Question 1

The accounts of Mason Company at the end of the past year report the following amounts:
 $\begin{array} { l  }\text { Accounts  }&\text { Amount }\
 \text {Owner Withdrawals, G. Mason. } &\$15,500 \
 \text {Revenues } &\$97,000 \
 \text {Expenses } &\$43,800 \
 \text {Owner investments } &2,000 \
\end{array}$
 
If the beginning equity for the year was $173,000, calculate the ending equity for Mason Company.

Accepted Answer

The answer of The accounts of Mason Company at the...

Question 2

Describe the income statement and the relation between revenues, expenses, and net income or loss.

Accepted Answer

The answer of Describe the income statement and the relation...

Question 3

The full disclosure principle:

Accepted Answer

A) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
B) Prescribes that a company record the expenses it incurred to generate the revenue reported. 
C) Prescribes that a company report the details behind financial statements that would impact users' decisions. 
D) Prescribes that accounting information is based on actual cost. 
E) Provides guidance on when a company must recognize revenue.

Question 4

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Accepted Answer

A) $92,000. 
B) $45,000. 
C) $282,000. 
D) $98,000. 
E) $210,000.

Question 5

U.S. government bonds are:

Accepted Answer

A) Low-risk and high-return investments. 
B) High-risk and high-return investments. 
C) Low-risk and low-return investments. 
D) High risk and no-return investments. 
E) High-risk and low-return investments.

Question 6

The time period assumption:

Accepted Answer

A) Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. 
B) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 
C) Means that we can express transactions and events in monetary, or money, units. 
D) Means that a business is accounted for separately from other business entities, including its owner. 
E) Prescribes that a company record the expenses it incurred to generate the revenue reported.

Question 7

Increases in equity from a company's sales of products or services are:

Accepted Answer

A) Revenues. 
B) Owner's Equity. 
C) Assets. 
D) Expenses. 
E) Liabilities.

Question 8

Define risk and return and discuss the relation between them.

Accepted Answer

The answer of Define risk and return and discuss the...

Question 9

If assets are $365,000 and equity is $120,000, then liabilities are:

Accepted Answer

A) $365,000. 
B) $245,000. 
C) $610,000. 
D) $120,000. 
E) $485,000.

Question 10

Dawson Electronic Services 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) 20.0%. 
B) 6.7%. 
C) 7.1%. 
D) 18.8%. 
E) 7.5%.

Question 11

Return on assets is often stated in ratio form as the amount of average total assets divided by income.

Accepted Answer

A) True 
 B)False

Question 12

Revenue is properly recognized:

Accepted Answer

A) Only if the transaction creates an account receivable. 
B) At the end of the accounting period. 
C) When the customer makes an order. 
D) Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. 
E) When cash from a sale is received.

Question 13

As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received.

Accepted Answer

A) True 
 B)False

Question 14

External users of accounting information include all of the following except:

Accepted Answer

A) Government regulators. 
B) Customers. 
C) Purchasing managers. 
D) Shareholders. 
E) Creditors.

Question 15

All of the following are true regarding ethics except:

Accepted Answer

A) Ethics can be difficult to apply. 
B) Ethics are beliefs that distinguish right from wrong. 
C) Are critical in accounting. 
D) Ethics rules are often set for CPAs. 
E) Ethics do not affect the operations or outcome of a company.

Question 16

Ethical behavior requires that:

Accepted Answer

A) Auditors invest in businesses they audit. 
B) Auditors' pay depends on the success of the client's business. 
C) Auditors' pay not depend on the success of the client's business. 
D) Analysts report information favorable to their companies. 
E) Managers use accounting information to benefit themselves.

Question 17

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Accepted Answer

A) Decreased $156,000. 
B) Increased $89,000. 
C) Decreased $22,000. 
D) Increased $22,000. 
E) Increased $156,000.

Question 18

Which of the following accounts is not included in the calculation of net income?

Accepted Answer

A) Rent expense. 
B) Cash. 
C) Rent revenue. 
D) Services revenue. 
E) Wages expense.

Question 19

Net income is sometimes called earnings or profit.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Accounting in Business

Describe the income statement and the relation between revenues, expenses, and net income or loss.

The full disclosure principle:

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

U.S. government bonds are:

The time period assumption:

Increases in equity from a company's sales of products or services are:

Define risk and return and discuss the relation between them.

If assets are $365,000 and equity is $120,000, then liabilities are:

Dawson Electronic Services 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.

Return on assets is often stated in ratio form as the amount of average total assets divided by income.

Revenue is properly recognized:

As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received.

External users of accounting information include all of the following except:

All of the following are true regarding ethics except:

Ethical behavior requires that:

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Which of the following accounts is not included in the calculation of net income?

Net income is sometimes called earnings or profit.

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