Question 1

An account is a summary record of the changes in a particular asset,liability,or owners' equity.

Accepted Answer

A) True 
 B)False

Question 2

The effects of the form of ownership of a business entity on income taxes may vary significantly.

Accepted Answer

A) True 
 B)False

Question 3

Abigail and Amanda started the ACL Partnership on September 1,20X9.Given the following transactions,prepare a balance sheet for the partnership as of September 10,20X9.
 Sept. 1 The ACL Partnership was formed as Abigail invested $ \$ 9,000 $ in cash and Amanda invested $ \$ 4,100 $ worth of supplies and $ \$ 4,700 $ in cash.
Sept. 2 ACL acquired $ \$ 3,600 $ in inventory, paying cash.
Sept. 4 ACL acquired equipment costing $ \$ 23,900 $, making a $ \$ 3,500 $ cash down payment, with the balance due on note.
Sept. 5 ACL returned $ \$ 300 $ worth of defective inventory and received a refund.
Sept. 7 ACL acquired inventory costing $ \$ 800 $ on open account.
Sept. 8 ACL sold equipment costing $ \$ 1,700 $ at cost. A close friend, purchased the equipment on account.
Sept. 9 ACL paid $ \$ 400 $ associated with the inventory acquired on September 7.
Sept. 10 ACL received $ \$ 400 $ from the friend who acquired equipment on September 8. Required:
1.Prepare an analysis of the transactions on the balance sheet equation.
2.Prepare a balance sheet as of September 10,20X9 for ACL Partnership.

Accepted Answer

None

Question 4

The accounting equation can be stated as which of the following?

Accepted Answer

A) Assets - liabilities = owners' equity 
B) Assets + liabilities = owners' equity 
C) Liabilities + assets = owners' equity 
D) Owners' equity + assets = liabilities 
E) Liabilities - owners' equity = assets 
A) Assets - liabilities = owners' equity 
B) Assets + liabilities = owners' equity 
C) Liabilities + assets = owners' equity 
D) Owners' equity + assets = liabilities 
E) Liabilities - owners' equity = assets

Question 5

A loan from a financial institution will increase assets and increase liabilities.

Accepted Answer

A) True 
 B)False

Question 6

Twinkle Toes Dance Company December 31,20X9
$$\begin{array} { | l | r | r | r | } 
\hline \text { Cash } & \$ 10,000 & \text { Accounts payable } & \$ 5,600 \
\hline \text { Accounts receivable } & 4,000 & \text { Notes payable } & 17,000 \
\hline \text { Inventory } & 8,000 & \text { Common stock } & 5,000 \
\hline \text { Equipment } & 14,800 & \text { Retained earnings } & \underline { 9,200 } \
\hline \text { Total Assets } & \$ 36,800 & \text { Total liabilities and shareholders equity } & \$  36,800 \
\hline
\end{array}$$ What is the name of the financial statement above?

Accepted Answer

A) Income Statement 
B) Balance Sheet 
C) Statement of Cash Flows 
D) Statement of Changes in Shareholders Equity 
E) Statement of Retained Earnings 
A) Income Statement 
B) Balance Sheet 
C) Statement of Cash Flows 
D) Statement of Changes in Shareholders Equity 
E) Statement of Retained Earnings

Question 7

Which of the following statements is true?

Accepted Answer

A) Owners' equities are economic sacrifices after deducting liabilities. 
B) Assets are expected to benefit no one. 
C) Liabilities are future cash inflows. 
D) Assets are always the sum of liabilities and owners' equities. 
E) Owners' equities have priority over liabilities for assets upon liquidation. 
A) Owners' equities are economic sacrifices after deducting liabilities. 
B) Assets are expected to benefit no one. 
C) Liabilities are future cash inflows. 
D) Assets are always the sum of liabilities and owners' equities. 
E) Owners' equities have priority over liabilities for assets upon liquidation.

Question 8

The accountant for Tibbo Industries is required to prepare monthly financial statements.Upon opening the file with the previous month's balance sheets,the accountant notices that they have been prepared incorrectly.Prepare a corrected November balance sheet based on the information below.
Balance Sheet for
Tibbo Industries
Prepared on
November 29,2009
 Assets  $ \quad $ $ \quad $ $ \quad $ Liabilities and Owners Equity $\begin{array}{lll}
\text { Merchandise inventory } & 8,000 & \text { Office supplies } &5\
\text { Accounts payable } & 4,500 & \text { Long term debt }&1 \
\text { Cash } & 9,000 & \text { Owners equity }&5 \
\text { Owners' equity } & 50,500 & \text { Prepaid expenses }&5 \
\text { Property and equipment } & 50,500 &
\end{array}$

Accepted Answer

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Question 9

Typically,a company sells its stock at par value.

