is usually managed by the owners. A

Question 3

Land was originally purchased for $20,000.It is sold for $20,000 in cash.How does the sale affect the accounting equation?

Accepted Answer

A)  Assets increase $20,000; liabilities decrease $20,000. 
B)  Assets increase $20,000; liabilities increase $20,000. 
C)  Assets increase $20,000; owner's equity increases $20,000. 
D)  Assets increase $20,000; assets decrease $20,000. 
A)  Assets increase $20,000; liabilities decrease $20,000. 
B)  Assets increase $20,000; liabilities increase $20,000. 
C)  Assets increase $20,000; owner's equity increases $20,000. 
D)  Assets increase $20,000; assets decrease $20,000. D

Question 4

The PCAOB is a watchdog agency that monitors the work of small,privately owned businesses.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following financial statements uses net income or net loss taken directly from the income statement?

Accepted Answer

A)  Statement of owner's equity 
B)  Statement of cash flow 
C)  Balance sheet 
D)  Statement of expenditures 
A)  Statement of owner's equity 
B)  Statement of cash flow 
C)  Balance sheet 
D)  Statement of expenditures

Question 6

Net income is $34,000.Beginning owner's capital is $29,000.Ending owner's capital is $55,000.No capital contributions were made during the year.What was the amount of drawings?

Accepted Answer

A)  $18,000 
B)  $8,000 
C)  $60,000 
D)  $5,000 
A)  $18,000 
B)  $8,000 
C)  $60,000 
D)  $5,000

Question 7

Hamilton Lawn Service incurred $500 labor expense and promised to pay the labor agency within 30 days.Which account increased?

Accepted Answer

A)  Accounts receivable 
B)  Cash 
C)  Accounts payable 
D)  Owner's capital 
A)  Accounts receivable 
B)  Cash 
C)  Accounts payable 
D)  Owner's capital

Question 8

Which of the following statements BEST describes managerial accounting?

Accepted Answer

A)  Managerial accounting focuses on information for internal decision making. 
B)  Managerial accounting focuses on outside investors and lenders. 
C)  Managerial accounting provides information for the public. 
D)  Managerial accounting provides information for taxing authorities. 
A)  Managerial accounting focuses on information for internal decision making. 
B)  Managerial accounting focuses on outside investors and lenders. 
C)  Managerial accounting provides information for the public. 
D)  Managerial accounting provides information for taxing authorities.

Question 9

A $5,000 account payable is paid by the business.How is the accounting equation affected?

Accepted Answer

A)  Assets decrease $5,000; owner's equity increases $5,000. 
B)  Assets decrease $5,000; liabilities decrease $5,000. 
C)  Assets increase $5,000; owner's equity decreases $5,000. 
D)  Assets increase $5,000; liabilities increase $5,000. 
A)  Assets decrease $5,000; owner's equity increases $5,000. 
B)  Assets decrease $5,000; liabilities decrease $5,000. 
C)  Assets increase $5,000; owner's equity decreases $5,000. 
D)  Assets increase $5,000; liabilities increase $5,000.

Question 10

A relatively low amount of government regulation is a key advantage of a:

Accepted Answer

A)  partnership. 
B)  not-for-profit. 
C)  corporation. 
D)  proprietorship. 
A)  partnership. 
B)  not-for-profit. 
C)  corporation. 
D)  proprietorship.

Question 11

Which of the following is NOT a characteristic of a traditional partnership?

Accepted Answer

A)  A partnership is owned by shareholders or stockholders. 
B)  If a partnership cannot pay its debts, lenders can take the owners' personal assets to satisfy the obligations. 
C)  A partnership joins two or more individuals as co-owners. 
D)  Each partner has the authority to commit the entire partnership to a binding contract. 
A)  A partnership is owned by shareholders or stockholders. 
B)  If a partnership cannot pay its debts, lenders can take the owners' personal assets to satisfy the obligations. 
C)  A partnership joins two or more individuals as co-owners. 
D)  Each partner has the authority to commit the entire partnership to a binding contract.

Question 12

By definition,which of the following represents the owners of a corporation?

Accepted Answer

A)  Customers 
B)  Creditors 
C)  Stockholders 
D)  Employees 
A)  Customers 
B)  Creditors 
C)  Stockholders 
D)  Employees

Question 13

Alice Li started Li Design Consultants and invested $5,000 into the business.On Dec.12,she rendered services to three clients "on account" with total revenues earned of $4,500.She then incurred advertising expense on four different websites and promised to pay a total of $1,600 at a later date.On Dec.15,she purchased $900 of office supplies for cash.On Dec.20,she received $1,000 in cash payment from her first client and deposited it into the business account.On Dec.22,she incurred $2,000 for legal expense and paid cash.On Dec.31,she made a payment of $300 to one of the websites that she owed for advertising provided earlier in the month.No withdrawals were taken in December.Please prepare an income statement for the month of December,a statement of owner's equity for the month of December,and a balance sheet at Dec.31,2012.

Accepted Answer

This question is no

Question 14

Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month.Which of the following accounts decreases?

Accepted Answer

A)  Accounts receivable 
B)  Accounts payable 
C)  Owner's capital 
D)  Rent expense 
A)  Accounts receivable 
B)  Accounts payable 
C)  Owner's capital 
D)  Rent expense

Question 15

A proprietor may have to pay self-employment tax in addition to income tax.

