Question 1

Financial reports are said to be verifiable when

Accepted Answer

A)  they are available in time to influence users' decisions. 
B)  they are formatted clearly and concisely. 
C)  they demonstrate the similarities and differences among reported items. 
D)  users can agree on the meaning of reported items.

Question 2

Donner Company is selling a piece of land adjacent to its business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost principle, what is the amount that will be used to record this transaction in the accounting records?

Accepted Answer

The answer of Donner Company is selling a piece of...

Question 3

Two common areas of accounting that respectively provide information to internal and external users are

Accepted Answer

A)  forensic accounting and financial accounting 
B)  managerial accounting and financial accounting 
C)  managerial accounting and environmental accounting 
D)  financial accounting and tax accounting systems

Question 4

Resources owned by a business are known as

Accepted Answer

A)  debts 
B)  liabilities 
C)  assets 
D)  equity

Question 5

Given the following data:
Dec. 31, Year 2 Dec. 31, Year 1
Total liabilities $128,250 $120,000
Total stockholders' equity 95,000 80,000
(a) Compute the ratio of liabilities to stockholders' equity for each year. Round your answer to two decimal places.
(b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

Accepted Answer

The answer of Given the following data:
Dec. 31, Year 2...

Question 6

Identify each of the following as either internal or external users of accounting information. $$\begin{array} { | l | l | } 
\hline \text { A. } & \text { Payroll manager } \
\hline \text { B. } & \text { Bank } \
\hline \text { C. } & \text { President's secretary } \
\hline \text { D. } & \text { Internal Revenue Service } \
\hline \text { E. } & \text { Raw material vendors } \
\hline \text { F. } & \text { Social Security Administration } \
\hline \text { G. } & \text { Health insurance provider } \
\hline \text { H. } & \text { Managerial accountant } \
\hline
\end{array}$$

Accepted Answer

The answer of Identify each of the following as either...

Question 7

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Has the ability to obtain large amounts of resources

Accepted Answer

A) Proprietorship 
B) Partnership 
C) Corporation

Question 8

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once.
-Used by large businesses

Accepted Answer

A) Proprietorship 
B) Partnership 
C) Corporation

Question 9

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

Accepted Answer

A) True 
 B)False

Question 10

The assets section of the balance sheet normally presents assets in

Accepted Answer

A)  alphabetical order 
B)  the order of largest to smallest dollar amounts 
C)  the order in which they will be converted into cash or used in operations 
D)  the order of smallest to largest dollar amounts

Question 11

Receiving payments on an account receivable increases both equity and assets.

Accepted Answer

A) True 
 B)False

Question 12

A summary of cash flows for Evelyn's Event Planning for the year ended December 31 is shown below. Cash receipts:
$\begin{array}{lr}
\text { Cash received from customers } & \$ 57,360 \
\text { Cash received from bank loan } & 15,000
\end{array}$  ? $\begin{array}{lr}
\text { Cash payments: }\
\text { Cash paid for oper ating expenses } & \$ 12,120 \
\text { Cash paid for equipment } & 18,070 \
\text { Cash paid for party supplies } & 9,480 \
\text { Dividends } & 12,000\
\
\text { The cash balance as of January } 1&\$15,580
\end{array}$ ?
Prepare a statement of cash flows for Evelyn's Event Planning for the year ended December 31.

Accepted Answer

The answer of A summary of cash flows for Evelyn's...

Question 13

Managerial accounting information is used by external and internal users equally.

Accepted Answer

A) True 
 B)False

Question 14

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

Accepted Answer

A)  proprietorship 
B)  corporation 
C)  partnership 
D)  governmental unit

Question 15

The accountant for Scott Industries prepared the following list of account balances from the company's records for the year ended December 31. Use this information to answer the question that follows.
 $\begin{array}{lrlr}
\text { Fees earned } & \$ 165,000 & \text { Cash } & \$ 30,000 \
\text { Accounts receivable } & 16,000 & \text { Selling expenses } & 44,000 \
\text { Equipment } & 64,000 & \text { Common stock } & 47,000 \
\text { Accounts payable } & 12,000 & \text { Interest revenue } & 3,000 \
\text { Salaries \& wages expense } & 40,000 & \text { Income taxes expense } & 18,000 \
\text { Income taxes payable } & 5,000 & \text { Rent expense } & 20,000
\end{array}$ ​
-Determine the total liabilities at the end of the current year for Scott Industries.
​

Accepted Answer

The answer of The accountant for Scott Industries prepared the...

Question 16

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

Accepted Answer

A) True 
 B)False

Question 17

Goods purchased on account for future use in the business, such as supplies, are called

Accepted Answer

A)  prepaid liabilities 
B)  revenues 
C)  prepaid expenses 
D)  liabilities

Question 18

Which of the following is a service business?

Accepted Answer

A)  Microsoft 
B)  Dell Computers 
C)  Facebook 
D)  Walmart

Question 19

If total liabilities decreased by $46,000 during a period of time and stockholders' equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a

Accepted Answer

A)  $106,000 increase 
B)  $14,000 increase 
C)  $14,000 decrease 
D)  $106,000 decrease

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Accounting and Business

Financial reports are said to be verifiable when

Two common areas of accounting that respectively provide information to internal and external users are

Resources owned by a business are known as

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Has the ability to obtain large amounts of resources

Match the following characteristics with the form of business entity that best describes it. Each may be used more than once. -Used by large businesses

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

The assets section of the balance sheet normally presents assets in

Receiving payments on an account receivable increases both equity and assets.

Managerial accounting information is used by external and internal users equally.

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

Goods purchased on account for future use in the business, such as supplies, are called

Which of the following is a service business?

If total liabilities decreased by $46,000 during a period of time and stockholders' equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a

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