Question 1

The ________________ assumption states that transactions and events are expressed in money units.

Accepted Answer

The answer of The ________________ assumption states that transactions and...

Question 2

An external transaction is an exchange of value within an organization.

Accepted Answer

A) True 
 B)False

Question 3

The monetary unit assumption means that all international transactions must be expressed in dollars.

Accepted Answer

A) True 
 B)False

Question 4

If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. What is the effect of the sale on the accounting equation for the seller?

Accepted Answer

A)  Assets increase $52,000; owner's equity increases $52,000. 
B)  Assets increase $85,000; owner's equity increases $85,000. 
C)  Assets increase $137,000; owner's equity increases $137,000. 
D)  Assets increase $140,000; owner's equity increases $140,000. 
E)  Assets decrease $85,000; owner's equity decreases $85,000. 
A)  Assets increase $52,000; owner's equity increases $52,000. 
B)  Assets increase $85,000; owner's equity increases $85,000. 
C)  Assets increase $137,000; owner's equity increases $137,000. 
D)  Assets increase $140,000; owner's equity increases $140,000. 
E)  Assets decrease $85,000; owner's equity decreases $85,000.

Question 5

According to the cost principle, it is preferable for managers to report an estimate of an asset's value.

Accepted Answer

A) True 
 B)False

Question 6

Della's Donuts had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate the net increase or decrease in cash.

Accepted Answer

A)  $61,000 increase. 
B)  $37,000 increase. 
C)  $7,000 decrease. 
D)  $7,000 increase. 
E)  $34,000 decreasE.$27,000 - $22,000 - $12,000 = $7,000 decrease. 
A)  $61,000 increase. 
B)  $37,000 increase. 
C)  $7,000 decrease. 
D)  $7,000 increase. 
E)  $34,000 decreasE.$27,000 - $22,000 - $12,000 = $7,000 decrease.

Question 7

Risk is:

Accepted Answer

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

Question 8

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 9

Decreases in equity that represent costs of assets or services used to earn revenues are called:

Accepted Answer

A)  Liabilities. 
B)  Equity. 
C)  Withdrawals. 
D)  Expenses. 
E)  Owner's Investment. 
A)  Liabilities. 
B)  Equity. 
C)  Withdrawals. 
D)  Expenses. 
E)  Owner's Investment.

Question 10

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called:

Accepted Answer

A)  A Balance sheet. 
B)  A Statement of owner's equity. 
C)  A Statement of cash flows. 
D)  An Income statement. 
E)  A Statement of financial position. 
A)  A Balance sheet. 
B)  A Statement of owner's equity. 
C)  A Statement of cash flows. 
D)  An Income statement. 
E)  A Statement of financial position.

Question 11

Managerial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

Accepted Answer

A) True 
 B)False

Question 12

The four basic financial statements include the balance sheet, income statement, statement of owner's equity, and statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 13

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

Accepted Answer

A) True 
 B)False

Question 14

Liabilities are the owner's claim on assets.

Accepted Answer

A) True 
 B)False

Question 15

The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners?

Accepted Answer

A)  $900,000. 
B)  $700,000. 
C)  $500,000. 
D)  $200,000. 
E)  It is impossible to determine unless the amount of this owners' investment is known. 
A)  $900,000. 
B)  $700,000. 
C)  $500,000. 
D)  $200,000. 
E)  It is impossible to determine unless the amount of this owners' investment is known.

Question 16

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

Accepted Answer

A) True 
 B)False

Question 17

______________ is the area of accounting aimed at serving external users.

Accepted Answer

Financial

Question 18

Operating activities:

Accepted Answer

A)  Are the means organizations use to pay for resources like land, buildings and equipment. 
B)  Involve using resources to research, develop, purchase, produce, distribute and market products and services. 
C)  Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services. 
D)  Are also called asset management. 
E)  Are also called strategic management. 
A)  Are the means organizations use to pay for resources like land, buildings and equipment. 
B)  Involve using resources to research, develop, purchase, produce, distribute and market products and services. 
C)  Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services. 
D)  Are also called asset management. 
E)  Are also called strategic management.

Question 19

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 20

An exchange of value between two entities is called:

Accepted Answer

A)  The accounting equation. 
B)  Recordkeeping or bookkeeping. 
C)  An external transaction. 
D)  An asset. 
E)  Net Income. 
A)  The accounting equation. 
B)  Recordkeeping or bookkeeping. 
C)  An external transaction. 
D)  An asset. 
E)  Net Income.

Exam 1: Accounting in Business

The ________________ assumption states that transactions and events are expressed in money units.

An external transaction is an exchange of value within an organization.

The monetary unit assumption means that all international transactions must be expressed in dollars.

If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. What is the effect of the sale on the accounting equation for the seller?

According to the cost principle, it is preferable for managers to report an estimate of an asset's value.

Della's Donuts had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate the net increase or decrease in cash.

Risk is:

Assets created by selling goods and services on credit are:

Decreases in equity that represent costs of assets or services used to earn revenues are called:

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called:

Managerial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.

The four basic financial statements include the balance sheet, income statement, statement of owner's equity, and statement of cash flows.

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

Liabilities are the owner's claim on assets.

The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners?

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

______________ is the area of accounting aimed at serving external users.

Operating activities:

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

An exchange of value between two entities is called:

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

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