Accepted Answer

A) True 
 B)False

Question 10

A corporation is an organization

Accepted Answer

A) with owners assuming personal liability for business losses. 
B) that joins two or more people together as co-owners. 
C) that is an "artificial being" created by individual state laws. 
D) that gives stockholders control of everyday management decisions. 
E) that does not sell stock to raise capital. 
A) with owners assuming personal liability for business losses. 
B) that joins two or more people together as co-owners. 
C) that is an "artificial being" created by individual state laws. 
D) that gives stockholders control of everyday management decisions. 
E) that does not sell stock to raise capital.

Question 11

The board of directors' duty is to manage a company.

Accepted Answer

A) True 
 B)False

Question 12

Iacofano Pizza Place acquired equipment costing $11,000 on account.The effect of this transaction on Iacofano Pizza Place would be to

Accepted Answer

A) increase equipment by $11,000 and decrease capital by $11,000. 
B) increase equipment by $11,000 and increase capital by $11,000. 
C) increase equipment by $11,000 and increase accounts payable by $11,000. 
D) increase equipment by $11,000 and decrease accounts payable by $11,000. 
E) No transaction is recorded since no cash has been paid. 
A) increase equipment by $11,000 and decrease capital by $11,000. 
B) increase equipment by $11,000 and increase capital by $11,000. 
C) increase equipment by $11,000 and increase accounts payable by $11,000. 
D) increase equipment by $11,000 and decrease accounts payable by $11,000. 
E) No transaction is recorded since no cash has been paid.

Question 13

Which of the following statements is false?

Accepted Answer

A) If a sole proprietorship fails,the creditors can obtain repayment from the personal assets of the single owner. 
B) If a partnership fails,the creditors can obtain repayment from the personal assets of the partners. 
C) If a corporation fails,the creditors can obtain repayment from the personal assets of the stockholders. 
D) A change in ownership among the partners results in the termination of the partnership. 
E) Income taxes are not levied against sole proprietorships and partnerships. 
A) If a sole proprietorship fails,the creditors can obtain repayment from the personal assets of the single owner. 
B) If a partnership fails,the creditors can obtain repayment from the personal assets of the partners. 
C) If a corporation fails,the creditors can obtain repayment from the personal assets of the stockholders. 
D) A change in ownership among the partners results in the termination of the partnership. 
E) Income taxes are not levied against sole proprietorships and partnerships.

Question 14

If liabilities increase by $10,000 during a given period and stockholders' equity decreases by $6,000 during the same period,assets must have

Accepted Answer

A) increased by $16,000. 
B) increased by $4,000. 
C) decreased by $4,000. 
D) decreased by $16,000. 
E) This cannot be determined with the given information. 
A) increased by $16,000. 
B) increased by $4,000. 
C) decreased by $4,000. 
D) decreased by $16,000. 
E) This cannot be determined with the given information.

Question 15

The form of organization that has limited liability for the owners is a(n)

Accepted Answer

A) corporation. 
B) partnership. 
C) proprietorship. 
D) cartel. 
E) Sarbanes group. 
A) corporation. 
B) partnership. 
C) proprietorship. 
D) cartel. 
E) Sarbanes group.

Question 16

Below are owners' equity accounts for three different forms of business entities.Identify which form of business entity each set of owners' equity accounts represents and explain how you arrived at your decision.
Business entity #1
 $\begin{array} { l l } 
\text {Sara Kromar, capital }  & \$ 100,000\
\text {Daniel Tondra, capita }  & 15,000\
\text {Ant Pamer, capital }  & 90,000\
\text { Kathy Frenan, capital}&110,000\
\text { Total capital}&\$ 315,000
\end{array}$ 
Business entity #2

$ \begin{array}{lr}
\text {Stockholders' equity:}\
\text {Paid-in capital:}\
\text { Capital stock, } 25,000 \text { shares issued at par value of } \$ 5 \text { per share } & \$ 125,000 \ \text { Paid-in capital in excess of par value } & \underline{250,000} \ \text { Total paid-in capital } & \underline{\underline{\$ 375,000}}\end{array} $
 Business entity #3
 Mary Housel, capital$ \quad $ $ \quad $ $ \quad $ $ \$ 100,000 $

Accepted Answer

Business entity #1 is a partnership sinc

Question 17

With respect to the role of the government in establishing accounting standards in the United States,which of the following statements is incorrect?

