Question 1

Income tax is calculated using accounting information.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following formulae is used to calculate average total assets for the return on assets ratio?

Accepted Answer

A)  Average total assets = (Beginning total assets + Ending total assets) × 2 
B)  Average total assets = (Beginning total assets - Ending total assets) × 2 
C)  Average total assets = (Beginning total assets - Ending total assets) / 2 
D)  Average total assets = (Beginning total assets + Ending total assets) / 2 
A)  Average total assets = (Beginning total assets + Ending total assets) × 2 
B)  Average total assets = (Beginning total assets - Ending total assets) × 2 
C)  Average total assets = (Beginning total assets - Ending total assets) / 2 
D)  Average total assets = (Beginning total assets + Ending total assets) / 2

Question 3

The Financial Accounting Standards Board is a U.S.governmental agency that oversees the creation and governance of accounting standards.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Accounting is the information system that measures business activities,processes the information into reports,and communicates the results to decision makers.

Accepted Answer

A) True 
 B)False

Question 6

Liabilities represent creditors' claims on the business's assets.

Accepted Answer

A) True 
 B)False

Question 7

A creditor who has loaned money to a business has a claim to some of the assets of the business until the debt is paid.

Accepted Answer

A) True 
 B)False

Question 8

International Financial Reporting Standards are comparatively more specific and more rule-based than U.S.GAAP.

Accepted Answer

A) True 
 B)False

Question 9

International Financial Reporting Standards (IFRS)allows periodic revaluation of certain assets and liabilities to restate them to market value.

Accepted Answer

A) True 
 B)False

Question 10

A creditor is a person who owes money to the business.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements best defines financial statements?

Accepted Answer

A)  Financial statements are the information systems that record monetary and nonmonetary business transactions. 
B)  Financial statements are the verbal statements made to business news organizations by chief financial officers. 
C)  Financial statements are business documents that report on a business in monetary terms, providing information to help users make informed business decisions. 
D)  Financial statements are plans and forecasts for future time periods based on information from past financial periods. 
A)  Financial statements are the information systems that record monetary and nonmonetary business transactions. 
B)  Financial statements are the verbal statements made to business news organizations by chief financial officers. 
C)  Financial statements are business documents that report on a business in monetary terms, providing information to help users make informed business decisions. 
D)  Financial statements are plans and forecasts for future time periods based on information from past financial periods.

Question 12

Which of the following financial statements shows the owner's withdrawals?

Accepted Answer

A)  Income statement 
B)  Statement of owner's equity 
C)  Budgeted balance sheet 
D)  Balance sheet 
A)  Income statement 
B)  Statement of owner's equity 
C)  Budgeted balance sheet 
D)  Balance sheet

Question 13

McGuire Company is a sole proprietorship.The financial transactions of McGuire Company for the month of May,their first month of operations,are as follows:
• On May 1,2019,Deborah McGuire,the owner,contributed $20,000 cash in exchange for capital.
• On May 3,the company borrowed $5,000 from a creditor and executed a note payable with the principal and interest to be due in one year.
• On May 7,the company purchased $15,000 of equipment for cash.
• On May 8,McGuire Company rendered service to a client and received $3,000 in cash.
• On May 12,the company incurred a repair expense of $1,800 and promised to pay the repair contractor the following month.
• On May 18,the company rendered service to a new client in the amount of $8,000 on account,as the client promised to pay the following month.
• At the end of May,Deborah McGuire withdrew $1,500 cash for personal use.
Required:
1.Prepare a transaction analysis of the transactions.Determine the effects of the transactions on the accounting equation.
2.Prepare an income statement and a statement of owner's equity for the month ending May 31,2019 for
McGuire Company.
3.Prepare a balance sheet at May 31,2019.

Accepted Answer

1.
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2.
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Question 14

The Sarbanes-Oxley Act (SOX)________.

Accepted Answer

A)  requires independent accountants to take responsibility for the accuracy and completeness of the financial reports 
B)  created the SEC 
C)  ensures that financial scandals will no longer occur 
D)  requires companies to take responsibility for the accuracy and completeness of their financial reports 
A)  requires independent accountants to take responsibility for the accuracy and completeness of the financial reports 
B)  created the SEC 
C)  ensures that financial scandals will no longer occur 
D)  requires companies to take responsibility for the accuracy and completeness of their financial reports

Question 15

Assume Metro Company had a net income of $2,100 for the year ending December 2018.Its beginning and ending total assets were $33,500 and $19,500,respectively.Calculate Metro's return on assets (ROA).(Round your percentage answer to two decimal places.)

