Question 1

The balance sheet of a business summarizes an entity's revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 2

Wylie Company has just completed operations for the year ended December 31, 2018. This is the second year of operations for the company. The following data have been assembled for the business.
 $$\begin{array} { | l | r | r | r | } 
\hline \text { Accounts Payable } & \$ 12,200 & \text { Office Expense } & \$ 6,500 \
\hline \text { Accounts Receivable } & 14,500 & \text { Rent Expense } & 9,600 \
\hline \text { Cash } & 8,200 & \text { Retained Earnings, Jan. 1, 2018 } & 8,300 \
\hline \text { Common Stock } & 9,000 & \text { Salaries Expense } & 36,000 \
\hline \text { Dividends } & 13,500 & \text { Service Revenue } & 84,000 \
\hline \text { Equipment } & 15,000 & \text { Utilities Expense } & 6,200 \
\hline \text { Insurance Expense } & 4,000 & & \
\hline
\end{array}$$ Prepare the balance sheet at December 31, 2018. Use a proper heading.

Accepted Answer

The answer of Wylie Company has just completed operations for...

Question 3

On the statement of cash flows, investing activities include purchases of land and equipment with the issuance of a note payable.

Accepted Answer

A) True 
 B)False

Question 4

Mulberry Corporation collected $16,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry?

Accepted Answer

A)  Assets increase by $16,000; liabilities decrease by $16,000. 
B)  Assets increase by $16,000; assets decrease by $16,000. 
C)  Assets increase by $16,000; liabilities increase by $16,000. 
D)  Assets increase by $16,000; equity increases by $16,000. 
A)  Assets increase by $16,000; liabilities decrease by $16,000. 
B)  Assets increase by $16,000; assets decrease by $16,000. 
C)  Assets increase by $16,000; liabilities increase by $16,000. 
D)  Assets increase by $16,000; equity increases by $16,000.

Question 5

The left side of the accounting equation always equals the right side of the accounting equation.

Accepted Answer

A) True 
 B)False

Question 6

GAAP refers to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to ________.

Accepted Answer

A)  Globally Accepted Accounting Policies 
B)  Government Approved Accounting Principles 
C)  Generally Accredited Accounting Policies 
D)  Generally Accepted Accounting Principles 
A)  Globally Accepted Accounting Policies 
B)  Government Approved Accounting Principles 
C)  Generally Accredited Accounting Policies 
D)  Generally Accepted Accounting Principles

Question 7

On the statement of cash flows, investing activities include cash contributions by stockholders.

Accepted Answer

A) True 
 B)False

Question 8

Diamond, Inc. had the following transactions during June: Performed services for $2,000 on account; received cash on account, $8,000; paid $700 for repair expense; paid $1,800 to a supplier that it owed from the previous month. What is the combined effect on Cash of these June transactions?

Accepted Answer

A)  $5,500 increase 
B)  $5,500 decrease 
C)  $8,000 increase 
D)  $2,500 decrease 
A)  $5,500 increase 
B)  $5,500 decrease 
C)  $8,000 increase 
D)  $2,500 decrease

Question 9

The SEC is a governmental agency that oversees world-wide financial markets and organizations that set accounting standards.

Accepted Answer

A) True 
 B)False

Question 10

Match the accounting position to the job description.

-________ are professional accountants who serve the general public, not one particular company.

Accepted Answer

A)  Certified public accountants 
B)  Financial managers 
C)  Internal auditors 
D)  Controllers 
A)  Certified public accountants 
B)  Financial managers 
C)  Internal auditors 
D)  Controllers

Question 11

Equity of a corporation is broken out into two components. Which of the following are the two components of the equity of a corporation?

Accepted Answer

A)  current assets and fixed assets 
B)  common stock and liabilities 
C)  revenues and expenses 
D)  contributed capital and retained earnings 
A)  current assets and fixed assets 
B)  common stock and liabilities 
C)  revenues and expenses 
D)  contributed capital and retained earnings

Question 12

Equity decreases with expenses and revenues.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a decision made by an internal user?

Accepted Answer

A)  Should we lend money to the business? 
B)  How much money should the business budget for production? 
C)  Should I invest in the business? 
D)  All of the above are correct. 
A)  Should we lend money to the business? 
B)  How much money should the business budget for production? 
C)  Should I invest in the business? 
D)  All of the above are correct.

Question 14

A creditor is any person who has an ownership interest in a business.

Accepted Answer

A) True 
 B)False

Question 15

Briefly discuss each of the following corporate characteristics.
A. Government regulation
B. Limited liability of stockholders
C. Continuous life and transferability of ownership

Accepted Answer

A. Government regulation - Corporations

Question 16

The income statement is also called the statement of earnings.

Accepted Answer

A) True 
 B)False

Question 17

The return on assets is calculated by ________.

Accepted Answer

A)  subtracting net income from average total assets 
B)  adding net income and average total assets 
C)  dividing net income by average total assets 
D)  multiplying net income and average total assets 
A)  subtracting net income from average total assets 
B)  adding net income and average total assets 
C)  dividing net income by average total assets 
D)  multiplying net income and average total assets

Question 18

Lawton Corporation records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent?

Accepted Answer

A)  economic entity assumption 
B)  going concern assumption 
C)  accounting period assumption 
D)  monetary unit assumption 
A)  economic entity assumption 
B)  going concern assumption 
C)  accounting period assumption 
D)  monetary unit assumption

Question 19

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

Accepted Answer

A)  Statement of cash flows 
B)  Income statement 
C)  Statement of retained earnings 
D)  Balance sheet 
A)  Statement of cash flows 
B)  Income statement 
C)  Statement of retained earnings 
D)  Balance sheet

Question 20

As per the economic entity assumption, an organization and its owners should be seen as the same entity.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting and the Business Environment

The balance sheet of a business summarizes an entity's revenues and expenses.

On the statement of cash flows, investing activities include purchases of land and equipment with the issuance of a note payable.

Mulberry Corporation collected $16,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry?

The left side of the accounting equation always equals the right side of the accounting equation.

GAAP refers to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to ________.

On the statement of cash flows, investing activities include cash contributions by stockholders.

Diamond, Inc. had the following transactions during June: Performed services for $2,000 on account; received cash on account, $8,000; paid $700 for repair expense; paid $1,800 to a supplier that it owed from the previous month. What is the combined effect on Cash of these June transactions?

The SEC is a governmental agency that oversees world-wide financial markets and organizations that set accounting standards.

Match the accounting position to the job description. -________ are professional accountants who serve the general public, not one particular company.

Equity of a corporation is broken out into two components. Which of the following are the two components of the equity of a corporation?

Equity decreases with expenses and revenues.

Which of the following is a decision made by an internal user?

A creditor is any person who has an ownership interest in a business.

Briefly discuss each of the following corporate characteristics. A. Government regulation B. Limited liability of stockholders C. Continuous life and transferability of ownership

The income statement is also called the statement of earnings.

The return on assets is calculated by ________.

Lawton Corporation records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent?

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

As per the economic entity assumption, an organization and its owners should be seen as the same entity.

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based Just-In-Time

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

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