Accepted Answer

A) Most accounting reporting requirements are determined by the FASB,which is a non-government institution. 
B) The SEC,and not the FASB,has the ultimate legal authority over most financial reporting to investors. 
C) The FASB can act independently of the SEC and does not need the SEC's support in establishing accounting standards. 
D) The SEC,which is an agency of the federal government,is empowered to ensure full and fair disclosures by corporations. 
E) The SEC is allowed to take an active role in establishing accounting standards. 
A) Most accounting reporting requirements are determined by the FASB,which is a non-government institution. 
B) The SEC,and not the FASB,has the ultimate legal authority over most financial reporting to investors. 
C) The FASB can act independently of the SEC and does not need the SEC's support in establishing accounting standards. 
D) The SEC,which is an agency of the federal government,is empowered to ensure full and fair disclosures by corporations. 
E) The SEC is allowed to take an active role in establishing accounting standards.

Question 18

Management accounting serves internal decision makers,such as top executives and department heads.

Accepted Answer

A) True 
 B)False

Question 19

Regardless of the type of corporation,companies generally account for assets and liabilities similarly.

Accepted Answer

A) True 
 B)False

Question 20

Surround Sound,LLC owned land originally costing $33,000.A real estate agent appraised the land and stated that it is now worth $38,000.Surround Sound,LLC should

Accepted Answer

A) increase the land account by $5,000 and increase the capital stock account by $5,000. 
B) increase the land account by $5,000 and increase the cash account by $5,000. 
C) increase the land account by $5,000 and increase the paid-in capital in excess of par account by $5,000. 
D) There is no effect from the increase in the value of the land on the accounts of Surround Sound,LLC. 
E) increase the land account and the investment account. 
A) increase the land account by $5,000 and increase the capital stock account by $5,000. 
B) increase the land account by $5,000 and increase the cash account by $5,000. 
C) increase the land account by $5,000 and increase the paid-in capital in excess of par account by $5,000. 
D) There is no effect from the increase in the value of the land on the accounts of Surround Sound,LLC. 
E) increase the land account and the investment account.

An account is a summary record of the changes in a particular asset,liability,or owners' equity.

The effects of the form of ownership of a business entity on income taxes may vary significantly.

The accounting equation can be stated as which of the following?

A loan from a financial institution will increase assets and increase liabilities.

Which of the following statements is true?

Typically,a company sells its stock at par value.

A corporation is an organization

The board of directors' duty is to manage a company.

Iacofano Pizza Place acquired equipment costing $11,000 on account.The effect of this transaction on Iacofano Pizza Place would be to

Which of the following statements is false?

If liabilities increase by $10,000 during a given period and stockholders' equity decreases by $6,000 during the same period,assets must have

The form of organization that has limited liability for the owners is a(n)

With respect to the role of the government in establishing accounting standards in the United States,which of the following statements is incorrect?

Management accounting serves internal decision makers,such as top executives and department heads.

Regardless of the type of corporation,companies generally account for assets and liabilities similarly.

Surround Sound,LLC owned land originally costing $33,000.A real estate agent appraised the land and stated that it is now worth $38,000.Surround Sound,LLC should

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

An account is a summary record of the changes in a particular asset,liability,or owners' equity.

The effects of the form of ownership of a business entity on income taxes may vary significantly.

The accounting equation can be stated as which of the following?

A loan from a financial institution will increase assets and increase liabilities.

Which of the following statements is true?

Typically,a company sells its stock at par value.

A corporation is an organization

The board of directors' duty is to manage a company.

Iacofano Pizza Place acquired equipment costing $11,000 on account.The effect of this transaction on Iacofano Pizza Place would be to

Which of the following statements is false?

If liabilities increase by $10,000 during a given period and stockholders' equity decreases by $6,000 during the same period,assets must have

The form of organization that has limited liability for the owners is a(n)

With respect to the role of the government in establishing accounting standards in the United States,which of the following statements is incorrect?

Management accounting serves internal decision makers,such as top executives and department heads.

Regardless of the type of corporation,companies generally account for assets and liabilities similarly.

Surround Sound,LLC owned land originally costing $33,000.A real estate agent appraised the land and stated that it is now worth $38,000.Surround Sound,LLC should

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