Question 1

Proprietorships are owned by one owner and provide only services to their customers.

Accepted Answer

A) True 
 B)False

Question 2

The Austin Land Company sold land for $85,000 in cash. The land was originally purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank. After the sale, The Austin Land Company paid off the loan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

Accepted Answer

Total assets decrease $20,000 (Cash incr

Question 3

Which of the following is not a role of accounting in business?

Accepted Answer

A)  To provide reports to users about the economic activities and conditions of a business. 
B)  To personally guarantee loans of the business. 
C)  To provide information to other users to determine the economic performance and condition of the business. 
D)  To assess the various informational needs of users and design its accounting system to meet those needs. 
A)  To provide reports to users about the economic activities and conditions of a business. 
B)  To personally guarantee loans of the business. 
C)  To provide information to other users to determine the economic performance and condition of the business. 
D)  To assess the various informational needs of users and design its accounting system to meet those needs.

Question 4

Expenses are recorded when

Accepted Answer

A)  cash is paid for services rendered 
B)  a bill is received in advance of services rendered 
C)  assets are used in the process of earning revenue 
D)  none of these 
A)  cash is paid for services rendered 
B)  a bill is received in advance of services rendered 
C)  assets are used in the process of earning revenue 
D)  none of these

Question 5

Explain the meaning of the business entity concept.

Accepted Answer

The business entity concept limits the e

Question 6

The unit of measure concept:

Accepted Answer

A)  is only used in the financial statements of manufacturing companies. 
B)  is not important when applying the cost concept. 
C)  requires that different units be used for assets and liabilities. 
D)  requires that economic data be reported in yen in Japan or dollars in the U.S. 
A)  is only used in the financial statements of manufacturing companies. 
B)  is not important when applying the cost concept. 
C)  requires that different units be used for assets and liabilities. 
D)  requires that economic data be reported in yen in Japan or dollars in the U.S.

Question 7

An income statement is a summary of the revenues and expenses of a business as of a specific date.

Accepted Answer

A) True 
 B)False

Question 8

An account receivable is typically classified as a revenue.

Accepted Answer

A) True 
 B)False

Question 9

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

Accepted Answer

A)  FASB 
B)  IRS 
C)  SEC 
D)  AICPA 
A)  FASB 
B)  IRS 
C)  SEC 
D)  AICPA

Question 11

For accounting purposes, the business entity should be considered separate from its owners if the entity is

Accepted Answer

A)  a corporation 
B)  a proprietorship 
C)  a partnership 
D)  all of the above 
A)  a corporation 
B)  a proprietorship 
C)  a partnership 
D)  all of the above

Question 12

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

Accepted Answer

A)  the Income Statement. 
B)  the Balance Sheet. 
C)  the Statement of Cash Flows. 
D)  cannot be determined. 
A)  the Income Statement. 
B)  the Balance Sheet. 
C)  the Statement of Cash Flows. 
D)  cannot be determined.

Question 13

On May 7, Carpet Barn Company offered to pay $83,000 for land that had a selling price of $105,000. On May 15, Carpet Barn accepted a counteroffer of $95,000. On June 5, the land was assessed at a value of $115,000 for property tax purposes. On December 10, Carpet Barn Company was offered $135,000 for the land by another company. At what value should the land be recorded in Carpet Barn Company's records?

Accepted Answer

The answer of On May 7, Carpet Barn Company offered...

Question 14

Liabilities are reported on the

Accepted Answer

A)  income statement 
B)  statement of owner's equity 
C)  statement of cash flows 
D)  balance sheet 
A)  income statement 
B)  statement of owner's equity 
C)  statement of cash flows 
D)  balance sheet

Question 15

How does receiving a bill to be paid next month for services received affect the accounting equation?

Accepted Answer

A)  assets decrease; owner's equity decreases 
B)  assets increase; liabilities increase 
C)  liabilities increase; owner's equity increases 
D)  liabilities increase; owner's equity decreases 
A)  assets decrease; owner's equity decreases 
B)  assets increase; liabilities increase 
C)  liabilities increase; owner's equity increases 
D)  liabilities increase; owner's equity decreases

Question 16

Paying an account payable increases liabilities and decreases assets.

Accepted Answer

A) True 
 B)False

Question 17

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

Accepted Answer

A) True 
 B)False

Question 18

The owner's rights to the assets rank ahead of the creditors' rights to the assets.

Accepted Answer

A) True 
 B)False

Question 19

An account receivable is a claim against a customer arising from a sale on account.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following financial statements reports information as of a specific date?

Accepted Answer

A)  income statement 
B)  statement of owner's equity 
C)  statement of cash flows 
D)  balance sheet 
A)  income statement 
B)  statement of owner's equity 
C)  statement of cash flows 
D)  balance sheet

Exam 1: Introduction to Accounting and Business

Proprietorships are owned by one owner and provide only services to their customers.

Which of the following is not a role of accounting in business?

Expenses are recorded when

Explain the meaning of the business entity concept.

The unit of measure concept:

An income statement is a summary of the revenues and expenses of a business as of a specific date.

An account receivable is typically classified as a revenue.

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?

For accounting purposes, the business entity should be considered separate from its owners if the entity is

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

Liabilities are reported on the

How does receiving a bill to be paid next month for services received affect the accounting equation?

Paying an account payable increases liabilities and decreases assets.

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

The owner's rights to the assets rank ahead of the creditors' rights to the assets.

An account receivable is a claim against a customer arising from a sale on account.

Which of the following financial statements reports information as of a specific date?

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Filters