Question 1

The income statement shows the financial position of a business on a specific date.

Accepted Answer

A) True 
 B)False

Question 2

Owner financing refers to resources contributed by creditors or lenders.

Accepted Answer

A) True 
 B)False

Question 3

Net income occurs when revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 4

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

Accepted Answer

A)  Going-concern assumption. 
B)  Cost principle. 
C)  Revenue recognition principle. 
D)  Objectivity principle. 
E)  Business entity assumption. 
A)  Going-concern assumption. 
B)  Cost principle. 
C)  Revenue recognition principle. 
D)  Objectivity principle. 
E)  Business entity assumption.

Question 5

The International Accounting Standards Board (IASB)

Accepted Answer

A)  Hopes to create harmony among accounting practices of different countries. 
B)  Is the government group that establishes reporting requirements for companies that issue stock to the public. 
C)  Has the authority to impose its standards on companies. 
D)  Is the only source of generally accepted accounting principles (GAAP). 
E)  Only applies to companies that are members of the European Union. 
A)  Hopes to create harmony among accounting practices of different countries. 
B)  Is the government group that establishes reporting requirements for companies that issue stock to the public. 
C)  Has the authority to impose its standards on companies. 
D)  Is the only source of generally accepted accounting principles (GAAP). 
E)  Only applies to companies that are members of the European Union.

Question 6

________________ activities are the means organizations use to pay for resources such as land, building, and equipment.

Accepted Answer

The answer of ________________ activities are the means organizations use...

Question 7

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Accepted Answer

A) True 
 B)False

Question 8

Unlimited liability is an advantage of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 9

Accounting is an information and measurement system that does all of the following except:

Accepted Answer

A)  Identifies business activities. 
B)  Records business activities. 
C)  Communicates business activities. 
D)  Does not use technology to improve accuracy in reporting. 
E)  Helps people make better decisions. 
A)  Identifies business activities. 
B)  Records business activities. 
C)  Communicates business activities. 
D)  Does not use technology to improve accuracy in reporting. 
E)  Helps people make better decisions.

Question 10

Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable.

Accepted Answer

A) True 
 B)False

Question 11

Quick Computer Service had revenues of $80,000 and expenses of $50,000 for the year. Its assets at the beginning of the year were $400,000. At the end of the year assets were worth $450,000. Calculate its return on assets.

Accepted Answer

A)  7.1% 
B)  7.5% 
C)  6.7% 
D)  20.0% 
E)  18.8% 
A)  7.1% 
B)  7.5% 
C)  6.7% 
D)  20.0% 
E)  18.8%

Question 12

On December 15 of the current year, Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in the following year. Which accounting principle would require Myers Legal Services to record the legal fees revenue in the following year and not the year the cash was received?

Accepted Answer

A)  Monetary unit assumption. 
B)  Going-concern assumption. 
C)  Cost principle. 
D)  Business entity assumption. 
E)  Revenue recognition principle. 
A)  Monetary unit assumption. 
B)  Going-concern assumption. 
C)  Cost principle. 
D)  Business entity assumption. 
E)  Revenue recognition principle.

Question 13

If a parcel of land that was originally acquired 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, the land should be recorded in the purchaser's books at:

Accepted Answer

A)  $95,000. 
B)  $137,000. 
C)  $138,500. 
D)  $140,000. 
E)  $150,000. 
A)  $95,000. 
B)  $137,000. 
C)  $138,500. 
D)  $140,000. 
E)  $150,000.

Question 14

____________ are the increases in equity from a company's earnings activities

Accepted Answer

The answer of ____________ are the increases in equity from...

Question 15

A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities?

Accepted Answer

A)  $104,000. 
B)  $76,000. 
C)  $32,000. 
D)  $68,000. 
E)  $176,000. 
A)  $104,000. 
B)  $76,000. 
C)  $32,000. 
D)  $68,000. 
E)  $176,000.

Question 16

The private group that currently has the authority to establish generally accepted accounting principles in the United States is the:

Accepted Answer

A)  APB. 
B)  FASB. 
C)  AAA. 
D)  AICPA. 
E)  SEC. 
A)  APB. 
B)  FASB. 
C)  AAA. 
D)  AICPA. 
E)  SEC.

Question 17

FastForward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

Accepted Answer

The answer of FastForward has the following beginning cash balance...

Question 18

Generally accepted accounting principles are the basic assumptions, concepts, and guidelines for preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 19

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n):

Accepted Answer

A)  Revenue activity. 
B)  Operating activity. 
C)  Expense activity. 
D)  Investing activity. 
E)  Financing activity. 
A)  Revenue activity. 
B)  Operating activity. 
C)  Expense activity. 
D)  Investing activity. 
E)  Financing activity.

Question 20

Explain the role of accounting in the information age.

Accepted Answer

Accounting is an information and measure

Exam 1: Accounting in Business

The income statement shows the financial position of a business on a specific date.

Owner financing refers to resources contributed by creditors or lenders.

Net income occurs when revenues exceed expenses.

The International Accounting Standards Board (IASB)

________________ activities are the means organizations use to pay for resources such as land, building, and equipment.

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

Unlimited liability is an advantage of a sole proprietorship.

Accounting is an information and measurement system that does all of the following except:

Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable.

Quick Computer Service had revenues of $80,000 and expenses of $50,000 for the year. Its assets at the beginning of the year were $400,000. At the end of the year assets were worth $450,000. Calculate its return on assets.

If a parcel of land that was originally acquired 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, the land should be recorded in the purchaser's books at:

____________ are the increases in equity from a company's earnings activities

A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities?

The private group that currently has the authority to establish generally accepted accounting principles in the United States is the:

FastForward has the following beginning cash balance and cash transactions for the month of January. Using this information prepare a statement of cash flows.

Generally accepted accounting principles are the basic assumptions, concepts, and guidelines for preparing financial statements.

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n):

Explain the role of accounting in the information age.

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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