Question 1

The monetary value charged to customers for the performance of services sold is called a(n)

Accepted Answer

A)  asset 
B)  net income 
C)  capital 
D)  revenue

Question 2

The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Given the following: Beginning retained earnings $ 70,000
Ending retained earnings $ 48,000
Dividends declared and paid $ 21,000
Calculate net income or net loss.

Accepted Answer

The answer of Given the following: Beginning retained earnings $...

Question 5

From the following list of accounts taken from Lamar's accounting records, identify those that would appear on the income statement.

Accepted Answer

The answer of From the following list of accounts taken...

Question 6

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a business transaction?

Accepted Answer

A)  Erin Adams receives stock in exchange for depositing $15,000 in a bank account in the name of Erin's Lawn Service. 
B)  Erin's Lawn Service provided services to customers earning fees of $600. 
C)  Erin Adams purchased hedge trimmers for her lawn service, agreeing to pay the supplier next month. 
D)  Erin Adams pays her monthly personal credit card bill.

Question 8

The objectivity concept requires that

Accepted Answer

A)  business transactions must be consistent with the objectives of the entity 
B)  the Financial Accounting Standards Board must be fair and unbiased in its deliberations over new accounting standards 
C)  accounting principles must meet the objectives of the Security and Exchange Commission 
D)  amounts recorded in the financial statements must be based on independently verifiable evidence

Question 9

The Austin Land Company sold land for $85,000 in cash. The land was originally purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank. After the sale, The Austin Land Company paid off the loan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

Accepted Answer

The answer of The Austin Land Company sold land for...

Question 10

All financial statements are identified by the name of the business, the title of the statement, and the date or period of time.

Accepted Answer

A) True 
 B)False

Question 11

Amos Moving Services' account balances at March 31, 2011, the end of the current year, are listed below. The Retained Earnings balance was $180,000 at April 1, 2010, the beginning of the current year.
  Based on the data provided for Amos Moving Services, prepare a balance sheet as of March 31, 2011.

Accepted Answer

The answer of Amos Moving Services' account balances at March...

Question 12

Financial reports are used by

Accepted Answer

A)  management 
B)  creditors 
C)  investors 
D)  all are correct

Question 13

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

Accepted Answer

The answer of Discuss internal and external users of accounting...

Question 14

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

Accepted Answer

A)  the income statement 
B)  the balance sheet 
C)  the statement of cash flows 
D)  cannot be determined with any of these

Question 15

No significant differences exist between the accounting standards issued by the FASB and the IASB.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a business transaction?

Accepted Answer

A)  make a sales offer 
B)  sell goods for cash 
C)  receive cash for services to be rendered later 
D)  pay for supplies

Question 17

Gomez Service Company paid its first installment on a note payable in the amount of $2,000. How will this transaction affect the accounting equation?

Accepted Answer

A)  Increase Liabilities (Notes Payable) and decrease Assets (Cash) 
B)  Decrease Assets (Cash) and decrease Stockholders' Equity (Note Payable Expense) 
C)  Decrease Assets (Cash) and decrease Assets (Notes Receivable) 
D)  Decrease Assets (Cash) and decrease Liabilities (Notes Payable)

Question 18

The unit of measure concept

Accepted Answer

A)  is only used in the financial statements of manufacturing companies 
B)  is not important when applying the cost concept 
C)  requires that different units be used for assets and liabilities 
D)  requires that economic data be reported in yen in Japan or dollars in the United States

Question 19

Which of the following concepts relates to separating the reporting of business and personal economic transactions?

Accepted Answer

A)  cost concept 
B)  unit of measure concept 
C)  business entity concept 
D)  objectivity concept

Question 20

Which of the items below is not a business entity?

Accepted Answer

A)  entrepreneurship 
B)  proprietorship 
C)  partnership 
D)  corporation

Exam 1: Introduction to Accounting and Business

The monetary value charged to customers for the performance of services sold is called a(n)

The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.

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.

Given the following: Beginning retained earnings $ 70,000 Ending retained earnings $ 48,000 Dividends declared and paid $ 21,000 Calculate net income or net loss.

From the following list of accounts taken from Lamar's accounting records, identify those that would appear on the income statement.

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

Which of the following is not a business transaction?

The objectivity concept requires that

All financial statements are identified by the name of the business, the title of the statement, and the date or period of time.

Amos Moving Services' account balances at March 31, 2011, the end of the current year, are listed below. The Retained Earnings balance was $180,000 at April 1, 2010, the beginning of the current year. Based on the data provided for Amos Moving Services, prepare a balance sheet as of March 31, 2011.

Financial reports are used by

Discuss internal and external users of accounting information. What areas of accounting provide them with information? Give an example of the type of report each type of user might use.

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

No significant differences exist between the accounting standards issued by the FASB and the IASB.

Which of the following is not a business transaction?

Gomez Service Company paid its first installment on a note payable in the amount of $2,000. How will this transaction affect the accounting equation?

The unit of measure concept

Which of the following concepts relates to separating the reporting of business and personal economic transactions?

Which of the items below is not a business entity?