Exam 1: Accounting and the Business Environment

Office Supplies is an expense because the supplies will be used up in the future.

The Sarbanes-Oxley Act (SOX)requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports.

Metropolitan Casting Services started the year with total assets of $130,000 and total liabilities of $60,000.The company is a sole proprietorship.The revenues and the expenses for the year amounted to $130,000 and $50,000,respectively.During the year,there were no new capital contributions and the owner withdrew $60,000.Calculate the amount of increase or decrease in owner's equity for the year.

An audit is an examination of a company's financial statements and records.

Under U.S.GAAP,the monetary unit assumption states that transactions are recorded in dollars.What is the basis for this assumption?

Following is a list of account balances of Nabers Delivery Services as of December 31,after the first year of operations. Accounts Receivable \ 4,000 Accounts Payable 7,000 Salaries Expense 7,000 Repairs Expense 700 Truck 12,000 Equipment 11,000 Notes Payable 8,200 Cash 7,300 Supplies Expense 1,300 Service Revenue 34,000 Gasoline Expense 3,000 Salaries Payable 300 What is the amount of total liabilities at the end of the year?

Which of the following is TRUE of assets?

The statement of owner's equity informs users about changes in the owner's capital account over a period of time.

The owner's claim to the assets of the business is called ________.

Following is an extract of account balances of Aztec Moving Services as of December 31,after the first year of operation. Accounts Receivable \ 4,000 Accounts Payable 4,000 Salaries Expense 7,000 Repairs Expense 700 Truck 10,000 Equipment 9,000 Notes Payable 8,200 Cash 7,100 Supplies Expense 1,200 Service Revenue 35,000 Gasoline Expense 3,600 Salaries Payable 300 What is the amount of total assets at the end of the year?

Which of the following is included on the balance sheet?

The net income (or net loss)must be calculated after the statement of owner's equity is prepared.

The owner's capital account increases with ________.

For each user of accounting information,identify if the user would use financial accounting (FA)or managerial accounting (MA). Accounting Information User FA or MA Business manager Creditor Stockholder Human resources director Internal Revenue Service

A transaction is any event that affects the financial position of the business and can be measured with faithful representation.

A business can be organized as a sole proprietorship,partnership,corporation,or limited-liability company (LLC).

As long as an increase and decrease of the same amount are recorded on one side of the accounting equation,the accounting equation remains in balance.

Which of the following financial statements is used to report the economic resources,debt,and overall financial position of a company?

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

Provide the definition of each of the following accounting assumptions or principles. Assumption or Principle Definition Going Concern Assumption Cost Principle