Accepted Answer

A)  6.27% 
B)  10.77% 
C)  7.92% 
D)  3.96% 
A)  6.27% 
B)  10.77% 
C)  7.92% 
D)  3.96%

Question 16

Regent Plumbing Company provides plumbing services.The company is a sole proprietorship.Selected transactions of Regent Plumbing Company are described as follows: a)Sharon Regent,the owner,contributed $6,000 cash in exchange for capital.
b)Paid $4,000 cash for equipment to be used for plumbing repairs.
c)Borrowed $10,000 from a local bank and deposited the money in the checking account.
d)Paid $700 rent for the year.
e)Paid $200 cash for plumbing supplies to be used next year.
f)Completed a plumbing repair project for a local lawyer and received $3,000 cash.
Calculate the net income.Assume plumbing supplies of $200 are left at the end of the accounting period.

Accepted Answer

A)  $500 
B)  $2,800 
C)  $3,000 
D)  $2,300 
A)  $500 
B)  $2,800 
C)  $3,000 
D)  $2,300

Question 17

Regarding the monetary unit assumption,which of the following statements is correct?

Accepted Answer

A)  This assumption requires that the items on the financial statements be measured at their current market value. 
B)  Accountants assume that the dollar's purchasing power is stable. 
C)  The value of a dollar does not change over time. 
D)  During periods of inflation, a dollar will purchase more. 
A)  This assumption requires that the items on the financial statements be measured at their current market value. 
B)  Accountants assume that the dollar's purchasing power is stable. 
C)  The value of a dollar does not change over time. 
D)  During periods of inflation, a dollar will purchase more.

Question 18

The Securities and Exchange Commission allows U.S.businesses to choose whether they follow U.S.GAAP or International Financial Reporting Standards.

Accepted Answer

A) True 
 B)False

Question 19

Analyze each of the following transactions in terms of their effects on the accounting equation of Osgood Delivery Service.The company is a sole proprietorship.Enter the correct amounts in the columns of the spreadsheet.
a)James Osgood contributes $75,000 cash to the business in exchange for capital.
b)The business purchases $750 of office supplies on account.
c)The business pays cash to purchase a delivery van for $25,000.
d)Services are performed for clients and $5,000 cash is received.
e)Cash is paid for rent expense,$800 and utilities expense,$400.
f)James Osgood withdraws $1,000 from the business for personal use.

Accepted Answer

The answer of Analyze each of the following transactions in...

Question 20

The primary objective of financial reporting is to ensure that all investment decisions are risk free.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting and the Business Environment

Income tax is calculated using accounting information.

Which of the following formulae is used to calculate average total assets for the return on assets ratio?

The Financial Accounting Standards Board is a U.S.governmental agency that oversees the creation and governance of accounting standards.

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

Accounting is the information system that measures business activities,processes the information into reports,and communicates the results to decision makers.

Liabilities represent creditors' claims on the business's assets.

A creditor who has loaned money to a business has a claim to some of the assets of the business until the debt is paid.

International Financial Reporting Standards are comparatively more specific and more rule-based than U.S.GAAP.

International Financial Reporting Standards (IFRS)allows periodic revaluation of certain assets and liabilities to restate them to market value.

A creditor is a person who owes money to the business.

Which of the following statements best defines financial statements?

Which of the following financial statements shows the owner's withdrawals?

The Sarbanes-Oxley Act (SOX)________.

Assume Metro Company had a net income of $2,100 for the year ending December 2018.Its beginning and ending total assets were $33,500 and $19,500,respectively.Calculate Metro's return on assets (ROA).(Round your percentage answer to two decimal places.)

Regarding the monetary unit assumption,which of the following statements is correct?

The Securities and Exchange Commission allows U.S.businesses to choose whether they follow U.S.GAAP or International Financial Reporting Standards.

The primary objective of financial reporting is to ensure that all investment decisions are risk free.

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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