Accepted Answer

A) True 
 B)False

Question 16

The primary objective of financial reporting is to provide information useful for making investment and lending decisions.To be useful,information must possess certain characteristics.Which of the following is NOT one of the basic characteristics that financial information must possess to be useful?

Accepted Answer

A)  Reliability 
B)  Creativity 
C)  Relevance 
D)  Comparability 
A)  Reliability 
B)  Creativity 
C)  Relevance 
D)  Comparability

Question 17

One beneficial characteristic of a proprietorship is:

Accepted Answer

A)  that the owner also manages the business. 
B)  the owner appoints a board of directors to manage the business. 
C)  the owner's interest is separate from the manager's interest. 
D)  the owner does not need to be involved in the day-to-day operations of the business. 
A)  that the owner also manages the business. 
B)  the owner appoints a board of directors to manage the business. 
C)  the owner's interest is separate from the manager's interest. 
D)  the owner does not need to be involved in the day-to-day operations of the business.

Question 18

Sharon Samson starts a plumbing service called Reliable Waterworks.Selected transactions are described as follows:
A.Sharon deposits $7,000 into a new checking account for the business,recording the capital contribution.
B.Reliable pays $4,000 cash for equipment to be used for plumbing repairs.
C.Reliable borrows $15,000 from a local bank and deposits the money in the checking account.
D.Reliable pays $600 rent for the first month.
E.Reliable pays $400 cash for plumbing supplies to be used on various jobs in the future.
F.Reliable completes a plumbing repair project for a local lawyer and receives $1,300 cash.
G.Sharon takes a cash withdrawal of $2,500.
After all of the transactions,what is the amount of total liabilities?

Accepted Answer

A) $15,000 
B) $4,000 
C) $19,000 
D) $4,400 
A) $15,000 
B) $4,000 
C) $19,000 
D) $4,400

Question 19

Which of the following financial statements reports expenses in decreasing order of their amounts,with the largest expense first?

Accepted Answer

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

Question 20

Caleb Brown has been the sole owner of a bicycle sales and repair shop for many years.Which of the following business types would best protect Caleb's personal assets from product liability exposure?

Accepted Answer

A)  Partnership 
B)  Limited liability company 
C)  Proprietorship 
D)  Not-for-profit 
A)  Partnership 
B)  Limited liability company 
C)  Proprietorship 
D)  Not-for-profit

Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)?

Corporate ownership is a very popular type of ownership in the United States.Which of the following is a major reason that corporate ownership is popular?

Land was originally purchased for $20,000.It is sold for $20,000 in cash.How does the sale affect the accounting equation?

The PCAOB is a watchdog agency that monitors the work of small,privately owned businesses.

Which of the following financial statements uses net income or net loss taken directly from the income statement?

Net income is $34,000.Beginning owner's capital is $29,000.Ending owner's capital is $55,000.No capital contributions were made during the year.What was the amount of drawings?

Hamilton Lawn Service incurred $500 labor expense and promised to pay the labor agency within 30 days.Which account increased?

Which of the following statements BEST describes managerial accounting?

A $5,000 account payable is paid by the business.How is the accounting equation affected?

A relatively low amount of government regulation is a key advantage of a:

Which of the following is NOT a characteristic of a traditional partnership?

By definition,which of the following represents the owners of a corporation?

Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month.Which of the following accounts decreases?

A proprietor may have to pay self-employment tax in addition to income tax.

The primary objective of financial reporting is to provide information useful for making investment and lending decisions.To be useful,information must possess certain characteristics.Which of the following is NOT one of the basic characteristics that financial information must possess to be useful?

One beneficial characteristic of a proprietorship is:

Which of the following financial statements reports expenses in decreasing order of their amounts,with the largest expense first?

Caleb Brown has been the sole owner of a bicycle sales and repair shop for many years.Which of the following business types would best protect Caleb's personal assets from product liability exposure?

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 1: Accounting and the Business Environment

Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)?

Corporate ownership is a very popular type of ownership in the United States.Which of the following is a major reason that corporate ownership is popular?

Land was originally purchased for $20,000.It is sold for $20,000 in cash.How does the sale affect the accounting equation?

The PCAOB is a watchdog agency that monitors the work of small,privately owned businesses.

Which of the following financial statements uses net income or net loss taken directly from the income statement?

Net income is $34,000.Beginning owner's capital is $29,000.Ending owner's capital is $55,000.No capital contributions were made during the year.What was the amount of drawings?

Hamilton Lawn Service incurred $500 labor expense and promised to pay the labor agency within 30 days.Which account increased?

Which of the following statements BEST describes managerial accounting?

A $5,000 account payable is paid by the business.How is the accounting equation affected?

A relatively low amount of government regulation is a key advantage of a:

Which of the following is NOT a characteristic of a traditional partnership?

By definition,which of the following represents the owners of a corporation?

Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month.Which of the following accounts decreases?

A proprietor may have to pay self-employment tax in addition to income tax.

One beneficial characteristic of a proprietorship is:

Which of the following financial statements reports expenses in decreasing order of their amounts,with the largest expense first?

Caleb Brown has been the sole owner of a bicycle sales and repair shop for many years.Which of the following business types would best protect Caleb's personal assets from product liability exposure?

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters