Question 1

Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity?

Accepted Answer

A)  $55,000 
B)  $110,000 
C)  $165,000 
D)  $220,000 
E)  Cannot be determined from the given information 
A)  $55,000 
B)  $110,000 
C)  $165,000 
D)  $220,000 
E)  Cannot be determined from the given information

Question 2

Explain the accounting equation and define its terms.

Accepted Answer

The accounting equation is stated as: As

Question 3

Internal users of accounting information always include:

Accepted Answer

A)  Shareholders 
B)  Managers 
C)  Lenders 
D)  Suppliers 
E)  Customers 
A)  Shareholders 
B)  Managers 
C)  Lenders 
D)  Suppliers 
E)  Customers

Question 4

Accounting is one way important information about businesses are reported to decision makers.

Accepted Answer

A) True 
 B)False

Question 5

Assets created by selling goods and services on credit are:

Accepted Answer

A)  Accounts payable 
B)  Accounts receivable 
C)  Liabilities 
D)  Expenses 
E)  Equity 
A)  Accounts payable 
B)  Accounts receivable 
C)  Liabilities 
D)  Expenses 
E)  Equity

Question 6

Nike had income of $350 million and average assets of $2,000 million. Its return on assets is:

Accepted Answer

A)  1.8% 
B)  35% 
C)  17.5% 
D)  5.7% 
E)  3.5% 
A)  1.8% 
B)  35% 
C)  17.5% 
D)  5.7% 
E)  3.5%

Question 7

The statement of cash flows reports information on:

Accepted Answer

A)  Revenue activities 
B)  Expense activities 
C)  Financing activities 
D)  Equity activities 
E)  Asset activities 
A)  Revenue activities 
B)  Expense activities 
C)  Financing activities 
D)  Equity activities 
E)  Asset activities

Question 8

Beta Corporation purchased $100,000 worth of land by paying 10,000 cash and signing a $90,000 mortgage. Immediately prior to this transaction the corporation had assets, liabilities and owners' equity in the amounts of $150,000; $30,000; and $120,000 respectively. What is the total amount of Beta Corporation's assets after this transaction has been recorded?

Accepted Answer

A)  $240,000 
B)  $250,000 
C)  $160,000 
D)  $40,000 
E)  $260,000 
A)  $240,000 
B)  $250,000 
C)  $160,000 
D)  $40,000 
E)  $260,000

Question 9

Compute return on assets given net income of $13,764, beginning assets of $120,000 and ending assets of $176,000.

Accepted Answer

A)  4.65% 
B)  7.82% 
C)  9.3% 
D)  11.47% 
E)  21.51% 
A)  4.65% 
B)  7.82% 
C)  9.3% 
D)  11.47% 
E)  21.51%

Question 10

How does the objectivity principle support ethical behavior?

Accepted Answer

The objectivity principle supports ethic

Question 11

Della's Donuts has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Accepted Answer

Net income

Question 12

Assets are the resources owned or controlled by a business.

Accepted Answer

A) True 
 B)False

Question 13

The International Accounting Standards Board (IASB) has the authority to impose its standards on companies around the world.

Accepted Answer

A) True 
 B)False

Question 14

The primary objective of financial accounting is to provide general-purpose financial statements to help external users analyze and interpret an organization's activities.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following elements are found on the Balance Sheet?

Accepted Answer

A)  Service Revenue 
B)  Net Income 
C)  Operating Activities 
D)  Utilities Expense 
E)  Retained Earnings 
A)  Service Revenue 
B)  Net Income 
C)  Operating Activities 
D)  Utilities Expense 
E)  Retained Earnings

Question 16

If the assets of a business increased $15,000 during a period of time and its equity decreased $4,000 during the same period, liabilities in the business must have:

Accepted Answer

A)  Increased $11,000 
B)  Decreased $11,000 
C)  Increased $19,000 
D)  Decreased $19,000 
E)  Increased $61,000 
A)  Increased $11,000 
B)  Decreased $11,000 
C)  Increased $19,000 
D)  Decreased $19,000 
E)  Increased $61,000

Question 17

Assets = Liabilities + Equity is known as the:

Accepted Answer

A)  Income statement equation 
B)  Cost principle 
C)  Objectivity principle 
D)  Accounting equation 
E)  Transaction principle 
A)  Income statement equation 
B)  Cost principle 
C)  Objectivity principle 
D)  Accounting equation 
E)  Transaction principle

Question 18

The financial statement that shows: beginning and ending retained earnings balances and the effects of net income (loss) and a dividend for the period is the:

Accepted Answer

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

Question 19

Risk is:

Accepted Answer

A)  Net income divided by average total assets 
B)  The reward for investment 
C)  The uncertainty about the expected return that will be earned from an investment 
D)  Unrelated to expected return 
E)  Derived from the idea of getting something back from an investment 
A)  Net income divided by average total assets 
B)  The reward for investment 
C)  The uncertainty about the expected return that will be earned from an investment 
D)  Unrelated to expected return 
E)  Derived from the idea of getting something back from an investment

Question 20

The primary objective of financial accounting is:

Accepted Answer

A)  To serve the decision-making needs of internal users 
B)  To provide financial statements to help external users analyze and interpret an organization's activities 
C)  To monitor and control company activities 
D)  To provide information on both the costs and benefits of managing products and services 
E)  To know what, when and how much to produce 
A)  To serve the decision-making needs of internal users 
B)  To provide financial statements to help external users analyze and interpret an organization's activities 
C)  To monitor and control company activities 
D)  To provide information on both the costs and benefits of managing products and services 
E)  To know what, when and how much to produce

Exam 1: Introducing Accounting in Business

Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity?

Explain the accounting equation and define its terms.

Internal users of accounting information always include:

Accounting is one way important information about businesses are reported to decision makers.

Assets created by selling goods and services on credit are:

Nike had income of $350 million and average assets of $2,000 million. Its return on assets is:

The statement of cash flows reports information on:

Compute return on assets given net income of $13,764, beginning assets of $120,000 and ending assets of $176,000.

How does the objectivity principle support ethical behavior?

Della's Donuts has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Assets are the resources owned or controlled by a business.

The International Accounting Standards Board (IASB) has the authority to impose its standards on companies around the world.

The primary objective of financial accounting is to provide general-purpose financial statements to help external users analyze and interpret an organization's activities.

Which of the following elements are found on the Balance Sheet?

If the assets of a business increased $15,000 during a period of time and its equity decreased $4,000 during the same period, liabilities in the business must have:

Assets = Liabilities + Equity is known as the:

The financial statement that shows: beginning and ending retained earnings balances and the effects of net income (loss) and a dividend for the period is the:

Risk is:

The primary objective of financial accounting is:

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

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