Question 1

It is against SEC regulations to promote the corporation in the annual report.

Accepted Answer

A) True 
 B)False  False

Question 2

Generally accepted accounting principles

Accepted Answer

A) are advisory guidelines for management. 
B) are only applicable to balance sheets. 
C) are to be followed in the preparation of financial statements. 
D) can never be deviated from. 
E) are uniform world-wide. 
A) are advisory guidelines for management. 
B) are only applicable to balance sheets. 
C) are to be followed in the preparation of financial statements. 
D) can never be deviated from. 
E) are uniform world-wide. C

Question 3

Which of the following statements is false?

Accepted Answer

A) If you increase an asset account,you may increase a liability account. 
B) If you increase an asset account,you may decrease an asset account. 
C) If you decrease an asset account,you may increase an owners' equity account. 
D) If you decrease an asset account,you may decrease an owners' equity account. 
E) If you increase an asset account,you may increase an owners' equity account. 
A) If you increase an asset account,you may increase a liability account. 
B) If you increase an asset account,you may decrease an asset account. 
C) If you decrease an asset account,you may increase an owners' equity account. 
D) If you decrease an asset account,you may decrease an owners' equity account. 
E) If you increase an asset account,you may increase an owners' equity account. C

Question 4

Smith's Medical Supplies sold unused land at cost,which was $15,000.The buyer paid $6,000 in cash,with the balance to be paid on a note due in 6 months.The effect on Smith's Medical Supplies is to

Accepted Answer

A) decrease the land account by $15,000,increase the cash account by $6,000,and increase the balance in the notes payable account by $9,000. 
B) decrease the land account by $15,000,increase the cash account by $6,000,and increase the balance in the notes receivable account by $9,000. 
C) decrease the land account by $15,000,increase the cash account by $6,000,and decrease the balance in the notes receivable by $9,000. 
D) decrease the land account by $6,000 and increase the cash account by $6,000. 
E) decrease the land account by $15,000,increase the cash account by $6,000,and decrease the balance in the notes payable account by $9,000. 
A) decrease the land account by $15,000,increase the cash account by $6,000,and increase the balance in the notes payable account by $9,000. 
B) decrease the land account by $15,000,increase the cash account by $6,000,and increase the balance in the notes receivable account by $9,000. 
C) decrease the land account by $15,000,increase the cash account by $6,000,and decrease the balance in the notes receivable by $9,000. 
D) decrease the land account by $6,000 and increase the cash account by $6,000. 
E) decrease the land account by $15,000,increase the cash account by $6,000,and decrease the balance in the notes payable account by $9,000.

Question 5

Statement of financial position is another name for the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

A sole proprietorship is an accounting entity,even though it has only a single owner.

Accepted Answer

A) True 
 B)False

Question 7

Stockholders' equity at the beginning and end of the period amounts to $16,000 and $19,000,respectively.Assets at the beginning and end of the period amount to $26,000 and $21,000,respectively.Liabilities at the beginning of the period were $10,000.Liabilities at the end of the period amount to

Accepted Answer

A) $8,000. 
B) $6,000. 
C) $2,000. 
D) $5,000. 
E) $3,000. 
A) $8,000. 
B) $6,000. 
C) $2,000. 
D) $5,000. 
E) $3,000.

Question 8

Analyze the following transactions in the balance sheet equation using the following worksheet.
1.Initial investment of $300,000 by the owner
2.Acquire equipment for $25,000 cash
3.Acquire inventory for $6,000 on credit
4.Obtain loan of $15,000 from the bank
5.Returned $600 of inventory to supplier
6.Payment to creditor for amount of inventory purchase less amount returned
 $\begin{array}{l}
\begin{array} { |c|r|r|r} 
\hline \text { Transaction } & \text { Cash } & \text { Inventory } \
\hline 1 &  & \
\hline 2 &  & \
\hline 3 & &  \
\hline 4 &  & \
\hline 5 & & \
\hline 6 & &\
\hline
\end{array}
\begin{array} { r|r|r|r|} 
\hline\text { Equipment  } &\text {Note Payable }&\text {Accounts Payable }& \text { Capital } \
\hline & & &  \
\hline& & & \
\hline & & & \
\hline &  & & \
\hline & &  & \
\hline & &&\
\hline
\end{array}
\end{array}$

Accepted Answer

None

Question 9

A creditor is one to whom money is owed.

Accepted Answer

A) True 
 B)False

Question 10

Kitty Clips acquired $2,800 worth of merchandise inventory on account.Upon inspection,the company discovered that $400 worth of the merchandise inventory was defective.Kitty Clips returned the defective merchandise inventory and received full credit.The effect of the return transaction on Kitty Clips would be to

Accepted Answer

A) decrease the merchandise inventory account by $400 and increase the accounts payable account by $400. 
B) decrease the merchandise inventory account by $400 and decrease the accounts payable account by $400. 
C) decrease the merchandise inventory account by $400 and increase the accounts receivable account by $400. 
D) decrease the merchandise inventory account by $400 and decrease the accounts receivable account by $400. 
E) Because the merchandise inventory was never used,Kitty Clips would not record the return of the merchandise inventory. 
A) decrease the merchandise inventory account by $400 and increase the accounts payable account by $400. 
B) decrease the merchandise inventory account by $400 and decrease the accounts payable account by $400. 
C) decrease the merchandise inventory account by $400 and increase the accounts receivable account by $400. 
D) decrease the merchandise inventory account by $400 and decrease the accounts receivable account by $400. 
E) Because the merchandise inventory was never used,Kitty Clips would not record the return of the merchandise inventory.

Question 11

Michael Hudson owns 400 shares of Surefoot Enterprises.The capital stock of Surefoot Enterprises has a par value of $8 per share.Michael Hudson sells his 400 shares of Surefoot Enterprises stock to Brian Haas for $15 per share.The effect of this transaction on Surefoot Enterprises,would be to

Accepted Answer

A) increase the cash account by $6,000 and increase the capital stock account by $6,000. 
B) increase the cash account by $6,000 and decrease the capital stock account by $6,000. 
C) increase the cash account by $6,000,increase the capital stock account by $3,200,and increase the paid-in capital in excess of par account by $2,800. 
D) Surefoot Enterprises would not record this transaction but would note the change in ownership. 
E) Surefoot Enterprises records this transaction but would not note the change in ownership. 
A) increase the cash account by $6,000 and increase the capital stock account by $6,000. 
B) increase the cash account by $6,000 and decrease the capital stock account by $6,000. 
C) increase the cash account by $6,000,increase the capital stock account by $3,200,and increase the paid-in capital in excess of par account by $2,800. 
D) Surefoot Enterprises would not record this transaction but would note the change in ownership. 
E) Surefoot Enterprises records this transaction but would not note the change in ownership.

Question 12

Accountants use the terms notes payable or notes receivable to describe the existence of promissory notes.

Accepted Answer

A) True 
 B)False

Question 13

What effect does the purchase of store equipment on account have on the balance sheet equation?

Accepted Answer

A) Assets increase and liabilities decrease 
B) Assets increase and liabilities increase 
C) Assets decrease and liabilities decrease 
D) Assets decrease and liabilities increase 
E) There is no effect on the accounting equation. 
A) Assets increase and liabilities decrease 
B) Assets increase and liabilities increase 
C) Assets decrease and liabilities decrease 
D) Assets decrease and liabilities increase 
E) There is no effect on the accounting equation.

Question 14

Public accountants are those whose services are offered to the general public on a fee basis.

Accepted Answer

A) True 
 B)False

Question 15

An audit is an examination of transactions and financial statements.

Accepted Answer

A) True 
 B)False

Question 16

Buying on credit creates an account receivable.

Accepted Answer

A) True 
 B)False

Question 17

Nonprofit organizations do not need to analyze financial statement information since their purpose is not to increase net income like profit-seeking organizations.

Accepted Answer

A) True 
 B)False

Question 18

The AICPA Code of Professional Ethics is especially concerned with integrity and independence.

Accepted Answer

A) True 
 B)False

Question 19

Zeus Greek Foods purchased a $21,000 van for use in the business.The company made a $15,000 cash down payment,and signed a note for the balance.The effect of this transaction on Zeus Greek Foods would be to

Accepted Answer

A) increase the van account by $21,000,decrease the cash account by $15,000,and decrease the notes receivable account by $6,000. 
B) increase the van account by $21,000,decrease the cash account by $15,000,and decrease the notes payable account by $6,000. 
C) increase the van account by $15,000 and decrease the cash account by $15,000. 
D) increase the van account by $21,000,decrease the cash account by $15,000,and increase the notes payable account by $6,000. 
E) decrease the van account by $15,000 and increase the cash account by $15,000. 
A) increase the van account by $21,000,decrease the cash account by $15,000,and decrease the notes receivable account by $6,000. 
B) increase the van account by $21,000,decrease the cash account by $15,000,and decrease the notes payable account by $6,000. 
C) increase the van account by $15,000 and decrease the cash account by $15,000. 
D) increase the van account by $21,000,decrease the cash account by $15,000,and increase the notes payable account by $6,000. 
E) decrease the van account by $15,000 and increase the cash account by $15,000.

Question 20

Which of the following describes a liability?

Accepted Answer

A) Future economic benefit 
B) Economic obligations to creditors 
C) Paid-in capital 
D) Investment by owners 
E) Present value of customer future payments 
A) Future economic benefit 
B) Economic obligations to creditors 
C) Paid-in capital 
D) Investment by owners 
E) Present value of customer future payments

It is against SEC regulations to promote the corporation in the annual report.

Generally accepted accounting principles

Which of the following statements is false?

Smith's Medical Supplies sold unused land at cost,which was $15,000.The buyer paid $6,000 in cash,with the balance to be paid on a note due in 6 months.The effect on Smith's Medical Supplies is to

Statement of financial position is another name for the balance sheet.

A sole proprietorship is an accounting entity,even though it has only a single owner.

Stockholders' equity at the beginning and end of the period amounts to $16,000 and $19,000,respectively.Assets at the beginning and end of the period amount to $26,000 and $21,000,respectively.Liabilities at the beginning of the period were $10,000.Liabilities at the end of the period amount to

A creditor is one to whom money is owed.

Michael Hudson owns 400 shares of Surefoot Enterprises.The capital stock of Surefoot Enterprises has a par value of $8 per share.Michael Hudson sells his 400 shares of Surefoot Enterprises stock to Brian Haas for $15 per share.The effect of this transaction on Surefoot Enterprises,would be to

Accountants use the terms notes payable or notes receivable to describe the existence of promissory notes.

What effect does the purchase of store equipment on account have on the balance sheet equation?

Public accountants are those whose services are offered to the general public on a fee basis.

An audit is an examination of transactions and financial statements.

Buying on credit creates an account receivable.

Nonprofit organizations do not need to analyze financial statement information since their purpose is not to increase net income like profit-seeking organizations.

The AICPA Code of Professional Ethics is especially concerned with integrity and independence.

Zeus Greek Foods purchased a $21,000 van for use in the business.The company made a $15,000 cash down payment,and signed a note for the balance.The effect of this transaction on Zeus Greek Foods would be to

Which of the following describes a liability?

Measuring Income to Assess Performance

Recording Transactions

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Inventories and Cost of Goods Sold

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

Filters

Exam 1: Accounting: the Language of Business

It is against SEC regulations to promote the corporation in the annual report.

Generally accepted accounting principles

Which of the following statements is false?

Smith's Medical Supplies sold unused land at cost,which was $15,000.The buyer paid $6,000 in cash,with the balance to be paid on a note due in 6 months.The effect on Smith's Medical Supplies is to

Statement of financial position is another name for the balance sheet.

A sole proprietorship is an accounting entity,even though it has only a single owner.

Stockholders' equity at the beginning and end of the period amounts to $16,000 and $19,000,respectively.Assets at the beginning and end of the period amount to $26,000 and $21,000,respectively.Liabilities at the beginning of the period were $10,000.Liabilities at the end of the period amount to

A creditor is one to whom money is owed.

Michael Hudson owns 400 shares of Surefoot Enterprises.The capital stock of Surefoot Enterprises has a par value of $8 per share.Michael Hudson sells his 400 shares of Surefoot Enterprises stock to Brian Haas for $15 per share.The effect of this transaction on Surefoot Enterprises,would be to

Accountants use the terms notes payable or notes receivable to describe the existence of promissory notes.

What effect does the purchase of store equipment on account have on the balance sheet equation?

Public accountants are those whose services are offered to the general public on a fee basis.

An audit is an examination of transactions and financial statements.

Buying on credit creates an account receivable.

Nonprofit organizations do not need to analyze financial statement information since their purpose is not to increase net income like profit-seeking organizations.

The AICPA Code of Professional Ethics is especially concerned with integrity and independence.

Zeus Greek Foods purchased a $21,000 van for use in the business.The company made a $15,000 cash down payment,and signed a note for the balance.The effect of this transaction on Zeus Greek Foods would be to

Which of the following describes a liability?

Measuring Income to Assess Performance

Recording Transactions

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Inventories and Cost of Goods Sold

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

Filters